As filed with the Securities and Exchange Commission on or about April 28, 2022
Registration Statement File No. 033-82060
Registration Statement File No. 811-03542
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-6
REGISTRATION STATEMENT
☒ UNDER THE SECURITIES ACT OF 1933
☐ Pre-Effective Amendment No.
☒ Post-Effective Amendment No. 32
and/or
REGISTRATION STATEMENT
☒ UNDER THE INVESTMENT COMPANY ACT OF 1940
☒ Amendment No. 45
(Check appropriate box or boxes.)
MML Bay State Variable Life Separate Account I
(Exact Name of Registrant)
MML Bay State Life Insurance Company
(Name of Depositor)
1295 State Street, Springfield, MA 01111-0001
(Address of Depositor’s Principal Executive Offices)
(413) 788-8411
(Depositor’s Telephone Number, including Area Code)
John E. Deitelbaum
Senior Vice President
MML Bay State Life Insurance Company
1295 State Street, Springfield, MA 01111-0001
(Name and Address of Agent for Service)
Approximate date of proposed public offering: Continuous
It is proposed that this filing will become effective (check appropriate box)
☐ immediately upon filing pursuant to paragraph (b) of Rule 485.
☒ on May 1, 2022 pursuant to paragraph (b) of Rule 485.
☐ 60 days after filing pursuant to paragraph (a)(1) of Rule 485.
☐ on pursuant to paragraph (a)(1) of Rule 485.
If appropriate, check the following box:
☐ this post effective amendment designates a new effective date for a previously filed post effective amendment.
Title of Securities being Registered: Units of Interest in Variable Life Select (VLS), an individual, flexible premium, variable life insurance policy.
Variable Life Select (VLS)
Issued by MML Bay State Life Insurance Company
MML Bay State Variable Life Separate Account I
This prospectus describes an individual, flexible premium, variable life insurance policy (policy) issued by MML Bay State Life Insurance Company (MML Bay State, Company, we, us, or our). MML Bay State is a wholly owned life insurance subsidiary of C.M. Life Insurance Company (C.M. Life) and an indirect subsidiary of Massachusetts Mutual Life Insurance Company (MassMutual). While the policy is In Force, it provides lifetime insurance protection on the Insured. The policy is not a way to invest in mutual funds and is not suitable for short-term investment. The Owner (you or your) should consider the policy in conjunction with other life insurance you own. Replacing any existing life insurance policy with this policy or financing the purchase or maintenance of the policy through a loan or through withdrawals from another policy may not be to your advantage.
The policy is no longer available for sale. However, we continue to administer existing policies.
The policy has a number of investment choices, including a Guaranteed Principal Account (GPA) and one or more variable investment divisions (Separate Account Divisions) offered through our separate account, MML Bay State Variable Life Separate Account I (Separate Account). Each Separate Account Division, in turn, invests in the Funds listed in Appendix A to this prospectus.
You bear the investment risks of any premium allocated to these Separate Account Divisions. The death benefit may vary and the Cash Surrender Value will vary, depending on the investment performance of the Funds.
The policy is not (1) a bank or credit union deposit or obligation; (2) FDIC or NCUA insured; (3) insured by any federal government agency or (4) guaranteed by any bank or credit union. The policy may go down in value and provides guarantees that are subject to our financial strength and claims-paying ability.
This prospectus is not an offer to sell the policy in any jurisdiction where it is illegal to offer the policy nor is it an offer to sell the policy to anyone to whom it is illegal to offer the policy. The policy is no longer offered for sale. Owners may, however, continue to make premium payments under existing policies.
YOU MAY CANCEL YOUR POLICY WITHIN 10 DAYS OF RECEIVING IT WITHOUT PAYING FEES OR PENALTIES.
In some states, this cancellation period may be longer. Upon cancellation, you will receive either a full refund of the premiums you paid less any withdrawals and any Policy Debt or your Account Value less any withdrawals and any Policy Debt. You should review this prospectus, or consult with your investment professional, for additional information about the specific cancellation terms that apply.
Additional information about certain investment products, including variable life insurance policies, has been prepared by the Securities and Exchange Commission staff and is available at www.investor.gov.
The SEC has not approved or disapproved the policy or determined that this prospectus is accurate or complete. Any representation that it has is a criminal offense.
Please read this prospectus before investing. You should keep it for future reference.
Effective May 1, 2022
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Important Information You Should Consider About the |
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General Information about the Company, the Separate |
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We have tried to make this prospectus as readable and understandable for you as possible. By the very nature of the policy, however, certain technical words or terms are unavoidable. We have identified the following as some of these words or terms.
Account Value. The value of your investment in the Separate Account Divisions and the GPA.
Accumulation Unit. A unit of measure that we use to determine the value in each Separate Account Division.
Administrative Office. MassMutual Customer Service Center, PO Box 1865, Springfield, MA 01102-1865, (800) 272-2216, (Fax) (866) 329-4527, www.MassMutual.com
Attained Age. Insured’s age on the Issue Date plus the number of completed Policy Years.
Cash Surrender Value. Account Value less any surrender charges and Policy Debt.
Free Look. Your right to cancel the policy and receive a refund.
Fund(s). The investment entities in which the Separate Account Divisions invest.
Good Order. The actual receipt by our Administrative Office of the instructions related to a request or transaction in writing (or, when permitted, by telephone, fax, website, or other electronic means), within the time limits, if any, along with all forms, information and supporting legal documentation we require to effect the request or transaction. This information includes, to the extent applicable: the completed application or instruction form; your policy number; the transaction amount (in dollars or percentage terms); the names and allocations to and/or from the Separate Account Divisions affected by the request or transaction; the signatures of all Owners; if necessary, Social Security Number or Tax Identification number; tax certification; and any other information or supporting documentation we may require including consents, certifications and guarantees. Instructions must be complete and sufficiently clear so that we do not need to exercise any discretion to follow such instructions. We may, in our sole discretion, determine whether any particular request or transaction is in Good Order, and we reserve the right to change or waive any Good Order requirements at any time. If you have any questions, you may contact our Administrative Office before submitting the form or request.
Grace Period. A period that begins when the Account Value less Policy Debt is not sufficient to cover the monthly charges due and your policy stays In Force, during which you can pay the amount of premium needed to avoid termination.
In Force. Your policy has not terminated.
Initial Selected Face Amount. The Selected Face Amount on the Policy Date.
Insurance Risk. The difference between the death benefit and the Account Value.
Insured. The person on whose life the policy is issued.
Issue Date. The date we issue the policy. The Issue Date starts the contestability and suicide periods.
Modified Endowment Contract (MEC). A Modified Endowment Contract (MEC) is a special type of life insurance under federal income tax law. Specifically, the law prescribes a test that is intended to differentiate between policies that are purchased primarily for certain tax advantages, versus policies that are purchased primarily for death protection. MECs are still life insurance and offer tax-free death benefits and tax-deferred cash value accumulation. However, pre-death distributions (including loans) are taxed as “income first” (not cost basis first), meaning they are taxable to the extent of gain in the policy. In addition, distributions may be subject to a 10% additional tax.
Monthly Calculation Date. The Policy Date and the same day of each succeeding calendar month.
Net Premium. A premium payment received in Good Order minus the premium expense charge.
Planned Premium. The amount selected by you to be paid on a periodic basis to keep your policy In Force.
Policy Anniversary. The anniversary of the Policy Date.
Policy Date. The starting point for determining the Policy Anniversaries, Policy Years, and Monthly Calculation Dates. It is also the day we first deduct monthly charges under the policy.
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Policy Debt. All outstanding loans plus accrued interest.
Policy Debt Limit. When total Policy Debt exceeds the Account Value less surrender charges.
Policy Termination. An event where your policy is no longer In Force due to the Account Value less any Policy Debt becoming too low to support your policy’s monthly charges, or if the total Policy Debt exceeds the Account Value less any surrender charges.
Policy Year. The twelve-month period beginning with the Policy Date, and each successive twelve-month period thereafter.
Selected Face Amount. An amount used to determine the insurance coverage the policy provides while it is In Force.
Separate Account Division. A variable investment division offered through our Separate Account that invests in the corresponding underlying Fund.
Valuation Date. Any day on which the net asset value of the units of each division of the Separate Account is determined. Generally, this is any date the New York Stock Exchange (NYSE), or its successor, is open for trading. A Valuation Date ends when the NYSE closes (usually 4 p.m. Eastern Time).
Written Request. A written or electronic communication or instruction in Good Order sent by you to us at our Administrative Office.
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Important Information You Should Consider About the Variable Life Select (VLS) Policy
FEES AND EXPENSES |
LOCATION IN PROSPECTUS |
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Charges for Early Withdrawals |
If you surrender the policy, decrease the Selected Face Amount, or the policy lapses in the first 15 Policy Years or the first 15 years following an increase in Selected Face Amount, a surrender charge may apply. For the Initial Selected Face Amount, rates are based on the Insured’s issue age, gender, risk class, and coverage year. For each increase in the Selected Face Amount, rates are based on the Insured’s Attained Age, gender, risk class on the effective date of the increase, and coverage year. The surrender charge is the sum of surrender charges for the Initial Selected Face Amount and all Selected Face Amount increases. |
Fee Tables – Transaction Fees – Surrender Charges |
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Transaction Charges |
In addition to surrender charges, you also may be charged for other transactions. |
Fee Tables – Transaction Fees |
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FEES AND EXPENSES |
LOCATION IN PROSPECTUS |
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Ongoing Fees and Expenses |
In addition to surrender charges and transaction charges, an investment in the policy is subject to certain ongoing fees and expenses, including fees and expenses covering the cost of insurance and cost of optional riders. Those fees and expenses may either be fixed or vary based on characteristics of the Insured (e.g., age, sex, and risk classification). You should view the policy’s specifications pages for rates applicable to your policy. |
Fee Tables – Periodic Charges Other Than Fund Operating Expenses |
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Annual Fee |
Minimum |
Maximum |
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Fund options (Fund fees and expenses) |
0.27%(1) |
0.89%(1) |
(1) | As a percentage of Fund assets. |
RISKS |
LOCATION IN PROSPECTUS |
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Risk of Loss |
You can lose money by investing in this policy. |
Principal Risks – Investment Risks |
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Not a Short-Term Investment |
This policy is not a short-term investment and is not appropriate for an investor who needs ready access to cash. |
Overview of the Policy – What is the policy, and what is it designed to do? |
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Risks Associated with Investment Options |
An investment in this policy is subject to the risk of poor investment performance and can vary depending upon the performance of the underlying Funds you choose. |
Principal Risks – Investment Risks |
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Insurance Company Risks |
An investment in the policy is subject to the risks related to the Depositor (MML Bay State). Any obligations (including under any fixed account investment option), guarantees, or benefits of the policy are subject to the claims-paying ability of MML Bay State. If MML Bay State experiences financial distress, it may not be able to meet its obligations to you. More information about MML Bay State, including its financial strength ratings, is available at www.MassMutual.com/ratings. |
General Information About the Company, the Separate Account, and the Underlying Funds – The Guaranteed Principal Account |
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RISKS |
LOCATION IN PROSPECTUS |
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Policy Lapse |
Your policy could terminate (or lapse) if the Account Value less any Policy Debt becomes too low to support the policy’s monthly charges, or if total Policy Debt exceeds the Account Value less any surrender charges. Factors that may cause your policy to lapse include: insufficient premium payments, poor investment performance, withdrawals, and unpaid loans or loan interest. If your policy lapses, you may be able to reinstate it. To reinstate your policy, you must provide us certain written materials we require as well as a premium payment sufficient to keep the policy In Force for three months after reinstatement. The death benefit will not be paid if the policy has lapsed. |
Principal Risks – Policy Termination |
RESTRICTIONS |
LOCATION IN PROSPECTUS |
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Investments |
Generally, you may transfer Account Value among the Separate Account Divisions and the GPA, subject to certain limitations. We also offer an automated transfer program, Dollar Cost Averaging.
Transfers from the GPA are limited to one per Policy Year and may not exceed 25% of your Account Value in the GPA (less any Policy Debt).There is one exception to this rule. If you have transferred 25% of the GPA Value (less any Policy Debt) for three consecutive years and you have not added any Net Premiums or transferred amounts to the GPA during these three consecutive years, you may transfer the remainder of the GPA Value (less any Policy Debt) out of the GPA in the succeeding Policy Year.
Transfers are not permitted during the Free Look period for those policies in which we refund the premium paid less withdrawals and Policy Debt.
Transfers (including transfers through automated programs) cannot be processed during a Grace Period. In addition, we reserve the right to reject or restrict transfers if we determine the transfers reflect frequent trading or a market timing strategy, or we are required to reject or restrict by the applicable Fund. |
Transfers |
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Optional Benefits |
Optional benefits, such as riders, may alter the benefits or charges in your policy. Rider availability and benefits may vary by state of issue, and their election may have tax consequences. Riders may have restrictions or limitations. If you elect a particular rider, it may restrict or enhance the terms of your policy, or restrict the availability or terms of other riders. |
Other Benefits Available under the Policy |
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TAXES |
LOCATION IN PROSPECTUS |
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Tax Implications |
You should consult with a tax professional to determine the tax implications of an investment in and payments received under the policy.
If you purchase the policy through a qualified retirement plan, you do not receive any additional tax deferral.
Withdrawals and partial surrenders are taxed as recovery of cost basis first and income second. Loans and collateral assignments are not taxable when taken. Any gain on your policy is taxed as ordinary income.
If your policy becomes a Modified Endowment Contract or MEC, loans, collateral assignments, withdrawals, and other pre-death distributions will be taxed as income first and recovery of cost basis second. You may have to pay a penalty tax if you take a distribution before you attain age 59½. |
Federal Income Tax Considerations |
CONFLICTS OF INTEREST |
LOCATION IN PROSPECTUS |
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Investment Professional Compensation |
Your registered representative may receive compensation in the form of commissions for selling the policy to you. If your registered representative is also a MassMutual insurance agent, they are also eligible for certain cash and non-cash benefits from MassMutual. Cash compensation includes bonuses and allowances based on factors such as sales, productivity and persistency (policy retention). Non-cash compensation includes various recognition items such as prizes and awards as well as attendance at, and payment of the costs associated with attendance at, conferences, seminars and recognition trips, and also includes contributions to certain individual plans such as pension and medical plans. Sales of the policy may help these registered representatives and their supervisors qualify for such benefits. |
Other Information – Distribution |
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Exchanges |
Because the policy is no longer sold, you would not be affected by a scenario in which you are asked to replace an existing life insurance policy you own with a new purchase of this policy. However, in general, you should be aware that some investment professionals may have a financial incentive to offer you a new policy in place of the one you already own. Thus, in general, you should only exchange your life insurance policy if you determine, after comparing the features, fees, and risks of both policies, that it is preferable for you to purchase the new life insurance policy rather than continue to own the existing policy. |
Other Benefits Available Under the Policy – Right to Exchange |
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The MML Bay State Variable Life Select policy is a variable life insurance policy that provides a death benefit. The policy is designed to allow you to fund your life insurance needs through investment in a Guaranteed Principal Account (GPA) and one or more of the variable investment divisions of the Massachusetts Mutual Variable Life Separate Account I (Separate Account). The policy allows you to allocate your Net Premiums and Account Value among the various investment choices. Your Account Value will vary based on performance of the investment choices you select and the fees and charges under the policy.
In exchange for your premium payments, we will pay the beneficiary a death benefit when the Insured dies while the policy is In Force. You can select one of the two death benefit options available under the policy. Subject to certain limitations, you can change the death benefit option you selected.
This policy does not mature or provide an endowment in a specific Policy Year except as follows: Policies issued in Texas will mature when the Insured reaches Attained Age 100. Any Cash Surrender Value the policy has on the maturity date will be paid to the Owner.
Variable life insurance is designed to help meet long-term insurance needs. It is not suitable as a vehicle for short-term savings. You should not purchase the policy if you will need the premium payments in a short period of time. The policy is not intended for people who need to take early or frequent withdrawals or who intend to engage in frequent trading among the Separate Account Divisions. You should consider your need for cash, time horizon for investment and financial goals before submitting an application to purchase the policy. You may want to consult your financial or tax adviser.
When you apply for the policy, you select (within certain limitations) the Planned Premium amount and the payment frequency (annual, semiannual, quarterly, or monthly). The Planned Premium amount is based on a number of factors, including, but not limited to, the Selected Face Amount, Insured’s issue age, gender and risk classification. Generally, you determine the first premium you want to pay for the policy, but it must be at least equal to the Minimum Initial Premium. The Minimum Initial Premium depends on the premium frequency you choose, the policy’s Initial Selected Face Amount and death benefit option, the Insured’s age, gender and risk classification, and whether the policy has any riders.
After the first premium has been paid, the policy offers premium flexibility, which allows subsequent premium payments to be paid in any amount and at any time, within certain limits. Although you must maintain sufficient Account Value to keep the policy In Force, there is no required schedule for premium payments. You should review the Premium Flexibility section of the prospectus for additional important information.
When a premium payment is received in Good Order, we deduct a premium expense charge to generally cover taxes and acquisition expenses, and the remaining amount, known as the Net Premium, is allocated among the Separate Account Divisions and the GPA according to your current allocation instructions. Depending on the state in which we issue the policy, we may hold your initial Net Premium payments in the money market division until the Free Look period is completed.
Investments in your policy’s Separate Account Divisions are held in an account separate from the general assets of the Company. We have established a segment within the Separate Account to receive and invest premium payments for the Variable Life Select policies. Currently, the Variable Life Select segment is divided into 13 Separate Account Divisions. Each Separate Account Division purchases shares in a corresponding Fund. Information about each corresponding Fund is provided at the back of this prospectus. Please see “Appendix A – Funds Available Under the Policy”.
Net Premium and Account Value allocated to the GPA become part of the Company’s General Investment Account, which supports life insurance and annuity obligations, and are dependent on the Company’s financial strength and claims-paying ability. You do not participate in the investment performance of the assets in our General Investment Account. Instead, we guarantee that amounts allocated to the GPA, in excess of Policy Debt, will earn interest at a minimum rate of 3% per year. We may credit a higher rate at our discretion.
Payment of insufficient premiums may result in the policy lapsing. There is no guarantee that the policy will remain In Force as a result of making Planned Premium payments.
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Federal law, such as the Internal Revenue Code of 1986, as amended (IRC), places restrictions on the amount of money you may put into a life insurance contract and still meet the definition of life insurance for tax purposes. In order for a policy to meet the IRC’s guidelines, either the Cash Value Accumulation Test or the Guideline Premium Test must be chosen. If you choose the Cash Value Accumulation Test, any premium payment that would exceed its limits may only be accepted if the Insured provides us with satisfactory evidence of insurability. If you choose the Guideline Premium Test, we will refund any amount of premium payment that exceeds its limit.
| Choice of Death Benefit Options. The policy offers a choice of one of two death benefit options— a Level Option and Return of Account Value Option. Please see the “Death Benefit” section for more information. |
| Selected Face Amount Changes. You may request an increase or decrease in the Selected Face Amount. If you change your Selected Face Amount, your policy charges, including surrender charges, will change accordingly. If the policy’s Account Value (or Cash Surrender Value if there is Policy Debt) cannot keep the policy In Force with the requested change in Selected Face Amount, a premium payment may be required. |
| Investment Options. You can choose to allocate your Net Premium payments and Account Value among various investment choices. Your choices include the Separate Account Divisions, each of which invests in an underlying Fund, and the Guaranteed Principal Account (GPA). |
| Surrenders and Withdrawals. You may surrender your policy, and we will pay you its Cash Surrender Value (Account Value less any surrender charges and Policy Debt). You may also withdraw a part of the Cash Surrender Value. A withdrawal reduces the policy values, may reduce the Selected Face Amount of the policy, and may increase the risk that the policy will terminate or lapse. Surrenders and withdrawals may have adverse tax consequences. |
| Loans. You may take a loan on the policy once your Account Value exceeds the total of any surrender charges. The policy secures the loan. Taking a loan may have adverse tax consequences and will increase the risk that your policy may terminate or lapse. Interest charges will apply. |
| Transfers. Generally, you may transfer funds among the Separate Account Divisions and the GPA, subject to certain limitations. We also offer an automated transfer program, Dollar Cost Averaging. |
| Assignability. You may generally assign the policy as collateral for a loan or other obligation. |
| Tax Treatment. You are generally not taxed on the policy’s earnings until you withdraw Account Value from your policy. This is known as tax deferral. |
| Additional Rider Benefits. There are additional benefits you may add to your policy by way of riders. An additional charge may apply if you elect a rider. The riders available with this policy are listed in the “Other Benefits Available Under the Policy” section. |
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The following tables describe the fees and expenses that you will pay when buying, owning, surrendering or making withdrawals from the policy. Please refer to your policy’s specification pages for information about the specific fees you will pay each year based on the options you have elected.
The first table describes the fees and expenses that you will pay at the time you buy the policy, surrender the policy or take Account Value out of the policy.
Transaction Fees |
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Charge |
When Charge is Deducted |
Amount Deducted |
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Premium Expense Charge |
When you pay premium |
Maximum: |
4% of each premium payment |
Current: |
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Coverage Years 1-20 |
4% of each premium payment |
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Coverage Years 21+ |
0% of each premium payment |
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Surrender Charges(1)(2)(3) |
Upon surrender, at the time of an elected decrease in Selected Face Amount, or policy lapse. |
Maximum: |
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Coverage Years 1-15: |
Administrative Surrender Charge: |
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Coverage Years 16+: |
$0 |
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Current: |
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Coverage Years 1-15: |
Administrative Surrender Charge: |
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Coverage Years 16+: |
$0 |
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Representative |
Administrative Surrender Charge: |
Processing Fees |
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Charge |
When Charge is Deducted |
Amount Deducted |
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Withdrawal Fee |
When you withdraw a portion of your Account Value from the policy. |
Maximum: |
The lesser of $25 per withdrawal or 2% of the amount withdrawn |
Current: |
$0 |
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Processing Fees |
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Charge |
When Charge is Deducted |
Amount Deducted |
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Increase in Selected Face Amount Charge |
When you increase your Selected Face Amount |
Maximum: |
$75 |
Current: |
$0 |
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Change from Death Benefit Option 1 to Death Benefit Option 2 |
When you change from Death Benefit Option 1 |
Maximum: |
$75 |
Current: |
$0 |
(1) | For the Initial Selected Face Amount, the rates vary by the Insured’s gender, issue age, and year of coverage. For each increase in the Selected Face Amount, the rates are based on the Attained Age and gender of the Insured on the effective date of the increase and the year of coverage. The surrender charge is shown in the policy’s specifications pages. The rates in this table may not be representative of the charge that a particular Owner will pay. If you would like information on the surrender charge rates for your particular situation, you can request a personalized illustration from your registered representative or by calling our Administrative Office at (800) 272-2216. |
(2) | Under certain circumstances, the surrender charge may not apply when exchanging this policy for a qualifying non-variable life insurance policy offered by MassMutual or one of its subsidiaries. Please see “Adjustment to Surrender Charges Endorsement (for Internal Replacements)” in the “Additional Benefits” sub-section of the “Other Benefits Available Under the Policy” section for additional information. |
(3) | Surrender charges generally apply for the first 15 Policy Years and the first 15 years following an increase in Selected Face Amount. The administrative surrender charge remains level for years one through five and then decreases by 1.6666% each month during years six through ten. The administrative surrender charge is zero in years eleven and beyond. The sales load surrender charge is a percentage of premiums paid. The percentage remains level for the first ten years, then decreases starting in year eleven, reaching zero by the end of the fifteenth year. |
(4) | The rates shown for the “representative insured” are first year rates only. |
The next table describes the fees and expenses that you will pay periodically during the time that you own the policy, other than Fund fees and expenses.
Periodic Charges Other than Annual Fund Operating Expenses |
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Charge |
When Charge is Deducted |
Amount Deducted |
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Base Contract Charge: |
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Mortality Charge(1) |
Monthly, on the policy’s |
Maximum: |
$83.33 per $1,000 of |
Minimum: |
$0.01688 per $1,000 of |
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Current: |
$0.01688-$63.89 per $1,000 of |
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Representative |
$0.097 per $1,000 of |
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Periodic Charges Other than Annual Fund Operating Expenses |
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Charge |
When Charge is Deducted |
Amount Deducted |
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Substandard Risk Charge(3) |
Monthly, on the policy’s |
Maximum: |
$83.33 per $1,000 of |
Current: |
$0.0042-$83.33 per $1,000 of |
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Administrative Charge |
Monthly, on the policy’s |
Maximum: |
$9 per policy |
Current: |
$6 per policy |
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Mortality & Expense Risk Charge |
Daily |
Maximum: |
0.90% of the policy’s |
Current: |
0.55% of the policy’s |
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Loan Interest Rate Expense Charge(4) |
Reduces the interest we credit |
Maximum: |
2.00% as a percentage |
Current: |
0.90% as a percentage |
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Optional Benefit Charges: |
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Accelerated Death Benefit Rider for Terminal Illness(5) |
When you elect an accelerated |
Maximum: |
$250 |
Current: |
$150-$250 |
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Accidental Death Benefit Rider(6) |
Monthly, on the policy’s |
Maximum: |
$0.06591 - $0.12929 |
Current: |
$0.06591 - $0.12929 |
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Representative |
$0.06591 per $1,000 of |
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Death Benefit Guarantee Rider |
Monthly, on the policy’s |
Maximum: |
$0.01 per $1,000 of |
Current: |
$0.01 per $1,000 of |
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Periodic Charges Other than Annual Fund Operating Expenses |
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Charge |
When Charge is Deducted |
Amount Deducted |
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Disability Benefit Rider(7)(8)(9) |
Monthly, on the policy’s |
Maximum: |
$0.041-$0.266 per $1 of |
Current: |
$0.041-$0.266 per $1 of |
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Representative |
$0.056 per $1 of Monthly |
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Insurability Protection Rider(10) |
Monthly, on the policy’s |
Maximum: |
$0.043-$0.179 per $1,000 of |
Current: |
$0.043-$0.179 per $1,000 of |
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Representative |
$0.154 per $1,000 of |
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Right to Exchange Endorsement |
When you elect to exchange the policy for a new policy on a substitute Insured. |
Maximum: |
$75 |
Current: |
$75 |
(1) | The rates vary by a number of factors including, but not limited to, the Insured’s gender, issue age, risk classification, and year of coverage. The rates may not be representative of the charge that a particular Owner will pay. If you would like information on the mortality charge rates for your particular situation, you can request a personalized illustration from your registered representative or by calling our Administrative Office at (800) 272-2216. The mortality charge rates reflected in this table are for standard risks. The maximum mortality charge rates are based on the 1980 Commissioners’ Standard Ordinary (1980 CSO) Tables. Insurance Risk is a liability of the insurance company and is equal to the difference between the death benefit and the Account Value. |
(2) | The rates shown for the “representative Insured” are first year rates only. |
(3) | Additional mortality fees may be assessed for risks associated with certain health conditions, occupations, aviation, avocations or driving history (i.e., substandard risks). These fees can be in the form of higher rates known as table ratings and/or flat extra charges. Table ratings and flat extra charges are components in the calculation of the mortality charges for the base policy and any applicable monthly rider mortality charges. Substandard risk charges only apply if certain factors result in an Insured having a substandard rating and will be shown in the policy’s specifications pages. Note that the mortality charges, including any table ratings and/or flat extra charges, will not exceed $83.33 per $1,000 of Insurance Risk or Selected Face Amount. For additional information, refer to the “Monthly Charges Against the Account Value” sub-section of the “Charges and Deductions” section of this prospectus. |
(4) | We charge interest on policy loans, but we also credit interest on the cash value we hold as collateral on policy loans. The Loan Interest Rate Expense Charge represents the difference (cost) between the loan interest rate charged and the interest credited on loaned amounts. |
(5) | The fee we deduct may vary by state, but will not exceed $250. |
(6) | The rates vary by the Insured’s Attained Age. |
(7) | The rates vary by the Insured’s gender and Attained Age. The policy’s “monthly deduction” is the sum of the following current monthly charges: (a) administrative charge, (b) insurance charge, and (c) any applicable rider charges. |
(8) | For substandard risks, the rates may be increased by a multiple of 0.5, 1 or 2 times the standard rate shown. |
(9) | The rates shown are for standard risks and vary by the Insured’s gender and age. The rates in this table may not be representative of the charge that a particular Owner will pay. If you would like information on the rates for your particular situation, you can request a personalized illustration from your registered representative or by calling out Administrative Office at (800) 272-2216. |
(10) | The rates vary by the Insured’s issue Age. |
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All of the monthly charges listed in the table above are deducted proportionately from the then current Account Values in the Separate Account and the GPA (unless you direct us to deduct monthly charges from one Separate Account Division or from the GPA). The mortality and expense risk charge is deducted from the assets of the Separate Account only.
The next table shows the minimum and maximum total operating expenses charged by any of the Funds in which your Separate Account Divisions invest that you may pay periodically during the time that you own the policy. A complete list of Funds in which the Separate Account Divisions invest, including their annual expenses, may be found at the back of this document in Appendix A. More detail concerning each Fund’s fees and expenses is contained in the prospectus for each Fund.(1)
(1) | The Fund expenses used to prepare this table were provided to us by the Funds. We have not independently verified such information provided to us by Funds that are not affiliated with us. |
Annual Fund Operating Expenses |
Minimum |
Maximum |
(expenses are deducted from Fund assets, including management fees, distribution, and/or 12b-1 fees, and other expenses) |
0.27%
|
0.89%
|
The value of your policy will fluctuate with the performance of the Separate Account Divisions you select. Your Separate Account Divisions may decline in value or they may not perform to your expectations. You bear the investment risk of any Account Value invested in the Separate Account Divisions. It is possible you could lose your entire investment.
The type of investments that a Fund company makes will also create risk. A comprehensive discussion of the risks of each of the Funds underlying the Separate Account Divisions may be found in that Fund’s prospectus. You should read the Fund’s prospectus carefully before investing.
Variable life insurance is designed to help meet long-term financial goals. It is not suitable as a vehicle for short-term savings. You should not purchase the policy if you will need the premium payment in a short period of time. We may restrict short-term investment strategies.
If you surrender your policy, you will be subject to surrender charges during the first 15 Policy Years and during the first 15 years after an increase in the policy’s Selected Face Amount. The surrender charge will reduce the proceeds payable to you. In some situations, it is possible that there will be little or no value in the policy after the surrender charges are deducted. An early surrender can also result in adverse tax consequences.
A withdrawal will reduce your policy’s Account Value by the amount withdrawn. If the policy’s Account Value is reduced to a point where it cannot meet a monthly deduction, your policy may terminate. A withdrawal may also reduce your policy’s Selected Face Amount and may have adverse tax consequences.
Taking a loan from your policy has several risks: (1) it may increase the risk that your policy will terminate; (2) it will have a permanent effect on your policy’s Cash Surrender Value; (3) it may increase the amount of premium needed to keep the policy In Force; (4) it will reduce the death benefit proceeds; and (5) it has potential adverse tax consequences.
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Your policy could terminate if the Account Value of the policy becomes too low to support the policy’s monthly charges. In addition, the policy could terminate if the total Policy Debt Limit is reached (i.e., when Policy Debt equals or exceeds the Account Value less any surrender charges that apply: (1) on a Monthly Calculation Date or (2) on the Valuation Date a premium payment is received, if the policy is in the Grace Period). Factors that may cause your policy to terminate include: insufficient premium payments, poor investment performance, withdrawals, and unpaid loans or loan interest. Poor investment performance of the Funds selected by the Owner and the deduction of policy fees and monthly charges may result in termination of the policy even if all Planned Premiums are timely paid. No death benefit or other benefits under the policy will be paid once the policy terminates.
Limitations on Access to Cash Value
| Withdrawals were not available in the first Policy Year. |
| We may not allow a withdrawal if it would reduce the Selected Face Amount to less than the policy’s minimum Face Amount. |
| The minimum withdrawal is $100 and the maximum withdrawal is 75% of the Cash Surrender Value. |
| There may be little to no cash value available for loans and withdrawals in the policy’s early years. |
It is possible that we could experience financial difficulty in the future and even become insolvent, and therefore unable to provide all of the guarantees and benefits that we promise that exceed the value of the assets in the Separate Account.
Certain transactions (including, but not limited to, withdrawals, surrenders and loans) may lead to a taxable event. Under certain circumstances (usually if your premium payments in the first seven years or less exceed specified limits), your policy may become a “Modified Endowment Contract” (MEC). Under federal tax law, loans, collateral assignments, withdrawals, and other pre-death distributions received from a MEC policy are taxed as income first and recovery of cost basis, second. Also, distributions includible in income received before you attain age 59½ may be subject to a 10% penalty tax.
Existing tax laws that benefit this policy may change at any time.
We have the right to increase certain policy and rider charges; however, the charges will not exceed the maximum charges identified in the fee tables. If we increase a policy or rider charge, you may need to increase the amount and/or frequency of your premiums to keep your policy In Force. We will notify the Owner of any such changes through a prospectus supplement.
Cybersecurity and Certain Business Continuity Risks
Our operations support complex transactions and are highly dependent on the proper functioning of information technology and communication systems. Any failure of or gap in the systems and processes necessary to support complex transactions and avoid systems failure, fraud, information security failures, processing errors, cyber intrusion, loss of data and breaches of regulation may lead to a materially adverse effect on our results of operations and corporate reputation. In addition, we must commit significant resources to maintain and enhance our existing systems in order to keep pace with applicable regulatory requirements, industry standards and customer preferences. If we fail to maintain secure and well-functioning information systems, we may not be able to rely on information for product pricing, compliance obligations, risk management and underwriting decisions. In addition, we cannot assure investors or consumers that interruptions, failures or breaches in security of these processes and systems will not occur, or if they do occur, that they can be timely detected and remediated. The occurrence of any of these events may have a materially adverse effect on our businesses, results of operations and financial condition. For additional detail regarding cybersecurity and related risks, please see “Other Information – Computer System, Cybersecurity, and Service Disruption Risks” in this prospectus.
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General Information about the Company, the Separate Account and the Underlying Funds
MML Bay State is a wholly owned stock life insurance subsidiary of C.M. Life and an indirect subsidiary of MassMutual. MML Bay State provides life insurance and annuities to individuals and group life insurance to institutions. MassMutual and its domestic life insurance subsidiaries provide individual and group life insurance, disability insurance, individual and group annuities and guaranteed interest contracts to individual and institutional customers in all 50 states of the U.S., the District of Columbia and Puerto Rico. Products and services are offered primarily through MassMutual’s distribution channels: MassMutual Financial Advisors, MassMutual Strategic Distributors, Digital Direct to Consumer and Business to Business, Institutional Solutions and Worksite.
MassMutual is organized as a mutual life insurance company domiciled in the Commonwealth of Massachusetts. MML Bay State’s home office is located at 100 Bright Meadow Boulevard, Enfield, Connecticut 06082-1981.
The Guaranteed Principal Account
Net Premium and Account Value you allocate to the GPA become part of the General Investment Account of the Company. Subject to applicable law, the Company has sole discretion over the assets in its General Investment Account. The assets of our General Investment Account support our insurance and annuity obligations and are subject to our general liabilities from our business operations and to claims by our creditors. We use General Investment Account assets for many purposes including to pay death benefits, withdrawals, surrenders, policy loans, and transfers from the GPA as well as to pay amounts we provide to you through elected additional features and guarantees that are in excess of your Variable Account Value allocated to the Separate Account. We refer to our ability to meet any contractual obligations as our claims-paying ability.
It is important to note that there is no guarantee that we will always be able to meet our claims-paying obligations, and as with any insurance product, there are risks to purchasing this policy. For this reason, when purchasing a policy and making investment decisions, you should consider our financial strength and claims-paying ability to meet our obligations under the policy.
The General Investment Account has not been registered under the Securities Act of 1933 (1933 Act) or the 1940 Act because of exemptive and exclusionary provisions. Accordingly, neither the General Investment Account nor any interests therein are generally subject to the provisions of the 1933 Act or the 1940 Act. Disclosures regarding the GPA or the General Investment Account, however, are subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in this prospectus.
You do not participate in the investment performance of the assets in our General Investment Account. Instead, we guarantee that amounts allocated to the GPA, in excess of Policy Debt, will earn interest at a minimum rate of 3% per year. We may credit a higher rate of interest at our discretion. The interest rate is declared monthly and becomes effective on the first of each calendar month. You bear the risk that no higher rates of interest will be credited.
For amounts in the GPA equal to any Policy Debt, the guaranteed minimum interest rate per year is the greater of:
| 3%; or |
| the policy loan rate less the maximum loan interest rate expense charge. |
You may obtain interest rate information for the GPA, including the loaned portion and the non-loaned portion, by calling our Administrative Office.
The part of your premium that you invest in your policy’s Separate Account Divisions is held in an account that is separate from the general assets of the Company. This account is called the MML Bay State Variable Life Separate Account I. In this prospectus we will refer to it simply as the “Separate Account.”
We established the Separate Account on June 9, 1982, according to the laws of the State of Connecticut. We registered it with the SEC as a unit investment trust under the Investment Company Act of 1940 (1940 Act).
The Separate Account exists to keep your life insurance assets separate from our other Company assets. As such, any income, gains, and losses credited to, or charged against, the Separate Account reflect only the Separate Account’s own investment experience. At no
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time will the Separate Account reflect the investment experience of the Company’s other assets. The Company owns the assets in the Separate Account. The Separate Account is divided into divisions, each of which purchases shares in a corresponding underlying Fund. Any death benefits, withdrawals, surrenders, policy loans, or transfers of Account Value from the Separate Account Divisions will be redeemed from the corresponding Funds.
We may not use the assets in the Separate Account to pay any liabilities of the Company other than those arising from the policies. We may, however, transfer to our General Investment Account any assets that exceed anticipated obligations of the Separate Account. We are required to pay, from our general assets, if necessary, all amounts promised under the VLS policies. In the event that the assets in the Separate Account exceed the liabilities, the Company may only withdraw seed capital and earned fees and charges.
We have established a segment within the Separate Account to receive and invest premium payments for the VLS policies. Currently, the VLS segment is divided into 13 Separate Account Divisions. The underlying Funds are listed in Appendix A. Please see “Appendix A – Funds Available Under the Policy.”
Some of the underlying Funds offered are similar to mutual funds offered in the retail marketplace. They may have the same investment objectives and portfolio managers as the retail funds. The Funds offered in the VLS policy, however, are set up exclusively for variable annuity and variable life insurance products. Their shares are not offered for sale to the general public, and their performance results will differ from the performance of the retail funds.
We reserve the right, subject to compliance with applicable federal securities laws and regulations and any other federal or state law, to create separate accounts and to make certain material changes to the structure and operation of the Separate Account, including, among other things to:
| create new Separate Account Divisions; |
| create new segments of the Separate Account for any new variable life insurance products we create in the future; |
| eliminate Separate Account Divisions; |
| close existing Separate Account Divisions to allocations of new premium payments by current or new policy owners; |
| combine the Separate Account or any Separate Account Divisions with one or more different separate accounts or Separate Account Divisions; |
| transfer the assets of the Separate Account or any division of the Separate Account that we may determine to be associated with the class of contracts to which the policy belongs to another separate account or Separate Account Division; |
| operate the Separate Account as a management investment company under the 1940 Act or in any other form permitted by law; |
| de-register the Separate Account under the 1940 Act in the event such registration is no longer required; and |
| change the name of the Separate Account. |
We do not recommend or endorse any particular Fund and we do not provide investment advice. You are responsible for choosing the Funds, and the amounts allocated to each, that are appropriate for your own individual circumstances and your investment goals, financial situation, and risk tolerance. Since investment risk is borne by you, decisions regarding investment allocations should be carefully considered. Information regarding each Fund, including (i) its name; (ii) its type (e.g., money market fund, bond fund, balanced fund, etc.); (iii) its investment adviser and any sub-investment adviser; (iv) current expenses; and (v) performance is available in Appendix A to this prospectus. Please see “Appendix A – Funds Available Under the Policy.” In making your investment selections, we encourage you to thoroughly investigate all of the information regarding the Funds that is available to you. Each Fund has issued a prospectus that contains more detailed information about the Fund.
After you select Funds for your initial premium, you should monitor and periodically re-evaluate your allocations to determine if they are still appropriate.
You bear the risk of any decline in your policy Account Value resulting from the performance of the Funds you have chosen. You can find the prospectuses and other information about the Funds online at www.MassMutual.com/VLS. You can also request this information at no cost by calling (800) 272-2216 or sending an email request to MassMutualServiceCenter@MassMutual.com.
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Addition, Removal, Closure, or Substitution of Funds
We do not guarantee that each Fund will always be available for investment through the policy. We have the right to change the Funds offered through the policy, but only as permitted by law. If the law requires, we will also get your approval and the approval of any appropriate regulatory authorities. Changes may only impact certain Owners. Examples of possible changes include: adding new Funds or Fund classes, removing existing Funds or Fund classes, closing existing Funds or Fund classes, or substituting a Fund with a different Fund. New or substitute Funds may have different fees and expenses. We will not add, remove, close, or substitute any shares attributable to your interest in a Separate Account Division without notice to you and prior approval of the SEC, to the extent required by applicable law. We reserve the right to transfer Separate Account assets to another separate account that we determine to be associated with the class of policies to which your policy belongs.
Conflicts of Interest
The Funds available with this policy may also be available to registered separate accounts offering variable annuity and variable life products of other affiliated and unaffiliated insurance companies, as well as to the Separate Account and other separate accounts of MML Bay State. Although we do not anticipate any disadvantages to these arrangements, it is possible that a material conflict may arise between the interests of the Separate Account and one or more of the other separate accounts participating in the Funds. A conflict may occur, for example, as a result of a change in law affecting the operations of variable life and variable annuity separate accounts, differences in the voting instructions of the owners and payees and those of other insurance companies, or some other reason. In the event of a conflict of interest, we will take steps necessary to protect owners and payees, including withdrawing the Separate Account from participation in the Funds involved in the conflict or substituting shares of other Funds.
Compensation We Receive from Funds, Advisers and Sub-Advisers
Compensation We Receive from Funds
We and certain of our affiliates receive compensation from certain Funds pursuant to Rule 12b-1 under the 1940 Act. This compensation is paid out of a Fund’s assets and may be as much as 0.25% of the average net assets of an underlying Fund that are attributable to the variable annuity and variable life insurance products issued by us and our affiliates that offer the particular Fund (MassMutual’s variable contracts). An investment in a Fund with a 12b-1 fee will increase the cost of your investment in this policy.
Compensation We Receive from Advisers and Sub-Advisers
We and certain of our insurance affiliates also receive compensation from the advisers and sub-advisers to some of the Funds. We may use this compensation to pay expenses that we incur in promoting, issuing, distributing and administering the policy, and providing services on behalf of the Funds in our role as intermediary to the Funds. The amount of this compensation is determined by multiplying a specified annual percentage rate by the average net assets held in that Fund that are attributable to MassMutual’s variable contracts. These percentage rates differ, but currently do not exceed 0.25%. Some advisers and sub-advisers pay us more than others; some advisers and sub-advisers do not pay us any such compensation.
The compensation may not be reflected in a Fund’s expenses because this compensation may not be paid directly out of a Fund’s assets. These payments also may be derived, in whole or in part, from the advisory fee deducted from Fund assets. Owners, through their indirect investment in the Funds, bear the costs of these advisory fees (please see the Funds’ prospectuses for additional information).
In addition, we may receive fixed dollar payments from the advisers and sub-advisers to certain Funds so that the adviser and sub-adviser can participate in sales meetings conducted by MassMutual. Attending such meetings provides advisers and sub-advisers with opportunities to discuss and promote their Funds.
For a list of the Funds whose advisers currently pay such compensation, visit www.MassMutual.com/privacy-policy/compensation-arrangements or call our Administrative Office.
Compensation and Fund Selection
When selecting the Funds that will be available with MassMutual’s variable contracts, we consider each Fund’s investment strategy, asset class, manager’s reputation, and performance. We also consider the amount of compensation that we receive from the Funds, their advisers, sub-advisers, or their distributors. The compensation that we receive may be significant, and we may profit from this compensation. Additionally, we offer certain Funds through the policy at least in part because they are managed by an affiliate.
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Voting Rights
We are the legal owner of the Fund shares. However, you have the right to instruct us how to vote on questions submitted to the shareholders of the Funds supporting the policy. This right is limited to the extent you are invested in those Separate Account Divisions on the record date. We vote shares for which we do not receive instructions in the same proportion as the shares for which we do receive instructions. The shares held in the name of the Company and its affiliates will also be proportionally voted. This process may result in a small number of Owners controlling the vote. There is no minimum number of votes required. If we determine that we are no longer required to comply with the above, we will vote the shares in our own right.
Your right to instruct us is based on the number of shares of the Funds attributable to your policy. The number of shares of any Fund, attributable to your policy, is determined by dividing the Account Value held in that Separate Account Division by $100. Fractional votes are counted.
We will send you or, if permitted by law, make available electronically, proxy material and a form to complete giving us voting instructions.
We may, when required by state insurance regulatory authorities, disregard voting instructions, if such instructions would require shares to be voted so as to cause a change in the sub-classification or investment objective of a Fund or to approve or disapprove an investment advisory contract for the Fund. In addition, we may disregard voting instructions that would require a change in the investment policy or investment adviser of one or more of the available Funds. Our disapproval of such change must be reasonable and based on a good faith determination that the change would be contrary to state law or otherwise inappropriate, considering the Fund’s objectives and purpose. If we disregard Owner voting instructions, we will advise Owners of our action and the reasons for such action.
This section describes the charges and deductions we make under the policy to compensate us for the services and benefits we provide, costs and expenses we incur, and risks we assume. We may profit from the charges deducted, and we may use any such profits for any purpose, including payment of distribution expenses.
In addition, the Funds pay operating expenses that are deducted from the assets of the Funds. For more information about these expenses, please see the individual Fund prospectuses.
Premium Expense Charge
We deduct a premium expense charge from each premium payment you make. The premium expense charge is generally used to cover taxes assessed by a state and/or other governmental agency as well as acquisition expenses.
The current premium expense charge we deduct is 4% of premium during Policy Years 1 through 20 and 0% in Policy Years 21 and beyond. The maximum premium expense charge we can deduct is 4% of premium in all Policy Years.
Example:
Premium payment is $1,000. The maximum premium expense charge is 4%. Premium expense charge is $40 (4% X $1,000).
Increase in Selected Face Amount Charge
We do not currently charge you to increase your Selected Face Amount; however, we reserve the right to do so in the future. The maximum fee we would charge is $75. This charge will reimburse us for the underwriting and administrative costs associated with the change.
Change from Death Benefit Option 1 to Death Benefit Option 2
We do not currently charge you to change your death benefit option; however, we reserve the right to do so in the future. The maximum fee we would charge is $75. This charge will reimburse us for the underwriting and administrative costs associated with the change.
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Surrender Charges
There is a charge if you fully surrender your policy or if you decrease the Selected Face Amount. Generally, these charges will apply during:
| the first 15 years of coverage; and |
| the first 15 years after each increase in Selected Face Amount. |
However, in no event will we deduct surrender charges after the Insured’s Attained Age 99.
The surrender charge has two parts:
(1) | Administrative Surrender Charge The administrative component of the surrender charge applies during the first 10 Policy Years of each segment. This charge reimburses us for expenses incurred in issuing the policy and Selected Face Amount increases. The administrative surrender charge remains level for years one through five and then decreases by 1.6666% each month during years six through ten. It is zero in years eleven and beyond. In no case, however, will the administrative surrender charge ever exceed $5 per $1,000 of Selected Face Amount. |
(2) | Sales Load Surrender Charge The sales load component of the surrender charge is a percentage of the premium paid and applies during the first 15 Policy Years of each segment. The charge reimburses us for acquisition costs. The sales load surrender charge percentage remains level for years one through ten and decreases in years eleven through fifteen. The sales load surrender charge is zero in years sixteen and beyond. The sales load surrender charge will increase if the premium paid increases but, in no case, will the charge ever exceed 26% of the premiums paid for the coverage up to the surrender charge band, plus 4% of premiums paid in excess of the surrender charge band. |
The surrender charge band is set forth in the policy. It is based on the Selected Face Amount and varies by the Insured’s issue age and gender.
This surrender charge is also sometimes called a “deferred sales load.” The charge compensates us for expenses incurred in issuing the policy’s Initial Selected Face Amount, issuing Selected Face Amount increases, and for the recovery of acquisition costs.
The surrender charge is a charge against the Account Value of the policy. The deduction is taken from the Separate Account Divisions and the non-loaned portion of the GPA in proportion to the values in each on the effective date of the surrender or decrease in Selected Face Amount or lapse.
We calculate surrender charges separately for the Initial Selected Face Amount and for each increase in the Selected Face Amount. For the Initial Selected Face Amount, the rates are based on the Insured’s issue age, gender, risk classification, and coverage year. For each increase in the Selected Face Amount, the rates are based on the Insured’s gender, Attained Age, risk classification on the effective date of the increase, and coverage year. The surrender charge for the policy is the sum of the surrender charges for the Initial Selected Face Amount and all Selected Face Amount increases.
Surrender Charges for Decreases in Selected Face Amount
If you decrease your policy’s Selected Face Amount, we cancel all or a part of your Selected Face Amount segment(s) and charge a pro-rata surrender charge that will not exceed the surrender charge associated with each decreased or cancelled segment multiplied by the proportion of that segment that is decreased.
After a Selected Face Amount decrease, the surrender charge for a decreased segment that remains In Force is decreased proportionately. This charge provides us with a proportional compensation for expenses incurred in issuing the policy and Selected Face Amount increases, and for the recovery of acquisition costs.
Rider Processing Fee
We will assess a one-time processing fee at the time you exercise either the Accelerated Death Benefit Rider for Terminal Illness or the Right to Exchange Insured Endorsement. The maximum processing fee for the Accelerated Death Benefit Rider for Terminal Illness is $250 (the fee may vary by state, but will not exceed $250) and $75 for the Right to Exchange Insured Endorsement. Payment is due upon request to exercise the Right to Exchange Insured Endorsement; however, the fee for the Accelerated Death Benefit Rider for Terminal Illness is deducted from the accelerated benefit payment and will reduce the amount you receive.
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Loan Interest Rate Expense Charge
We assess a loan interest rate expense charge against policies with outstanding loan balances. This charge represents the difference between the interest we charge on policy loans and the interest we credit on the cash value we hold as collateral for policy loans. The loan interest rate minus the loan interest expense charge is the interest rate we use to credit interest to the loaned portion of the GPA. This charge reimburses us for the ongoing expense of administering the loan.
The maximum loan interest rate expense charge is 2%. The current loan interest rate expense charge is 0.90% for all Policy Years. We reserve the right to increase the loan interest rate expense charge in order to ensure your loan is not treated as a taxable distribution under federal income tax rules, which may change over time.
Monthly Charges Against the Account Value
The following charges are deducted from the Account Value on each Monthly Calculation Date. In some cases, the monthly charges may end sooner as stated below.
The Monthly Calculation Date is the date on which monthly charges for the policy are due. The first Monthly Calculation Date was the Policy Date, and subsequent Monthly Calculation Dates are on the same day of each succeeding calendar month.
Monthly charges are deducted from the Separate Account Division(s) and the GPA in proportion to the non-loaned values in each on the date the deduction is taken.
Administrative Charge
The administrative charge reimburses us for issuing and administering the policy, and for such activities as processing claims, maintaining records and communicating with you.
The current administrative charge is $6 per policy, per month.
Mortality Charge
The mortality charge reimburses us for providing you with life insurance protection. We deduct a mortality charge based on your policy’s Insurance Risk. Insurance Risk is equal to the difference between the death benefit (discounted one month at the guaranteed minimum interest rate for the GPA) and the Account Value. These deductions are made by deducting Accumulation Units, proportionately, from each Separate Account Division in which you have an Account Value and the GPA.
The maximum mortality charge rates associated with your policy are shown in the policy’s specification pages. These rates are calculated using the 1980 Commissioners’ Standard Ordinary Mortality Tables, or, for unisex rates, the 1980 Commissioners’ Ordinary Mortality Table B. The rates are also based on a number of factors, including, but not limited to, the age, gender (unless the unisex rates are used), and risk classification of the person insured by the policy.
We may charge less than the maximum monthly mortality charges shown in the table(s). In this case, the monthly mortality charge rates will be based on a number of factors including, but not limited to, our expectations for future mortality, investment earnings, persistency, expense and tax results, capital and reserve requirements, and profits. The expense component of these rates is used to offset sales and issue expenses, which decrease over time. Any change in these charges will apply to all individuals in the same class.
Mortality charges for the policy will not be the same for all Owners. Your policy’s actual or current mortality charge rates are based on a number of factors including, but not limited to, the Insured’s issue age (and age at increase, if applicable), risk classification, and gender (unless unisex rates are used). These rates generally increase as the Insured’s Attained Age increases. The rates will vary with the number of years the coverage has been In Force and with the Total Selected Face Amount of the policy.
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How the Mortality Charge is Calculated
(1) | If the minimum Face Amount is not in effect: |
We calculate the mortality charge on each Monthly Calculation Date by multiplying the current mortality charge rate by a discounted Insurance Risk. |
The Insurance Risk is the difference between: |
| the amount of benefit available on that date, under the death benefit option in effect, discounted by the monthly equivalent of 3% per year; and |
| the Account Value at the beginning of the policy month before the monthly mortality charge is due. |
The following three steps describe how we calculate the mortality charge for your policy: |
Step 1: We calculate the total Insurance Risk for your policy: |
(a) | We divide the amount of benefit under the death benefit option in effect that would be available at the beginning of the policy month by 1.0024662698 (which is the monthly equivalent of 3%); and |
(b) | We subtract your policy’s Account Value at the beginning of the policy month from the amount we calculated in Step 1(a) above. |
Step 2: We allocate the Insurance Risk in proportion to the Selected Face Amount of each segment and each increase that is In Force as of your Monthly Calculation Date. |
Step 3: We multiply the amount of each allocated Insurance Risk by the mortality charge rate for each coverage segment. The sum of these amounts is your mortality charge. |
(2) If the minimum face amount is in effect: |
We also calculate the mortality charge on each Monthly Calculation Date. However, in Step 1 we calculate the total Insurance Risk for your policy, as described in (1) above: |
(i) | assuming the minimum face amount is in effect; and then |
(ii) | assuming the minimum face amount is not in effect. |
Step 2: We allocate the Insurance Risk: |
(a) | calculated for (ii) in proportion to the Selected Face Amount of each segment and each increase that is In Force as of your Monthly Calculation Date; and |
(b) | we subtract the risk calculated for (ii) from the risk calculated for (i) and allocate that amount to the last underwritten segment. |
Step 3: We multiply the amount of each allocated Insurance Risk by the mortality charge rate for each coverage segment. The sum of these amounts is your mortality charge. |
Additional Information about the Mortality Charge
We will apply any changes in the mortality charges uniformly for all Insureds of the same issue age, gender, risk classification, and whose coverage has been In Force for the same length of time. No change in insurance class or cost will occur on account of deterioration of the Insured’s health after we issue the policy. We do not offer special underwriting programs for this product such as guaranteed issue or simplified issue underwriting; therefore, individuals of similar health will be classified similarly.
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Because your Account Value and death benefit may vary from month to month, your mortality charge may also vary on each Monthly Calculation Date. The cost of your insurance depends on the amount of Insurance Risk on your policy. Factors that may affect the Insurance Risk include:
| the amount and timing of premium payments; |
| investment performance; |
| fees and charges assessed; |
| the addition or deletion of certain riders; |
| rider charges; |
| withdrawals; |
| policy loans; |
| changes to the Selected Face Amount; and |
| changes to the death benefit option. |
Substandard Risk Charge
Additional mortality fees may be assessed for risks associated with certain health conditions, occupations, aviation, avocations or driving history (i.e., substandard risks). These fees can be in the form of higher rates known as table ratings and/or flat extra charges. Table ratings and flat extra charges are components in the calculation of the mortality charges for the base policy and any applicable monthly rider mortality charges. Substandard risk charges only apply if certain factors result in an Insured having a substandard rating and will be shown in the policy’s specifications pages. Note that the mortality charges, including any table ratings and/or flat extra charges, will not exceed $83.33 per $1,000 of Insurance Risk or Selected Face Amount.
Rider Charges
The charges for the following riders are deducted from the Account Value on each Monthly Calculation Date: Accidental Death Benefit Rider, Death Benefit Guarantee Rider, Disability Benefit Rider, and Insurability Protection Rider. The rates vary by the Insured’s gender, issue age, risk classification and year of coverage.
The current charge for the Accidental Death Benefit Rider is $0.06591 to $0.12929 per $1,000 of rider face amount. This monthly charge will continue up to, but not including, the Policy Anniversary date on which the Insured’s Attained Age becomes 70.
For the Death Benefit Guarantee Rider, the current charge is $0.01 per $1,000 of Selected Face Amount. This monthly charge will continue up to, but not including, the Policy Anniversary date on which the Insured’s Attained Age becomes 70 or for a period of 40 years, whichever is less.
Charges for the Disability Benefit Rider have two components. A portion of the charge is based on a current rate of $0.041 to $0.266 per $1 of monthly deductions. The remainder of the charge is based on a current rate of $0.009 to $0.149 per $1 of specified premium. These monthly charges will continue up to, but not including, the Policy Anniversary date on which the Insured’s Attained Age becomes 65.
The current charge for the Insurability Protection Rider is $0.043 to $0.179 per $1,000 of rider face amount. This monthly charge will continue up to, but not including, the Policy Anniversary date on which the Insured’s Attained Age becomes 43.
Daily Charges Against the Separate Account
The following charge is deducted daily from the Separate Account.
Mortality and Expense Risk Charge
The mortality and expense risk charge imposed is a percentage of the policy’s average daily net assets held in the Separate Account. The maximum annual percentage is 0.90% in all Policy Years. The current annual percentage is 0.55% in all Policy Years.
This charge compensates us for mortality and expense risks we assume under the policies and for acquisition costs. The mortality risk assumed is that the mortality charges will be insufficient to meet actual claims. The expense risk assumed is that the expenses incurred in issuing, distributing, and administering the policies will exceed the administrative charges collected.
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If the mortality and expense risk charge is not sufficient to cover the mortality and expense risk, we will bear the loss. If the amount of the charge is more than sufficient to cover those risks and expenses, we will make a profit on the charge. We may use this profit for any purpose, including the payment of marketing and distribution expenses for the policy.
The Separate Account purchases shares of the Funds at net asset value. The net asset value of each Fund reflects expenses already deducted from the assets of the Fund. Such expenses include investment management fees and other expenses and may include acquired Fund fees and expenses. For some Funds, expenses will also include 12b-1 fees to cover distribution and/or certain service expenses. When you elect a Fund as an investment choice, that Fund’s expenses will increase the cost of your investment in the policy. Please see each Fund’s prospectus for more information regarding these expenses.
There may be special circumstances that result in sales or administrative expenses or Insurance Risks that are different than those normally associated with this policy. Under such circumstances, we may vary the charges and other terms of the policies; however, the charges will not exceed the maximum charges identified in the fee tables. We will make these variations only in accordance with uniform rules we establish.
The Owner is the person who will generally make the choices that determine how the policy operates while it is In Force. You name the Owner in the application. However, the Owner may be changed by Written Request received in Good Order at our Administrative Office while the policy is In Force; therefore, the Owner is the person we have listed as such in our records. Generally, the change of Owner will take effect as of the date the Written Request is signed. However, in certain states you may not change Owners without our approval. We will refuse or accept any requested change of Owner on a non-discriminatory basis. Please see your policy. Each change will be subject to any payment we made or other action we took before receiving the owner designation form in Good Order. When we use the terms “you” or “your,” in this prospectus, we are referring to the Owner.
The sale of your policy to an unrelated investor, sometimes called a viatical or a life settlement, typically has transaction costs that may reduce the value of your estate. Discuss the benefits and risks of selling your life insurance policy with your registered representative and estate planner before you enter into a life settlement. Such a sale may also have adverse tax consequences. Please see “Sales to Third Parties” in the “Federal Income Tax Considerations” section for additional information.
The Insured is the person on whose life the policy is issued. The Owner must have an insurable interest in the life of the Insured in order for the policy to be valid under state law and for the policy to be considered life insurance for income tax purposes. If the policy does not comply with the insurable interest requirements of the issue state at the time of issue, the policy may be deemed void from the beginning. As a result, the policy would not provide the intended benefits. It is the responsibility of the Owner to determine whether proper insurable interest exists at the time of policy issuance.
You named the Insured in the application for the policy. We did not issue a policy for an Insured who was age 80 or older. Before issuing a policy, we required evidence to determine the insurability of the Insured. This usually required a medical examination.
The beneficiary is the person you named in the application to receive any death benefit. You may name different classes of beneficiaries, such as primary and secondary. These classes will set the order of payment. There may be more than one beneficiary in a class.
Unless an irrevocable beneficiary has been named, you can change the beneficiary at any time before the Insured dies by sending a Written Request in Good Order to our Administrative Office. The Owner must have the consent of an irrevocable beneficiary to
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change the beneficiary. Generally, the change will take effect as of the date your request is signed. Each change will be subject to any payment we made or other action we took before receiving the Written Request in Good Order.
If no beneficiary is living or in existence when the Insured dies, we will pay you the death benefit unless the policy states otherwise. If you are deceased, the death benefit will be paid to your estate.
The policy is no longer offered for sale. Owners may, however, continue to make premium payments under existing policies. To purchase a policy, you had to send us a completed application. The minimum Initial Selected Face Amount of a policy was $50,000. The Owner selected, within our limits, the policy’s Selected Face Amount. The Selected Face Amount is used to determine the amount of insurance coverage the policy provides while it is In Force. The Initial Selected Face Amount is the Selected Face Amount on the Policy Date. It is on the first page of your policy.
We determined whether to accept or reject the application for the policy and the Insured’s risk classification. Coverage under the policy generally became effective on the policy’s Issue Date. However, if we did not receive the first premium and all documents necessary to process the premium by the Issue Date, then coverage began on the date those items were received in Good Order at our Administrative Office.
Policies generally were issued with rates that vary based on a number of factors including, but not limited to, the gender of the Insured. In some situations, however, we may have issued unisex policies (policies whose rates do not vary by the gender of the Insured). Policies issued in Montana and Massachusetts are unisex, and policies issued as part of an employee benefit plan may be unisex. References in this prospectus to sex-distinct policy values are not applicable to unisex policies.
Your Right to Return the Policy
You had the right to examine your policy. If you changed your mind about owning it, generally, you could have cancelled it (Free Look) within ten calendar days after you received it, or ten calendar days after you received a written notice of withdrawal right, or 45 days after you signed Part 1 of your Application, whichever was latest. You may also cancel increase in Selected Face Amount under the same time limitations.
If you cancelled the policy, we issued you a refund. The Free Look period and the amount refunded vary. Please see your policy for the refund that applies in your state of issue; however, the following information will give you a general understanding of our refund procedures if you cancelled your policy.
In most states we refunded the policy’s Account Value less any withdrawals and any Policy Debt. In these states, if your premium was received in Good Order, it was allocated to your investment choices on the day after the policy’s Issue Date.
In certain other states we refunded the premium paid less withdrawals and Policy Debt. In those states your premium payment was held in the money market division of the Separate Account during the Free Look period.
To cancel the policy, you had to return it to us at our Administrative Office, to the registered representative who sold the policy, or to one of our agency offices.
Sending Requests in Good Order
From time to time you may want to submit a Written Request for a change of beneficiary, a transfer, or some other action. A Written Request is a written or electronic communication or instruction in Good Order sent by the Owner to, and received by, MML Bay State at our Administrative Office. We may allow requests to be submitted by telephone, fax, website, or other electronic media for certain transactions. Telephone, fax, email, or internet transactions may not always be available. Telephone, fax, and computer systems can experience outages or slowdowns for a variety of reasons. These outages or slowdowns may prevent or delay our receipt of your request. We may make these additional methods available at our discretion. They may be suspended or discontinued at any time without notice. Not all transaction types can be requested by telephone, website, or other electronic media.
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The Planned Premium amount you pay is based on a number of factors including, but not limited to:
| the Selected Face Amount; |
| the Insured’s gender; |
| the Insured’s issue age; |
| the Insured’s risk classification; |
| policy charges; |
| premium frequency; |
| the death benefit option; and |
| whether or not any riders apply to the policy. |
Generally, you determined the first premium you wanted to pay for the policy, but it must have been at least equal to the Minimum Initial Premium. The Minimum Initial Premium depended on:
| your chosen premium frequency; |
| the policy’s Initial Selected Face Amount and death benefit option; |
| the issue age, gender, and risk classification of the Insured; and |
| any riders on the policy. |
When applying for the policy, you selected (within the policy limitations) the Planned Premium and payment frequency (annual, semiannual, quarterly, or monthly).
We will send premium notices for the Planned Premium based on the payment frequency in effect. If a Planned Premium payment is not made, the policy will not necessarily terminate. Conversely, making Planned Premium payments does not necessarily guarantee the policy will remain In Force. To keep the policy In Force, it must have sufficient Account Value. Please see the “Policy Termination and Reinstatement” section. We will send a notice of any premium needed to prevent termination of the policy.
Before making any changes to the timing or frequency of premium payments, you should speak to your registered representative to determine the impact on your policy.
To change the amount and frequency of Planned Premiums, you may contact our Administrative Office.
If you change the frequency of your Planned Premiums, your policy may be at risk of lapsing because we do not bill for fractional payment periods.
Example:
Your Policy Anniversary is on January 2 and the planned quarterly premium payments are made. We have been sending a bill each quarter for the applicable premium. In June, we receive notification to change the Planned Premium from quarterly payments to annual payments. In this situation, we would have sent bills for the first and second quarterly payments of that year. After receiving notification, however, we would not send a bill for the last two quarterly payments of that year. We will send the next bill on the following Policy Anniversary date (January 2). If a premium payment is not made between July and January 2, your policy may lapse before the next bill is received. For more information on what happens if your policy lapses, please see the “Policy Termination and Reinstatement” section.
We will apply your subsequent premium payment on the Valuation Date that it is received in Good Order. If we receive your payment in Good Order on a non-Valuation Date or after the end of a Valuation Date, we will apply your payment on the next Valuation Date. If a payment is dishonored by your bank after we have applied the premium payment to your policy, the transaction will be deemed void and your payment will be reversed.
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If mailing a subsequent premium payment, it must be sent to the appropriate lockbox (premium payment processing service). Premium payments sent to an incorrect lockbox will be considered not in Good Order. We will reroute the payment and apply it on the Valuation Date when it is determined to be in Good Order. Please see below for lockbox address details.
Premium payments for VLS policies must be sent to the appropriate address:
Regular Mail: |
Overnight Mail: |
You may initiate single or recurring premium payments for your In Force policy through our secure website (www.MassMutual.com) or by calling our Administrative Office and authorizing an electronic draft from your bank account.
Requests to initiate electronic payments are effective on the Valuation Date that you submit the request in Good Order. If you wish to cancel an electronic payment, you must call our Administrative Office at (800) 272-2216 before the end of the Valuation Date (generally 4:00 p.m. Eastern Time).
If a bank draft is dishonored by your bank after we have applied the payment to your policy, the transaction will be deemed void and your payment will be reversed.
Premium payments may also be made by wire transfer. For instructions on how to make a premium payment by wire transfer, please call our Administrative Office at (800) 272-2216.
For recurring withdrawals from a bank account, you may elect to pay premiums by pre-authorized check. Under this procedure, we automatically deduct premium payments each month from a designated bank account. We will not send a bill for these automatic payments. The pre-authorized check service may commence at any time, unless your policy has entered its Grace Period. This service can be discontinued by contacting our Administrative Office.
This pre-authorized check (PAC) service may be initiated or updated by visiting www.MassMutual.com or by submitting a completed PAC form.
We must receive notification of account changes at our Administrative Office at least seven business days before the next draft. Withdrawals from the designated bank account may be selected for the 5th or the 20th of the month. If a date is not specified, we will select the 20th of the month and send notice in advance of the first draft. We may discontinue the pre-authorized check service for your policy and automatically switch to quarterly billing if:
| your policy has insufficient value to cover the monthly charges due and the elected premium is below the current monthly deductions; or |
| we are unable to obtain the premium payment from the bank account; or |
| your policy has exceeded a MEC or premium limitation and we are unable to apply your payment. |
After the first premium has been paid, within limits, any amount of premium may be paid at any time while the Insured is living. Although you must maintain sufficient Account Value to keep the policy In Force, there is no required schedule for premium payments.
We reserve the right to return any premium payment under $10.
In some cases, applying a subsequent premium payment in a Policy Year could result in your policy becoming a MEC. We will refund the portion of the payment that will exceed the MEC limit. In the event that this amount was applied to your policy, no interest or investment performance will be earned on the portion of the payment that is refunded to you. In the event of a refund of excess premium, no premium notices will be generated until the next Policy Anniversary.
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When we mail the refund, we will give you the option to accept your policy as a MEC. If you want to accept the policy as a MEC, you must complete and sign a MEC Notice and Acknowledgment Form and return it, along with the premium payment, to our Administrative Office.
You should consult your tax adviser for information on how a MEC may affect your tax situation. For more information on MECs, please see the “Federal Income Tax Considerations” section.
The Internal Revenue Code of 1986, as amended (IRC), has limits on the amount of money you may put into a life insurance contract and still meet the definition of life insurance for tax purposes.
The maximum premium you can pay each Policy Year is the greatest of:
| an amount equal to $100 plus double the annual basic premium for the policy; |
| the amount of premium paid in the preceding Policy Year; |
| the highest premium payment amount that would not increase the Insurance Risk; or |
| the minimum annual premium under the Death Benefit Guarantee Rider, if included with the policy. |
We will refund the portion of any payment that will exceed the maximum premium limit. If we did not refund the excess premium, the policy may no longer qualify as life insurance under federal tax law. In the event of a refund of excess premium, no premium notices will be generated until the next Policy Anniversary.
For more information on the test, please see the “Minimum Face Amount” sub-section in the “Death Benefit” section.
Certain policy changes (including but not limited to a change in Selected Face Amount, a change in risk classification, or the addition or removal of a rider) may cause a recalculation of your maximum premium limit. If a policy change results in a decrease to your premium limit, we may be required to distribute funds from your policy to maintain its compliance with the adjusted premium limit. The distribution will be taken from the Separate Account Division(s) and the GPA in proportion to the non-loaned values in each.
How and When Your Premium is Allocated
Net Premium
Net Premium is a premium payment received in Good Order minus the premium expense charge. Please see “Premium Expense Charge” in the “Transaction Fees” sub-section of the “Charges and Deductions” section.
Premiums that would cause the policy to be a MEC may not be considered to be in Good Order, depending on when they are received.
The Net Premium is allocated among the Separate Account Divisions and the GPA according to your current instructions we have on record.
Net Premium Allocation
When applying for the policy, you indicated how you wanted Net Premiums allocated among the Separate Account Divisions and the GPA. Net Premium allocations must be whole-number percentages that add up to 100%.
You may change your Net Premium allocation at any time by sending a Net Premium Allocation Request form to us at our Administrative Office. You may also change your Net Premium allocation by telephone or fax transmission, subject to certain restrictions. To help protect against unauthorized or fraudulent telephone instructions, we will take reasonable steps to confirm that telephone instructions given to us are genuine. We may record all telephone conversations.
When accompanied by a premium payment, a request to change your Net Premium allocation will become effective on the Valuation Date we receive your request, in Good Order, at our Administrative Office. If we receive your request in Good Order on a non-Valuation Date or after the end of a Valuation Date, the change will become effective on the next Valuation Date.
When Net Premium is Allocated
The Policy Date, Issue Date, and Register Date of your policy may affect the allocation of your Net Premiums. This, in turn, can affect the investment earnings and interest credited on your policy Account Value.
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The Issue Date is the date we actually issued the policy. The Policy Date normally is the same date as the Issue Date. However, you may have requested in your application that we set the Policy Date to be a specific date earlier than the Issue Date. In this case, monthly charges were deducted as of the requested Policy Date. These deductions covered a period of time during which the policy was not in effect.
The Register Date is the first date premiums were allocated. It is the Valuation Date that was on the latest of:
| the Policy Date; |
| the day we received your completed Part 1 of the application for the policy; or |
| the day we received the first premium payment in Good Order. |
We apply subsequent premium payments that are received on or after the Register Date, on the Valuation Date we receive them in Good Order. Subsequent premium payments will be applied in accordance with your premium allocation instructions.
While your policy is In Force, you may generally transfer all or part of a Separate Account Division’s Account Value to any other Separate Account Division or the GPA by indicating the dollar amount or the percentage (in whole numbers) you wish to transfer. Transfers are effective as of the Valuation Date we receive your request in Good Order at our Administrative Office. If we receive your request in Good Order on a non-Valuation Date or after the end of a Valuation Date, your transfer request will be effective as of the next Valuation Date.
We do not charge for transfers.
You can submit transfer requests by sending us a Written Request on our transfer request form. You may also submit transfer requests by telephone, or by other means we authorize, subject to certain restrictions. To help protect against unauthorized or fraudulent telephone instructions, we will take reasonable steps to confirm that telephone instructions given to us are genuine. We may record all telephone conversations.
Generally, there is no limit on the number of transfers you may make among the Separate Account Divisions. However, as discussed more fully in the section below, we may terminate, limit, or modify your ability to make such transfers due to frequent trading or market timing activity.
We limit transfers from the GPA to the Separate Account Divisions to one each Policy Year.
In addition, you may not transfer more than 25% of the Fixed Account Value (less any Policy Debt) at the time of transfer. There is one exception to this rule. If:
| you have transferred 25% of the Fixed Account Value (less any Policy Debt) each year for three consecutive Policy Years; and |
| you have not added any Net Premiums or transferred amounts to the GPA during these three years, |
then you may transfer the remainder of the Fixed Account Value (less any Policy Debt) out of the GPA in the succeeding Policy Year.
Limits on Frequent Trading and Market Timing Activity
This policy and its investment choices are not designed to serve as vehicles for what we have determined to be frequent trading or market timing trading activity. We consider these activities to be abusive trading practices that can disrupt the management of a Fund in the following ways:
| by requiring the Fund to keep more of its assets liquid rather than investing them for long-term growth, resulting in lost investment opportunity; and |
| by causing unplanned portfolio turnover. |
These disruptions, in turn, can result in increased expenses and can have an adverse effect on Fund performance that could impact all Owners and beneficiaries under the policy, including long-term Owners who do not engage in these activities. Therefore, we discourage frequent trading and market timing trading activity and will not accommodate frequent transfers among the Funds. Organizations and individuals that intend to trade frequently and/or use market timing investment strategies should not purchase this policy. We have adopted policies and procedures to help us identify those individuals or entities that we determine may be engaging in frequent trading and/or market timing trading activities. We monitor trading activity to uniformly enforce those procedures. However,
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those who engage in such activities may employ a variety of techniques to avoid detection. Our ability to detect frequent trading or market timing may be limited by operational or technological systems, as well as by our ability to predict strategies employed by Owners (or those acting on their behalf) to avoid detection. Therefore, despite our efforts to prevent frequent trading and the market timing of Funds among the Separate Account Divisions, there can be no assurance that we will be able to identify all those who trade frequently or those who employ a market timing strategy (or any intermediaries acting on behalf of such persons) and curtail their trading in every instance. Moreover, our ability to discourage and restrict frequent trading or market timing may be limited by decisions of state regulatory bodies and court orders that we cannot predict. In addition, some of the Funds are available with variable products issued by other insurance companies. We do not know the effectiveness of the policies and procedures used by these other insurance companies to detect frequent trading and/or market timing. The Funds may reflect lower performance and higher expenses across all policies as a result of undetected abusive trading practices. If we, or the investment adviser to any of the Funds available with this policy, determine that an Owner’s transfer patterns reflect frequent trading or employment of a market timing strategy, we will allow the Owner to submit transfer requests by regular mail only. We will not accept the Owner’s transfer request if submitted by overnight mail, fax, the telephone, our website, or any other type of electronic medium. Additionally, we may reject any single trade that we determine to be abusive or harmful to the Fund.
Orders for the purchase of Fund shares may be subject to acceptance by the Fund. Therefore, we reserve the right to reject, without prior notice, any Fund transfer request if the investment in the Fund is not accepted for any reason. In addition, Funds may assess a redemption fee (which we reserve the right to collect) on shares held for a relatively short period. The prospectuses for the Funds describe the Funds’ frequent trading or market timing policies and procedures, which may be more or less restrictive than the policies and procedures we have adopted. We have entered into a written agreement, as required by SEC regulation, with each Fund or its principal underwriter that obligates us to provide to the Fund promptly upon request certain information about the trading activity of individual Owners, and to execute instructions from the Fund to restrict or prohibit further purchases or transfers by specific Owners who violate the frequent trading or market timing policies established by the Fund. Owners and other persons with interests in the policies should be aware that the purchase and redemption orders received by the Funds generally are “omnibus” orders from intermediaries, such as retirement plans or separate accounts funding variable insurance contracts. The omnibus orders reflect the aggregation and netting of multiple orders from individual Owners of variable contracts and/or individual retirement plan participants. The omnibus nature of these orders may limit the Funds in their ability to apply their frequent trading or market timing policies and procedures. It may also require us to restrict or prohibit further purchases or transfers as requested by a Fund on all policies owned by an Owner whose trading activity under one variable contract has violated a Fund’s frequent trading or market timing policy. If a Fund believes that an omnibus order reflects one or more transfer requests from Owners engaged in frequent trading or market timing activity, the Fund may reject the entire omnibus order.
We will notify you in writing if we reject a transfer or if we implement a restriction due to frequent trading or the use of market timing investment strategies. If we do not accept a transfer request, no change will be made to your allocations per that request. We will then allow you to resubmit the rejected transfer by regular mail only. Additionally, we may in the future take any of the following restrictive actions that are designed to prevent the employment of a frequent trading or market timing strategy:
| not accept transfer instructions from an Owner or other person authorized to conduct a transfer; |
| limit the number of transfer requests that can be made during a Policy Year; and |
| require the value transferred into a Fund to remain in that Fund for a particular period of time before it can be transferred out of the Fund. |
We will apply any restrictive action we take uniformly to all Owners we believe are employing a frequent trading or market timing strategy. These restrictive actions may not work to deter frequent trading or market timing activity. We reserve the right to revise our procedures for detecting frequent trading and/or market timing at any time without prior notice if we determine it is necessary to do so in order to better detect frequent trading and/or market timing, to comply with state or federal regulatory requirements, or to impose different restrictions on frequent traders and/or market timers. If we modify our procedures, we will apply the new procedure uniformly to all Owners.
The Dollar Cost Averaging (DCA) Program is an automated transfer program that provides scheduled transfers of a set amount from a selected Separate Account Division to any other Separate Account Division(s) or the GPA.
DCA will not assure you of a profit and will not protect you against a loss in declining markets. Since our DCA Program anticipates continued investment during periods of fluctuating prices, you should consider your ability to assume the financial risks of continued DCA through periods of fluctuating price levels.
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Initially, a minimum of $5,000 of Account Value is placed in one Separate Account Divisions. Then, over a stipulated period of time and at a preset frequency, a specified amount of Account Value is transferred from that Separate Account Division and allocated to other Separate Account Divisions or to the GPA. The minimum transfer amount for the DCA Program is $50. Account Value held in the GPA cannot be transferred out of the GPA through the DCA Program.
Since the same specified dollar amount is transferred to each Separate Account Division at a preset frequency, more Accumulation Units are purchased when prices are low than when prices are high. Therefore, a lower average cost per unit may be achievable than through a lump-sum purchase of units or through non-level purchases of units.
If on a specified DCA transfer date, however, the Separate Account Division from which amounts are being transferred is less than the specified transfer amount, the remaining value in that Separate Account Division will be transferred on a pro rata basis to the designated divisions and the GPA. The DCA will then automatically terminate, and future DCA transfers will not occur. You must submit another DCA request to restart the DCA Program.
To elect DCA, complete our Dollar Cost Averaging request form and send it to us for processing. We do not charge you to participate in the DCA Program. We may at any time modify, suspend, or terminate the DCA Program without prior notification.
How the Value of Your Policy is Calculated
The value of your policy is called its Account Value. The Account Value has two components:
| the Variable Account Value; and |
| the Fixed Account Value. |
We will calculate your Account Value on each Valuation Date.
Variable Account Value
Transactions in your Separate Account Divisions are all reflected through the purchase and sale of Accumulation Units. An Accumulation Unit is a unit of measure that we use to determine the value in each Separate Account Division. For instance, before we invest your Net Premium payment in a Separate Account Division, we convert your Net Premium payment into Accumulation Units and then purchase an appropriate number of shares in the designated Fund.
The Variable Account Value is the sum of your values in each of the Separate Account Divisions. It reflects:
| Net Premiums allocated to the Separate Account; plus |
| transfers to the Separate Account from the GPA; less |
| transfers and withdrawals from the Separate Account; less |
| surrender charges deducted from the Separate Account due to any decreases in the Selected Face Amount; less |
| fees and charges deducted from the Separate Account; adjusted by |
| the Net Investment Experience of the Separate Account. |
Net Investment Experience
The Net Investment Experience of the Variable Account Value is reflected in the value of the Accumulation Units.
Every Valuation Date we determine the value of an Accumulation Unit for each of the Separate Account Divisions. Changes in the Accumulation Unit value reflect the investment performance of the Fund as well as deductions for the mortality and expense risk charge, and Fund expenses.
The value of an Accumulation Unit may go up or down from Valuation Date to Valuation Date.
When you make a premium payment, we credit your policy with Accumulation Units. We determine the number of Accumulation Units to credit by dividing the amount of the Net Premium payment allocated to a Separate Account Division by the unit value for that Separate Account Division. When you make a withdrawal, we deduct Accumulation Units representing the withdrawal amount from your policy. We deduct Accumulation Units for insurance and other policy charges.
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We calculate the value of an Accumulation Unit for each Separate Account Division at the end of each Valuation Date. Any change in the Accumulation Unit value will be reflected in your policy’s Account Value.
Fixed Account Value
The Fixed Account Value is the accumulation of:
| Net Premiums allocated to the GPA; plus |
| amounts transferred into the GPA; less |
| amounts transferred or withdrawn from the GPA; less |
| surrender charges deducted from the GPA due to any decreases in the Selected Face Amount; plus |
| fees and charges deducted from the GPA; plus |
| interest credited to the GPA. |
Interest on the Fixed Account Value
The Fixed Account Value earns interest at an effective annual rate, credited daily.
For the part of the Fixed Account Value equal to any policy loan, the daily rate we use is the daily equivalent of:
| the annual credited loan interest rate minus the current loan interest rate expense charge; or |
| 3%, if greater. |
With each financial transaction (e.g., premium payment, monthly charges, etc.) processed for your policy, the interest earned on any outstanding loan is credited to the GPA.
For the part of the Fixed Account Value in excess of any policy loan, the daily rate we use is the daily equivalent of:
(1) | the current interest rate we declare; or |
(2) | the guaranteed interest rate of 3%, if greater. |
The current interest rate may change as often as monthly and becomes effective on the first of each calendar month.
If the Insured dies while the policy is In Force and we determine that the claim is valid, we will pay the death benefit to the named beneficiary in a lump sum or under one of the payment options below.
The death benefit will be the amount provided by the death benefit option in effect on the date of death, reduced by any outstanding Policy Debt, and any unpaid monthly charges needed to avoid Policy Termination. The death benefit is calculated as of the date of the Insured’s death. The policy also provides additional amounts payable upon the death of the Insured through certain riders that may have been added to your policy with additional charges.
The minimum face amount for your policy is based on your policy’s Account Value as described below.
While the policy is In Force, you may make changes to the death benefit option and Selected Face Amount. You must pay any premium due before such transaction requests can be processed.
In order to qualify as life insurance under IRC Section 7702, the policy must have a minimum face amount that is determined by the Cash Value Accumulation Test. Under this test, the minimum face amount on any date is equal to a percentage of the Account Value on that date. The minimum face amount percentage depends on the Insured’s:
| gender; |
| Attained Age; and |
| risk classification. |
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When you applied for the policy, you chose one of two death benefit options. These are:
| Option 1 – The benefit amount is the greater of: |
(a) the Selected Face Amount on the date of death; or (b) the minimum face amount on the date of death. |
| Option 2 – The benefit amount is the greater of: |
(a) the Selected Face Amount plus the Account Value on the date of death; or (b) the minimum face amount on the date of death. |
You should note that under death benefit option 1, the death benefit amount is not affected by your policy’s investment experience unless the death benefit is based on the minimum Face Amount. Under death benefit option 2, the death benefit is a variable death benefit. This means that, because the death benefit amount includes the Account Value, it can change from day to day. Your policy’s Account Value will vary due to the investment performance of the Separate Account Divisions in which you have allocated premium or transferred funds. It is also impacted by the deduction of charges and other policy expenses. It is possible that the policy’s Account Value can be zero, which will reduce the overall value of the death benefit. The “Policy Value” section provides more detailed information on how your policy’s Account Value is determined.
Right to Change the Death Benefit Option
After the first Policy Year, you may change the death benefit option while the Insured is living. However, a death benefit option change cannot be processed during a Grace Period, and no change of death benefit option will be permitted beyond the Insured’s Attained Age 80.
You must send a Written Request in Good Order to our Administrative Office to change your death benefit option. We reserve the right to require a written application and evidence of insurability satisfactory to us for any death benefit option change that results in a Selected Face Amount increase.
The death benefit option change will be effective on the Monthly Calculation Date that is on or next follows the date we approve the request.
If you change your death benefit option, we will adjust your policy’s Selected Face Amount. The Selected Face Amount adjustment (up or down) will be in the amount needed so that the death benefit immediately before the change will be the same as the death benefit after the change.
Please see Appendix B for examples of how a change in death benefit option may impact the policy’s Selected Face Amount.
When the Selected Face Amount changes as a result of a change in the death benefit option:
| the monthly charges will also change; |
| the charge for certain additional benefits may change; and |
| the policy surrender charge will not change. |
You cannot change the death benefit option if, as a result, the Selected Face Amount would be reduced to an amount that is less than the minimum Initial Selected Face Amount.
When We Pay Death Benefit Proceeds
If the policy is In Force and it is determined that the claim is valid, we normally pay the death benefit within seven calendar days after the date we receive due proof of the Insured’s death and all required documents, in Good Order, at our Administrative Office.
Certain situations may delay payment of a death claim. These situations include, but are not limited to, our right to contest the validity of a death claim. We investigate all death claims that occur within the policy’s two-year contestable periods as described below.
We have the right to contest the validity of the policy for any material misrepresentation of a fact within two years:
| after the policy is issued; or |
| after a Selected Face Amount increase where evidence of insurability is required. |
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If the Selected Face Amount increase is the result of a policy change that does not require evidence of insurability such as a conversion from another policy or the exercise of an option on this or another policy, we have the right to contest the validity of the Selected Face Amount increase within two years after that other policy was issued.
We may also investigate death claims beyond the contestable periods. After any two-year contestable period, in the absence of fraud, we cannot contest the validity of a policy or a Selected Face Amount increase, except for failure to pay premiums.
We generally determine whether the contested claim is valid within five days after we receive the information from a completed investigation. Since it may take some time to receive the information, payment could be delayed during this period.
We can also delay payment of the death benefit if a portion is based on the Variable Account Value of the policy and the Insured’s date of death is before or during any period when:
| it is not reasonably practicable to determine the amount because the NYSE is closed (other than customary week-end and holiday closings); |
| trading is restricted by the SEC; |
| an emergency exists as a result of which disposal of shares of the Funds is not reasonably practicable or we cannot reasonably value the shares of the Funds; or |
| the SEC, by order, permits us to delay payment in order to protect our Owners. |
We will add interest to the death benefit from the date of death to the date of a lump sum payment or the effective date of a payment option payment. The interest rate equals the rate determined under the interest payment option, but not less than that required by law. Interest paid on the death benefit is taxable as ordinary income in the year such interest is credited.
Although the death benefit is generally excludable from the income of the beneficiary who receives it, interest on the death benefit is includable in the beneficiary’s income.
We will pay the death benefit in a lump sum or under one of the payment options described more fully below.
If the payment option is a lump sum when the Insured dies, the beneficiary may elect any payment option, with our consent. If the beneficiary does not elect a payment option and you have not elected a payment option during the Insured’s lifetime, the death benefit will be paid as a single lump sum.
The table below provides information about the different death payment options. None of these benefits depends upon the performance of the Separate Account or the GPA.
Installments for a Specified Period. Fixed time payments. Equal monthly payments for any period selected, up to 30 years. The amount of each payment depends on the total amount applied, the period selected, and the monthly income rates we are using when the first payment is due.
Life Income. Equal monthly payments based on the life of a named person. Payments will continue for the lifetime of that person. You can elect income with or without a minimum payment period.
Interest. We will hold any amount applied under this option. We will pay interest on the amount at an effective annual rate determined by us. This rate will not be less than 2.5%.
Installments of a Specified Amount. Fixed amount payments. Each payment may not be less than $10 for each $1,000 applied. We will credit interest each month on the unpaid balance and add this interest to the unpaid balance. This interest will be an effective annual rate determined by us, but not less than 2.5%. Payments continue until the balance we hold is reduced to less than the agreed fixed amount. The last payment will be for the balance only.
Life Income with Payments Guaranteed for Amount Applied. Equal monthly payments based on the life of a named person. We will make payments until the total amount paid equals the amount applied, whether or not the named person lives until all payments have been made. If the named person lives beyond the payments of the total amount applied, we will continue to make monthly payments as long as the named person lives.
Joint Lifetime Income. Monthly payments based on the lives of two named persons. When one dies, the same payment will continue for the lifetime of the other. You can elect income with or without a minimum payment period.
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Joint Lifetime Income with Reduced Payments to Survivor. Monthly payments based on the lives of two named persons. We will make payments at the initial level while both are living. When one dies, we will reduce the payments by one-third. Payments will continue at that level for the lifetime of the other. Payments stop when both named persons have died.
The minimum amount that can be applied under a payment option is $2,000 per beneficiary. If the periodic payment under any option is less than $20, we reserve the right to make payments at less frequent intervals. Once payments have begun, only the specified amount and interest options may be changed.
All payment option elections must be sent to our Administrative Office in writing. You may change the payment option during the Insured’s lifetime.
Right to Change the Selected Face Amount
You may request an increase or decrease in the Selected Face Amount. If you change your Selected Face Amount, your policy charges, including surrender charges, will change accordingly. If the policy’s Account Value (or Cash Surrender Value if there is Policy Debt) cannot keep the policy In Force with the requested change in Selected Face Amount, a premium payment may be required.
If you increase or decrease the policy Selected Face Amount, your policy may become a MEC under federal tax law. MECs are discussed in the “Federal Income Tax Considerations” section.
Increases in Selected Face Amount
To increase the policy Selected Face Amount, you must send to our Administrative Office a written application and evidence the Insured is still insurable. We treat each Selected Face Amount increase as a separate segment of coverage. An increase in Selected Face Amount cannot be processed during a Grace Period.
An increase in Selected Face Amount may not be:
| less than $15,000; or |
| made after the anniversary of your policy’s Issue Date nearest the Insured’s 80th birthday. |
Increases in the Selected Face Amount will be effective on the Monthly Calculation Date that is on, or next follows, the date we approve the application for the increase.
If the Account Value (or the Cash Surrender Value if there is Policy Debt) is insufficient to continue the changed policy In Force for three months at the new monthly charges and interest, we may require a premium payment sufficient to increase the Account Value to such an amount.
Mortality charges will apply for each Selected Face Amount increase you elect. Additionally, a separate surrender charge schedule will apply to the amount of the increase. Generally, these surrender charges will apply during the first 15 years of each segment of coverage.
Any increase elected under any insurability protection type of rider will be effective as directed in the rider.
Decreases in Selected Face Amount
You may decrease the Selected Face Amount any time after the first Policy Year. You must send a Written Request in Good Order to our Administrative Office. When we receive a Written Request for a decrease in Selected Face Amount from the Owner, we will provide the Owner with a written notice that specifies the surrender charges to be assessed at the time of the decrease. If the Owner does not withdraw the request for the decrease in Selected Face Amount within ten days from the date of the written notice, we will process the decrease in Selected Face Amount and assess any surrender charges that may apply. If we determine that the policy will become a MEC, then the decrease will not be processed until a MEC Notice and Acknowledgment form is received in Good Order at our Administrative Office.
If you decrease the Selected Face Amount, we cancel all or part of your Selected Face Amount segments, and a partial surrender charge may apply. Surrender charges that apply when you decrease the policy’s Selected Face Amount are discussed in “Surrender Charges for Decreases in Selected Face Amount” in the “Transaction Fees” section.
A decrease will reduce the Selected Face Amount in the following order:
(1) | the Selected Face Amount of the most recent increase; then |
(2) | the Selected Face Amount of the next most recent increases successively; and last |
(3) | the Initial Selected Face Amount. |
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You may not decrease the Selected Face Amount if the decrease would result in a Selected Face Amount of less than the minimum Selected Face Amount.
Selected Face Amount decreases will be effective on the Monthly Calculation Date that is on, or next follows, the date we receive (in Good Order at our Administrative Office) any applicable request for the decrease. A Selected Face Amount decrease will reduce your policy’s Account Value by the amount of any applicable partial surrender charge. The remaining surrender charge will be reduced by the amount of the partial surrender charge assessed when the Selected Face Amount is decreased. If the policy’s Account Value (or Cash Surrender Value if there is Policy Debt) cannot keep the policy In Force, a premium payment may be required.
Decreases in the policy’s Selected Face Amount may have adverse tax consequences.
If the Insured dies by suicide, while sane or insane, and the policy is In Force, the policy will terminate.
| If the death occurs within two years after the Issue Date, we will refund the sum of all premiums paid, less any withdrawals and any Policy Debt. |
| If death occurs within two years after the effective date of an increase in Selected Face Amount (but at least two years after the Issue Date), we will refund the sum of the monthly charges attributed to the increase. However, if a refund as described in the preceding paragraph is payable, there will be no additional payment for the increase. |
Example:
Assume a policy is issued with a $500,000 Selected Face Amount under death benefit option 1. In Policy Year 4, the Owner applies for a $250,000 Selected Face Amount increase, which is approved. If the Insured commits suicide within two years of the increase, the benefit payable to the beneficiaries is equal to the original $500,000 death benefit, plus an additional payment equal to the monthly charges that were deducted from the Account Value for the increase segment of $250,000.
For policies issued in Colorado and North Dakota, all references in the provision to “two years” should be replaced with “one year.”
If the Insured’s date of birth or gender was misstated in the policy application or the policy has been issued incorrectly, we may adjust the death benefit. The adjustment will reflect the amount provided by the most recent monthly mortality charges using the correct age and gender. If the adjustment is made while the Insured is living, monthly charges after the adjustment will be based on the correct age and gender.
Other Benefits Available Under the Policy
In addition to the standard death benefit(s) associated with your policy, other standard and/or optional benefits may be available to you. You can obtain additional benefits if you request them and/or qualify for them. We provide certain additional benefits by rider or endorsement. The cost of each rider is generally deducted as part of the monthly charges. Some riders do not result in monthly charges, but do require a fee to exercise the riders. Adding or removing a rider for which there is a monthly charge may impact the premium limitations on your policy. For additional information, please see “Premium Limitations” in the “Premiums” section. If you added a rider for which we charge, you may cancel it at any time upon Written Request. You may not, however, add or remove a rider during a Grace Period. You must pay any premium due before such transaction requests can be processed. Having one or more riders that have monthly charges will increase the overall cost of your policy. The availability of certain riders is subject to state availability and policy Issue Date.
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Note: The following riders can no longer be added to your policy:
| Accelerated Death Benefit Rider for Terminal Illness |
| Accidental Death Benefit Rider |
| Death Benefit Guarantee Rider |
| Disability Benefit Rider |
| Insurability Protection Rider |
We also offer an automated transfer program as an additional benefit – Dollar Cost Averaging (DCA).
The following table summarizes the information about the additional benefits available under the policy. Information about the fees associated with each benefit included in the table may be found in the Fee Table.
Name of Benefit |
Purpose |
Is this Benefit |
Brief Description of Restrictions/Limitations |
Accelerated Death Benefit Rider for Terminal Illness This rider is no longer issued. |
Advances portion of death benefit upon Insured being terminally ill and not expected to live more than 12 months. |
Standard |
Eligible payment amount (Eligible Amount) does not include: any amount of death benefit equal to the Account Value; amounts under riders that do not provide level or increasing coverage for at least two years after acceleration date; and the amount payable upon the death of someone other than the Insured under the policy, if applicable.
Minimum payment is $25,000.
Maximum payment is lesser of 75% of Eligible Amount and $250,000.
Death benefit reduced by accelerated amount. |
Accidental Death Benefit Rider This rider is no longer issued. |
Provides an additional death benefit if the Insured’s death was caused by accidental bodily injury. |
Optional |
Death must have occurred: as a direct result of bodily injury independent of all other causes; within 180 days after the injury was received; while the policy and rider were In Force; and on or after the Insured’s first birthday.
No rider benefit paid if death results directly or indirectly from: suicide; war; military service; aviation travel as a pilot, crew member, or while giving or receiving training; natural causes; drugs; or any injury received while committing a felony.
No benefit if Insured dies after Attained Age 69.
Minimum coverage is $15,000. |
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Name of Benefit |
Purpose |
Is this Benefit |
Brief Description of Restrictions/Limitations |
Death Benefit Guarantee Rider This rider is no longer issued. |
Guarantees the policy will not terminate, during the guarantee period, if its Account Value is insufficient to cover the monthly charges on a Monthly Calculation Date as long as the minimum premium requirement is met. |
Optional |
Guarantee period ends the earlier of: the Insured’s Attained Age 70; or 40 years from the Policy Date.
Minimum premium requirement met if the sum of all premiums paid for the policy, minus any withdrawals and Policy Debt, exceeds the sum of the minimum monthly policy premiums as defined in the rider.
Not available in New York. |
Disability Benefit Rider This rider is no longer issued. |
Credits specified amount to Account Value and waives monthly charges on specific Monthly Calculation Dates while Insured is totally and continuously disabled (as defined in rider). |
Optional |
Evidence of insurability required to add rider.
Benefit equal to the greater of: the specified monthly amount for the rider; or a Net Premium payment equal to the sum of all monthly charges due on the Monthly Calculation Date.
Benefits end day before Insured’s Attained Age 70 if total disability began on or after Insured’s Attained Age 60. |
Insurability Protection Rider. This rider is no longer issued. |
Provides right to increase Selected Face Amount without evidence of insurability on specified dates. |
Optional |
Requires premium payment to increase Selected Face Amount.
Minimum increase is $15,000. |
Right to Exchange Insured Endorsement |
Allows for substitution of Insured. |
Standard |
Owner must have insurable interest in life of substitute Insured.
Both Insured and substitute Insured must be alive on date of substitution.
Age of substitute Insured on date of the exchange may not exceed 75.
Evidence of insurability of substitute Insured required. |
Adjustment to Surrender Charges Endorsement for Internal Replacements |
Waives surrender charges in exchange of policy for non-variable life policy offered by MassMutual or its subsidiaries. |
Standard |
Evidence of insurability required.
MML Bay State reserves right to require repayment of loans and loan interest. |
Dollar Cost Averaging Program |
Automatically transfers a specific amount of Account Value from a single Separate Account Division to other divisions or the GPA, at set intervals. |
Optional |
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Accelerated Death Benefit Rider for Terminal Illness – This Rider Is No Longer Issued
This rider advances a portion of the policy’s death benefit to the Owner when we receive proof, satisfactory to us, that the Insured is terminally ill and is not expected to live more than 12 months.
Benefits under the rider may be taxable. The Owner should seek tax advice prior to requesting an accelerated death benefit payment.
For the purposes of this rider, terminal illness is a medical condition that:
| is first diagnosed by a Legally Qualified Physician; and |
| with reasonable medical certainty, will result in the death of the Insured within 12 months from the date the Legally Qualified Physician certifies the diagnosis; and |
| is not curable by any means available to the medical profession. |
We must receive the following items before an accelerated benefit can be paid:
| Owner’s Written Request for payment of an accelerated death benefit under the policy; |
| Insured’s written authorization to release medical records to us; |
| written consent to this request of any assignee and any irrevocable beneficiary under the policy; and |
| written certification from a Legally Qualified Physician that the Insured has a terminal illness, as defined above. |
The amount of the death benefit under the policy that can be considered for acceleration is determined as of the acceleration date. The acceleration date is the first date on which all the requirements for acceleration, except any confirming examination that we may require, have been met.
The amount eligible for acceleration under the rider (Eligible Amount) includes:
| the amount equal to the excess of the base policy death benefit over the Account Value; and |
| the amount payable upon death of the Insured under any life insurance rider included with the policy, if that rider provides level or increasing coverage on the life of the Insured for at least two years after the acceleration date. |
The Eligible Amount does not include:
| the amount payable upon the death of the Insured under any life insurance rider that does not provide level or increasing coverage for at least two years after the acceleration date; and |
| the amount payable upon the death of someone other than the Insured under the policy, if applicable. |
All other riders are excluded from the Eligible Amount.
The Owner may accelerate any portion of the Eligible Amount subject to the following limitations:
| the minimum amount that may be accelerated is $25,000; and |
| the maximum amount that may be accelerated is equal to the lesser of 75% of the Eligible Amount or $250,000 minus the total amount accelerated under all other policies issued by us or any of our affiliates. |
There is no premium or cost of insurance charge for this rider. However, when you exercise benefits under this rider, your death benefit will be reduced by an amount greater than the terminal illness benefit payment. The terminal illness benefit payment will be reduced by:
| a fee of not more than $250; and |
| interest at the annual interest rate we have declared for policies in this class. |
In return for the advance payment, a lien is placed on the policy equal to the amount of benefit accelerated. Interest is not charged on the lien. The Owner may not voluntarily repay all or any portion of the lien. However, the amount of the lien will be deducted from the amount of payment under the policy upon the death of the Insured.
Payment of the terminal illness benefit will be made to the Owner in a single sum, unless the payment has been assigned or designated by the Owner. However, we will not make the payment if we first receive due proof of the Insured’s death; in this case, we will instead pay the death benefit as if no request has been received under the rider.
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After the accelerated benefit payment is made, this policy will remain In Force, and premiums and charges will continue in accordance with the policy provisions.
The rider terminates on the earliest of:
| on the date the policy terminates, for any reason; |
| on the date the policy matures; |
| on the date the base policy is changed to a different policy on which the rider is not available; or |
| two years before coverage under the policy is scheduled to terminate. |
The Owner may terminate this rider upon Written Request.
Where this rider is available, it is included automatically with the policy at no charge at the time the policy is issued..
An example of the operation of the Accelerated Death Benefit Rider for Terminal Illness is set forth in Appendix C.
Accidental Death Benefit Rider – This Rider Is No Longer Issued
This rider provides an additional death benefit if the Insured’s death was caused by accidental bodily injury. This rider provides no benefit if the Insured dies after Attained Age 69. The minimum rider coverage is $15,000.
Proof of the accidental death must be provided to us at our Administrative Office. The proof must show that the Insured’s death occurred:
| as a direct result of an accidental bodily injury independent of all other causes; |
| within 180 days after the injury was received; |
| while the policy and rider were In Force; and |
| on or after the Insured’s first birthday. |
No rider benefit will be paid if the Insured’s death results directly or indirectly from:
| suicide; |
| war; |
| military service; |
| aviation travel as a pilot, crew member, or while giving or receiving training; |
| natural causes; |
| drugs; or |
| any injury received while committing a felony. |
These exclusions are more fully explained in the rider.
The rider terminates automatically:
| on the expiration date of the rider; |
| upon termination of the policy for any reason; or |
| at the end of the 61 day Grace Period provided by the policy. |
The Owner may terminate this rider upon Written Request.
There is an additional charge for this rider that varies based on the individual characteristics of the Insured.
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Below is an example of when rider benefits are paid.
Policy details:
Sex |
Female |
Risk Class |
Non-Tobacco |
Issue Age |
30 |
Attained Age |
40 |
Policy Selected Face Amount |
$250,000 |
Rider Face Amount |
$250,000 |
If the Insured dies while the rider is in effect, and death is proven to be accidental according to the rider and not subject to the rider’s exclusions, total death proceeds of $500,000 would be paid to the beneficiaries.
Death Benefit Guarantee Rider – This Rider Is No Longer Issued
This rider guarantees that the policy will not terminate, during the guarantee period, if its Account Value is insufficient to cover the monthly charges on a Monthly Calculation Date as long as the minimum premium requirement is met. The guarantee period ends at the earlier of:
| the insured’s Attained Age 70; or |
| 40 years from the Policy Date. |
The minimum premium requirement is met if the sum of all of the premiums paid for the policy, minus any withdrawals and Policy Debt, exceeds the sum of the minimum monthly policy premiums as defined in the rider. The minimum monthly policy premium for this rider is set as of its Issue Date. We may change the minimum monthly policy premium later to reflect other changes in the policy.
Minimum monthly premiums may be paid on other than a monthly basis as long as the sum of premiums paid is at least equal to the total required minimum monthly premiums on each Monthly Calculation Date. The minimum monthly policy premium may change if the Selected Face Amount is increased or decreased or if riders are added, changed, or terminated. The new minimum monthly premium will apply from the effective date of the change.
If, on a Monthly Calculation Date, the minimum monthly policy premium requirement has not been met, we will provide an additional 61 days to pay a premium sufficient to maintain the death benefit guarantee. The required payment will be equal to (a) the smallest amount needed to meet the requirement as of that date, plus (b) two times the minimum monthly premium for that date. If the required payment is not received within this period, the rider will terminate, and the death benefit guarantee will be lost.
The rider will terminate:
| on the rider expiration date; |
| upon termination of the policy for any reason other than insufficient Account Value; |
| if the Selected Face Amount of the policy is reduced to an amount less than $50,000; or |
| at the end of the rider’s 61-day Grace Period after failure to meet the policy premium requirement and to pay an amount of premium sufficient to maintain the guarantee. |
The Owner may terminate this rider upon Written Request,
Once the rider is terminated, it cannot be reinstated.
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Below is an example of the rider’s benefits.
| On a given Monthly Calculation Date, the policy’s Account Value monthly charges are insufficient to pay the monthly charges. If not for the Death Benefit Guarantee Rider, the policy would enter the Grace Period. |
| However, because the rider is attached and the guarantee period has not expired, the following comparison is made: |
∘ | If A exceeds B (both defined below), the policy will not enter the Grace Period. |
■ | A = the sum of all premiums paid, minus any partial withdrawals, and minus any Policy Debt including any accrued loan interest. |
■ | B = the sum of minimum monthly premiums from issue to (and including) the current month. |
∘ | If A = 10,500, and B = 10,400, the policy will not enter the Grace Period. |
Disability Benefit Rider – This Rider Is No Longer Issued
This rider provides that we will apply a monthly benefit amount to the policy while the Insured is totally and continuously disabled as defined in the rider. The disability benefit amount will be the greater of
| the specified monthly amount for the rider as shown in the policy’s specifications pages for this rider; or |
| a Net Premium equal to the sum of all monthly charges due on the Monthly Calculation Date. |
The benefits will be provided after the Insured has been totally disabled for six continuous months and all conditions of the rider have been met.
Total Disability is defined as an incapacity of the Insured that:
| is caused by sickness or injury; and |
| begins while this rider is In Force; and |
| for the first 24 months of any period of Total Disability, prevents the Insured from performing the substantial and material duties of the Insured’s occupation; and |
| after Total Disability has continued for 24 months, prevents the Insured from engaging in any occupation the Insured is or may become qualified to perform. |
The benefits will end when any of the following occurs:
| the Insured is no longer totally disabled; or |
| satisfactory proof of continued Total Disability is not given to us as required; or |
| the Insured refuses or fails to have an examination we require; or |
| the day before the Insured’s Attained Age becomes 70 if Total Disability began on or after the Insured’s Attained Age was 60. |
Proof of claim must be received at our Administrative Office while the Insured is living and during the continuance of Total Disability. Also, it must be received within one year after the earlier of the Policy Anniversary date nearest the Insured’s 65th birthday and termination of the policy. However, if it was not reasonably possible to give us proof of claim on time, the delay will not reduce the benefit if proof is given as soon as reasonably possible.
The Owner may terminate this rider at any time upon Written Request. If the rider is terminated at the Owner’s request, this rider cannot be reinstated. If not terminated at the Owner’s request, this rider will terminate automatically at the Insured’s Attained Age 65 if the Insured is not Totally Disabled on that date.
There is a monthly charge for this rider, which is based on the Insured’s Attained Age and gender, and on the benefits provided. The charge each month is the greater of:
| The specified benefit amount charge each month is equal to the specified monthly benefit multiplied by the specified benefit charge rate for the Insured’s Attained Age. |
| The waiver charge each month is equal to the sum of the monthly charges for the month, excluding the charge for this rider, multiplied by the waiver charge rate for the Insured’s Attained Age. |
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The monthly charge is deducted from the Account Value on each Monthly Calculation Date prior to the rider’s termination.
The specified benefit charge rates and waiver charge rates are shown in the policy’s specifications pages.
The example below shows the impact of this rider when on claim.
| The specified monthly benefit is $500 |
| The Insured is Attained Age 55 |
| The Insured has been totally and permanently disabled for at least 6 months |
| Account Value on the Monthly Calculation Date prior to the deduction of monthly charges is $100,000 |
| Total monthly charges are $400 |
| The rider benefit is treated as a premium paid in the amount equal to the greater of: |
A. The specified monthly benefit of $500; or B. The amount that results in a Net Premium equal to the sum of all monthly charges. In this case, a gross premium of $416.67 would result in a Net Premium equal to $400 after a 4% premium expense charge is taken. |
| The rider benefit for this month would be a gross premium of $500 because A is greater than B above. |
Insurability Protection Rider – This Rider Is No Longer Issued
This rider provides the right to increase the Selected Face Amount of the policy without evidence of insurability on certain option dates as defined in the rider.
A written application is required to elect an increase in the Selected Face Amount. The completed application and any premium payment needed for the increase must be received at our Administrative Office by the end of the option period.
The minimum increase is $15,000. The maximum increase will be listed in the policy’s specifications pages.
There are two types of option periods, regular and substitute. Regular option periods coincide with the Policy Anniversary dates nearest the Insured’s 25th birthday and end with the Policy Anniversary nearest the Insured’s 43rd birthday. Substitute option dates occur 60 days after the Insured’s marriage, the birth of the Insured’s child or adoption of a child by the Insured.
A substitute option date can be exercised only if there is a subsequent regular option date. If new insurance is purchased during a substitute option period, new insurance cannot be purchased again during the next regular option period. Failure to exercise an option date does not impact your ability to exercise a future option.
While the rider is In Force, term insurance, equal to the rider benefit listed in the policy’s specification pages, is provided during the 60-day period before each option date on which an increase may be elected. If the Insured dies during this period, the term insurance is added to the policy’s death benefit.
The rider terminates:
| after the last regular option date as shown in the policy’s specification pages; |
| if the policy terminates for any reason; or |
| election of an increase on a substitute option date if that increase is the last one that may be elected under the rider. |
The Owner may terminate this rider upon Written Request.
There is a monthly charge for this rider. It is a rate per $1,000 of rider face amount, which is deducted from the Account Value on each Monthly Calculation Date prior to the rider’s termination.
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Below is an example of exercising this rider.
Policy details:
Sex |
Male |
Risk Class |
Non-Tobacco |
Issue Age |
30 |
Attained Age |
37 |
Selected Face Amount |
$250,000 |
Rider Option Amount |
$50,000 |
On the Policy Anniversary:
| The Selected Face Amount can be increased by the rider option amount, from $250,000 to $300,000. |
| The increase segment gets the same risk class as the base policy (Non-Tobacco). |
| Evidence of insurability is not required for this Selected Face Amount increase. |
Right to Exchange Insured Endorsement
This endorsement allows you to substitute a new Insured in place of the current Insured under the policy without incurring surrender charges.
A substitute of Insured is allowed if the policy is In Force, and all of the following conditions are met as of the Date of Substitution:
| the policy has been In Force for at least one year; |
| the Owner has an insurable interest in the life of the substitute Insured; and |
| the substitute Insured’s Attained Age does not exceed 75 years of age on the date of the exchange. |
Before the submission can become effective, we require:
| a written application for substitution, received by us at our Administration Office; |
| evidence of insurability of the substitute Insured that is satisfactory to us; and |
| payment of a fee of $75.00 and the amount of any Policy Debt, if any, that is more than the maximum loan available under the new policy. |
The Selected Face Amount and the Death Benefit for the new policy will be the same as for this policy. The Account Value immediately after the exchange will be equal to:
| The Account Value immediately before the exchange; minus |
| The monthly charges deducted on the date of exchange. |
Immediately after the exchange, the Account Value for the new policy will be allocated among the Separate Account Divisions and the Guaranteed Principal Account (including outstanding loans) in the same proportion as the Account Value of this policy immediately preceding the exchange. All monthly charges, surrender charges, and other values after the substitution of the Insured will be based on the life and risk classification of the substitute Insured.
An example of the operation of the Right to Exchange Insured Endorsement is set forth in Appendix D.
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Adjustment to Surrender Charges Endorsement (for internal replacements)
This endorsement allows the Company to waive surrender charges if an Owner wishes to exchange this policy for a qualifying non-variable life insurance policy offered by MassMutual or one of its subsidiaries provided the following conditions are met:
| On the date of the exchange, the Cash Surrender Value of the new policy must be less than or equal to the Cash Surrender Value of the replaced policy; |
| The Selected Face Amount of the new policy must be equal to or greater than the Selected Face Amount of the replaced policy; and |
| The entire value of the replaced policy must be put into the new policy. |
The endorsement is included automatically with the policy at no charge at the time the policy is issued.
We require a written application and evidence of insurability satisfactory to us for the new policy. There is no guarantee the new policy will be issued. We reserve the right to require repayment of any loans and loan interest.
We have the right to modify, suspend, or terminate any replacement program at any time without prior notification. This right does not apply to policies to which the endorsement has already been added.
Generally, you can exchange a life insurance policy for another in a tax-free exchange under Section 1035 of the Internal Revenue Code. Before making such an exchange, you should compare the features, fees, and risks of both policies to determine whether the purchase of the new policy is in your best interest. Remember that if you replace a policy with another policy, you might have to pay a surrender charge on the surrendered policy, and there may be new surrender charges for the new policy. In addition, other charges may be higher (or lower), and the benefits may be different. You should talk to your financial professional or tax adviser.
Accessing the Money in Your Policy
After the first Policy Year, the maximum amount you may withdraw is 75% of the current Cash Surrender Value. This amount is referred to as the maximum partial withdrawal. The minimum amount you may withdraw is $100. We do not currently charge a withdrawal fee or surrender charge for a withdrawal.
You can make a withdrawal by sending us a Written Request in Good Order on our partial withdrawal request form.
You must state in your request form the dollar amount and corresponding Separate Account Division(s) from which you want the withdrawal made. If you choose to withdraw an amount from the GPA, it may not exceed the non-loaned Account Value in the GPA. If you request a maximum partial withdrawal, the amount of the withdrawal will be deducted proportionately from the available Separate Account Divisions and the non-loaned Account Value in the GPA.
A withdrawal will reduce your policy’s Account Value by the amount withdrawn. If the policy’s Account Value is reduced to a point where it cannot meet a monthly deduction, your policy may terminate. A withdrawal may also: 1) reduce your policy’s Selected Face Amount; and 2) have adverse tax consequences. For more information on tax implications, please see the “Federal Income Tax Considerations” section.
Example:
Assume Death Benefit Option 1 is in effect and prior to the withdrawal the policy has a Selected Face Amount of $50,000 and an Account Value of $20,000. If you make a withdrawal of $5,000, the Account Value will be reduced to $15,000 and the Selected Face Amount will be reduced to $45,000. The withdrawal payment will be $5,000.
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If your policy’s Selected Face Amount is decreased because of a withdrawal, surrender charges will not apply. We may reduce the Selected Face Amount of your policy unless you have chosen death benefit option 2 or we receive evidence of insurability satisfactory to us. The amount of the reduction will be the amount of the withdrawal.
There is one exception:
If the death benefit provided by the death benefit option immediately before the withdrawal is equal to the minimum Face Amount, either the Selected Face Amount reduction will be limited or we will not reduce the Selected Face Amount. |
We will not reduce the Selected Face Amount if the death benefit immediately after the withdrawal would be the new minimum Face Amount (based on the reduced Account Value). Otherwise, the Selected Face Amount reduction will be based on a formula. |
The formula considers the smallest withdrawal amount that would bring the minimum face amount below the death benefit provided by the death benefit option. The formula reduces the Selected Face Amount by the excess of the requested withdrawal amount over this smallest withdrawal amount. (Minimum face amount, death benefit, and death benefit options are explained in the “Death Benefit” section.) |
We may not allow a withdrawal if it would result in a reduction of the Selected Face Amount to less than $25,000.
Withdrawal requests where evidence of insurability is not required will be effective on the Valuation Date we receive the Written Request in Good Order at our Administrative Office. Withdrawal requests where evidence of insurability is required will be effective on the Valuation Date we approve the evidence of insurability application provided that the remainder of the withdrawal request is in Good Order on that date. Withdrawal requests determined to be in Good Order on a non-Valuation Date or after the end of a Valuation Date, will be effective as of the next Valuation Date.
If a withdrawal would cause the policy to become a MEC, a MEC Notice and Acknowledgement Form will be required before the withdrawal will be processed. For more information on MECs, please see the “Federal Income Tax Considerations” section.
We will normally pay any withdrawal amounts within seven calendar days of the withdrawal effective date unless we are required to suspend or postpone withdrawal payments. Please see “Other Policy Rights and Limitations” in the “Other Information” section for additional information.
You may surrender your policy to us at any time while the policy is In Force. We will pay you its Cash Surrender Value. To surrender your policy, you must submit a completed surrender form and any other forms we may require.
The surrender will be effective on the Valuation Date we receive all required, fully completed forms in Good Order at our Administrative Office. If the surrender involves an exchange or transfer of assets to a policy issued by another financial institution or insurance company (not MassMutual or any of its subsidiaries), we also will require a completed absolute assignment form and any state mandated replacement paperwork. If we receive your request in Good Order on a non-Valuation Date or after the end of a Valuation Date, your surrender request will be effective as of the next Valuation Date.
We will normally pay any surrender amounts within seven calendar days of the surrender effective date, unless we are required to suspend or postpone surrender payments. Please see “Other Policy Rights and Limitations” in the “Other Information” section for additional information.
The policy terminates as of the effective date of the surrender and cannot be reinstated unless required by law. Surrendering the policy may result in adverse tax consequences. These tax consequences are discussed in the “Federal Income Tax Considerations” section.
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You may take a loan from the policy once the Account Value exceeds the total of any surrender charges. You must assign the policy to us as collateral for the loan. We charge interest on policy loans that is added to the Policy Debt. We refer to all outstanding loans plus accrued interest as Policy Debt. You may repay all or part of your Policy Debt, but you are not required to do so.
The maximum loan amount allowed at any time is calculated as follows:
(1) | we subtract from the Account Value any surrender charges that would apply if the policy were surrendered on that date; |
(2) | we calculate 90% of the amount determined in (1) above; and |
(3) | we subtract any Policy Debt from the amount determined in (2) above. The result is the maximum amount that can be borrowed. |
Taking a loan from your policy has several risks:
| it may increase the risk that your policy will terminate; |
| it will have a permanent effect on your policy’s Cash Surrender Value; |
| it may increase the amount of premium needed to keep your policy In Force; |
| it will reduce the death benefit proceeds; and |
| it has potential adverse tax consequences. |
The risks that can result from taking a policy loan may be reduced if you repay Policy Debt. The tax consequences of loans are discussed in the “Federal Income Tax Considerations” section.
You may take a loan by completing a loan request form and sending it to our Administrative Office, or by other means we authorize, subject to certain restrictions. You must assign the policy to us as collateral for the loan.
Once we have processed the loan request and deducted the proportionate amounts from the Separate Account Divisions and/or the GPA, we consider the loan effective and outstanding. If, after we process the loan request, you decide not to cash the check, you may submit a Written Request to our Administrative Office to repay the loan amount. The loan repayment will be effective on the Valuation Date the Written Request is received in Good Order at our Administrative Office. Loan interest begins to accrue as soon as the loan is effective. Therefore, loan interest will accrue even if the loan check is not cashed. Please see “Loan Interest Charged” below for additional information.
Loans will be effective on the Valuation Date we receive your loan request form and all other required documents in Good Order at our Administrative Office. If we receive your request in Good Order on a non-Valuation Date or after the end of a Valuation Date, your loan request will be effective as of the next Valuation Date.
On the effective date of the loan, we deduct proportionate amounts from the Separate Account Divisions and/or the GPA (excluding any outstanding loans) and transfer the resulting dollar amounts to the loaned portion of the GPA. We will normally pay any loan amounts within seven calendar days of the loan effective date, unless we are required to suspend or postpone loan amounts. Please see the “Other Policy Rights and Limitations” sub-section in the “Other Information” section for additional information.
Interest Credited on the Loaned Value
When you take a loan, we transfer an amount equal to the loan to the loaned portion of the GPA. This amount earns interest at a rate equal to the greater of:
| 3%; or |
| the loan interest rate less the current loan interest rate expense charge. |
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With each financial transaction (e.g., premium payment, monthly charges, etc.) processed for your policy, the interest earned on any outstanding loan is credited to the GPA.
At the time you applied for the policy, you selected either a fixed loan interest rate of 6% or (in all jurisdictions except Arkansas) an adjustable loan rate.
Each year we will set the adjustable rate that will apply for the next Policy Year. The maximum loan rate is based on the Monthly Average Corporate yield on seasoned corporate bonds as published by Moody’s Investors Service, Inc. If this Average is no longer published, we will use a similar average as approved by the insurance department of the state in which your contract was issued.
The maximum rate is the greater of:
| The published monthly average for the calendar month ending two months before the Policy Year begins; or |
| 4% |
If the maximum rate is less than 0.5% higher than the rate in effect for the previous year, we will not increase the rate. If the maximum rate is at least 0.5% lower than the rate in effect for the previous year, we will decrease the rate.
Interest on policy loans accrues daily and becomes part of the Policy Debt as it accrues. As part of the loan, it will bear interest at the loan rate. Therefore, loan interest will accrue even if the loan check is not cashed. Loan interest is due on each Policy Anniversary. The interest is deducted proportionately from the Separate Account Divisions and the GPA according to the then current value in those Separate Account Divisions and the GPA and added to the loan. If the policy’s Account Value cannot cover the loan interest due, the policy may lapse. Please see the “Policy Termination and Reinstatement” section.
Effect of a Loan on the Values of the Policy
A policy loan negatively affects policy values because we reduce the death benefit and Cash Surrender Value by the amount of the Policy Debt.
Also, a policy loan, whether or not repaid, has a permanent effect on your policy’s Cash Surrender Value because, as long as a loan is outstanding, a portion of the Account Value equal to the loan is invested in the GPA. This amount does not participate in the investment performance of the Separate Account or receive the current interest rates credited to the non-loaned portion of the GPA. The longer a loan is outstanding, the greater the effect on your Cash Surrender Value will be. In addition, if you do not repay a loan, your outstanding Policy Debt will reduce the death benefit and Cash Surrender Value that might otherwise be payable.
Whenever you reach your Policy Debt Limit, your policy is at risk of terminating. Your Policy Debt Limit is reached when total Policy Debt exceeds the Account Value less surrender charges. If this happens, we will notify you in writing. The “Policy Termination and Reinstatement” section explains more completely what will happen if your policy is at risk of terminating. Please note that Policy Termination with an outstanding loan also can result in adverse tax consequences. Please see the “Federal Income Tax Considerations” section for additional information.
As you repay a loan, the amount in the non-loaned section of the GPA will increase because we allocate loan repayments first to the GPA until you have repaid all loan amounts originally deducted from that account. Additionally, your ability to transfer funds out of the GPA following a loan repayment will be limited due to certain transfer restrictions. Please see the “Transfers” section for additional information.
All or part of your Policy Debt may be repaid at any time while the Insured is living and while the policy is In Force. We will increase the death benefit and Cash Surrender Value under the policy by the amount of the repayment.
A loan repayment must be identified as such or we will consider it a premium payment. We will apply the loan repayment on the Valuation Date it is received in Good Order. If we receive the loan repayment in Good Order on a non-Valuation Date or after the end
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of a Valuation Date, the loan repayment is effective as of the next Valuation Date. If a loan repayment is dishonored by your bank after we have applied the loan repayment to your policy, the transaction will be deemed void and your loan repayment will be reversed.
Loan repayments can be mailed to the same address used for premium payments, or you may initiate a single loan repayment for your In Force policy through our secure website (www.MassMutual.com) or by calling our Administrative Office and authorizing an electronic draft from your bank account. Please see the “Subsequent Premium Payments” sub-section in the “Premiums” section for mailing address information.
For any loan repayment, we will first transfer values equal to the repayment amount from the loaned portion of the GPA to the non-loaned portion of the GPA until all loan amounts originally deducted from that account have been repaid. We will allocate any additional loan repayments by transferring values equal to the repayment amount from the loaned portion of the GPA to the non-loaned portion of the GPA and/or the applicable Separate Account Divisions, based on your premium allocation instructions in effect at that time. When we receive a loan repayment and only a portion is needed to fully repay the loan, we will apply any excess as premium and allocate it according to the current premium allocation instructions after deduction of the premium expense charge. Any subsequent loan repayments received after the loan is fully repaid will be refunded to the premium payer.
We will deduct any outstanding Policy Debt from:
| the proceeds payable on the death of the Insured; |
| the proceeds payable when you surrender the policy; or |
| the Account Value if the policy lapses. |
In these situations, we will then consider the Policy Debt paid.
Policy Termination and Reinstatement
If there is no Policy Debt, the policy may terminate without value if the Account Value on a Monthly Calculation Date cannot cover the charges due.
If there is Policy Debt, the policy will terminate without value at the end of the Grace Period if:
| the Policy Debt Limit is reached. The Policy Debt Limit is reached when the Policy Debt (outstanding loans plus accrued interest) exceeds the Account Value less any surrender charges that may apply: 1) on a Monthly Calculation Date or (2) on the Valuation Date a premium payment is received, if the policy is in the Grace Period. |
Before your policy terminates, we allow a Grace Period during which you can pay the amount of premium needed to increase the Account Value so that the monthly charges can be paid. We will mail you a notice stating this amount.
The Grace Period begins on the date the monthly charges are due. It ends 61 days after the date we mail you the notice.
During the Grace Period, the policy will stay In Force. If the Insured dies during this period and the amount of premium has not been paid, we will pay the death benefit proceeds, reduced by the amount of the unpaid monthly charges and any Policy Debt.
If we do not receive the required payment by the end of the Grace Period, the policy will terminate without value at the end of the Grace Period. We will return a premium payment if it is less than the minimum amount needed to avoid termination.
During the Grace Period, certain financial transactions cannot be processed (transfers, withdrawals, loans). You must pay the premium due before subsequent financial transactions can be processed.
The Company’s mailing of a Policy Termination or a lapse notice to you constitutes sufficient notice of cancellation of coverage.
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If your policy terminates, you may be able to reinstate it. You may not, however, reinstate your policy if:
| you surrendered it (unless required by law); or |
| five years have passed since it terminated. |
To reinstate your policy, we will need:
| a written application to reinstate; |
| evidence, satisfactory to us, that the Insured is still insurable; |
| a premium payment sufficient to keep the policy In Force for three months after reinstatement. The minimum amount of this premium payment will be quoted upon request; and |
| a MEC Notice and Acknowledgement form, if the reinstated policy would be a MEC (please see “Policy After You Reinstate” below, and the “Federal Income Tax Considerations” section). |
We will not apply the required premium for reinstatement to any investment option until we have approved your reinstatement application.
The policy will be reinstated after your application has been approved by us and the required premium is received in Good Order at our Administrative Office. The Reinstatement Date will be the Valuation Date on or immediately following the date we determine the application and payment to be in Good Order. We will assess monthly charges due to us upon reinstatement of your policy as of the Reinstatement Date.
If you reinstate your policy, the Selected Face Amount will be the same as it was when the policy terminated. Your Account Value will be:
(1) | the premium paid to reinstate your policy, less |
(2) | the premium expense charge, less |
(3) | applicable monthly charges due. |
Additionally, if the policy lapsed during a period when a surrender charge applied, surrender charges equal to the amount and period applicable when the policy lapsed will apply to the reinstated policy.
We do not reinstate Policy Debt.
If you reinstate your policy, it may become a MEC under current federal tax law. Please consult your tax adviser. More information on MECs is included in the “Federal Income Tax Considerations” section.
Reinstatement will not reverse any adverse tax consequences caused by Policy Termination unless it occurs within 90 days of the end of the Grace Period. In no situation, however, can adverse tax consequences that are a result of Policy Debt be reversed.
Federal Income Tax Considerations
The information in this prospectus is general and is not an exhaustive discussion of all tax questions that might arise under the policy. The information is not written or intended as tax or legal advice. You are encouraged to seek legal and tax advice from a qualified tax adviser. In addition, we do not profess to know the likelihood that current federal income tax laws and Treasury Regulations or the current interpretations of the Internal Revenue Code of 1986, as amended (IRC), Regulations, and other guidance will continue. We cannot make any guarantee regarding the future tax treatment of any policy. We reserve the right to make changes in the policy to ensure that it continues to qualify as life insurance for tax purposes.
No attempt is made in this prospectus to consider any applicable state or other tax laws.
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We believe the policy meets the IRC definition of life insurance. Therefore, the death benefit under the policy generally is excludible from the beneficiary’s gross income under federal tax law. If you sell the policy or there is a transfer for value under IRC Section 101(a)(2), all or a portion of the death benefit under the policy may become taxable unless an exception applies.
As a life insurance policy under the IRC, the gain accumulated in the policy is not taxed until it is withdrawn or otherwise accessed. Any gain withdrawn from the policy is taxed as ordinary income.
From time to time, the Company may be entitled to certain tax benefits related to the investment of Company assets, including those comprising the policy value. These tax benefits, which may include foreign tax credits and the corporate dividends received deduction, are not passed back to you since the Company is the owner of the assets from which the tax benefits are derived.
The following information applies only to a policy that is not a MEC under federal tax law. Please see “Modified Endowment Contracts” later in this section for information about MECs.
As a general rule, withdrawals are taxable only to the extent that the amounts received exceed your cost basis (also referred to as investment in the contract) in the policy. Cost basis equals the sum of the premiums and other consideration paid for the policy less any prior withdrawals under the policy that were not subject to income taxation. For example, if your cost basis in the policy is $10,000, amounts received under the policy will not be taxable as income until they exceed $10,000 in the aggregate; then, only the excess over $10,000 is taxable.
However, special rules apply to certain withdrawals associated with a decrease in the policy death benefit. The IRC provides that if:
| there is a reduction of benefits during the first 15 years after a policy is issued; and |
| there is a cash distribution associated with the reduction, |
you may be taxed on all or a part of the amount distributed. After 15 years, cash distributions are not subject to federal income tax, except to the extent they exceed your cost basis.
If you surrender the policy for its Cash Surrender Value, all or a portion of the distribution may be taxable as ordinary income. The distribution represents income to the extent the value received exceeds your cost basis in the policy. For this calculation, the value received is equal to the Account Value, reduced by any surrender charges, but not reduced by any outstanding Policy Debt. Therefore, if there is a loan on the policy when the policy is surrendered, the loan will reduce the cash actually paid to you but will not reduce the amount you must include in your taxable income as a result of the surrender.
To illustrate how Policy Termination with an outstanding loan can result in adverse tax consequences as described above, suppose that your premiums paid (that is, your cost basis) in the policy is $10,000, your Account Value is $15,000, you have no surrender charges, and you have received no other distributions and taken no withdrawals under the policy. If, in this example, you have an outstanding Policy Debt of $14,000, you would receive a payment equal to the Cash Surrender Value of only $1,000; but you still would have taxable income at the time of surrender equal to $5,000 ($15,000 Account Value minus $10,000 cost basis).
The potential that Policy Debt will cause taxable income from Policy Termination to exceed the payment received at termination also may occur if the policy terminates without value. Factors that may contribute to these potential situations include:
| amount of outstanding Policy Debt at or near the maximum loan value; |
| unfavorable investment results affecting your policy Account Value; |
| increasing monthly policy charge rates due to increasing Attained Age of the Insured; |
| high or increasing amount of Insurance Risk, depending on death benefit option and changing Account Value; and |
| increasing policy loan rates if the adjustable policy loan rate is in effect. |
One example occurs when the Policy Debt Limit is reached. If, using the previous example, the Account Value were to decrease to $14,000 due to unfavorable investment results, and the policy were to terminate because the Policy Debt Limit is reached, the policy would terminate without any cash paid to you; but your taxable income from the policy at that time would be $4,000 ($14,000 Account Value minus $10,000 cost basis). The policy also may terminate without value if unpaid policy loan interest increases the outstanding Policy Debt to reach the Policy Debt Limit.
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To avoid Policy Terminations that may give rise to significant income tax liability, you may need to make substantial premium payments or loan repayments to keep your policy In Force.
You can reduce the likelihood that these situations will occur by considering these risks before taking a policy loan. If you take a policy loan, you should monitor the status of your policy with your registered representative and your tax adviser at least annually, and take appropriate preventative action.
We believe that, under current tax law, any loan taken under the policy will be treated as Policy Debt of the Owner. If your policy is not a MEC, the loan will not be considered income to you when received.
Interest on policy loans used for personal purposes generally is not tax-deductible. However, you may be able to deduct this interest if the loan proceeds are used for “trade or business” or “investment” purposes, provided that you meet certain narrow criteria.
If the Owner is a corporation or other business, additional restrictions may apply. For example, there are limits on interest deductions available for loans against a business-owned policy. In addition, the IRC restricts the ability of a business to deduct interest on debt totally unrelated to any life insurance, if the business holds a cash value policy on the life of certain Insureds.
Investor Control and Diversification
There are a number of tax benefits associated with variable life insurance policies. Gains on the Net Investment Experience of the Separate Account are deferred until withdrawn or otherwise accessed, and gains on transfers among Separate Account Divisions also are deferred. For these benefits to continue, the policy must continue to qualify as life insurance. In addition to other requirements, federal tax law dictates that the insurer, and not the Owner, has control of the investments underlying the various Separate Account Divisions for the policy to qualify as life insurance.
You may make transfers among Separate Account Divisions, but you may not direct the investments each Separate Account Division makes. If the IRS were to conclude that you, as the investor, have control over these investments, then the policy would no longer qualify as life insurance and you would be taxed on the gain in the policy as it is earned rather than when it is withdrawn or otherwise accessed.
The IRS has provided some guidance on investor control, but many issues remain unclear. One such issue is whether an Owner can have too much investor control if the variable life policy offers a large number of investment divisions in which to invest Account Values. We do not know if the IRS will provide any further guidance on the issue. We do not know if any such guidance would apply retroactively to policies already In Force.
Consequently, we reserve the right to further limit Net Premium allocations and transfers under the policy, so that it will not lose its qualification as life insurance due to investor control.
In addition, the IRC requires that the investments of the Separate Account Divisions be “adequately diversified” in order for a policy to be treated as a life insurance contract for federal income tax purposes. It is intended that the Separate Account Divisions, through their underlying investment Funds, will satisfy these diversification requirements.
If a policy is a Modified Endowment Contract (MEC) under federal tax law, loans, withdrawals, and other amounts distributed under the policy are taxable to the extent of any income accumulated in the policy. The policy income is the excess of the Account Value (both loaned and non-loaned) over your cost basis. For example, if your cost basis in the policy is $10,000 and the Account Value is $15,000, then all distributions up to $5,000 (the accumulated policy income) are immediately taxable as income when withdrawn or otherwise accessed. The collateral assignment of a MEC is also treated as a taxable distribution. Death benefits paid under a MEC, however, are not taxed any differently than death benefits payable under other life insurance contracts.
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If any amount is taxable as a distribution of income under a MEC, it may also be subject to a 10% penalty tax. There are a few exceptions to the additional penalty tax for distributions to individual Owners. The penalty tax will not apply to distributions:
| made on or after the date the taxpayer attains age 59½; or |
| made because the taxpayer became disabled; or |
| made as part of a series of substantially equal periodic payments paid for the life or life expectancy of the taxpayer, or the joint lives or joint life expectancies of the taxpayer and the taxpayer’s beneficiary. These payments must be made at least annually. |
A policy is a MEC if it satisfies the IRC definition of life insurance but fails the “7-pay test.” A policy fails this test if:
(1) | the accumulated amount paid under the policy at any time during the first seven contract years exceeds |
(2) | the total premiums that would have been payable at that time for a policy providing the same benefits guaranteed after the payment of seven level annual premiums. |
A life insurance policy will always be treated as a MEC if it is issued as part of an IRC section 1035 tax-free exchange from a life insurance policy that was already a MEC.
If certain changes are made to a policy, we will retest it to determine if it has become a MEC. For example, if you reduce the death benefit during a 7-pay testing period, we will retest the policy using the lower death benefit amount, from the start of that testing period. If the reduction in death benefit causes the policy to fail the 7-pay test for any prior Policy Year, the policy will be treated as a MEC beginning in the Policy Year in which the reduction takes place.
Any reduction in benefits attributable to the non-payment of premiums will not be taken into account if the benefits are reinstated within 90 days after the reduction in such benefit.
We will retest whenever there is a “material change” to the policy while it is In Force. If there is a material change, a new 7-pay test period begins at that time. The term “material change” includes certain increases in death benefits.
Since the policy provides for flexible premium payments, we have procedures for determining whether increases in death benefits or additional premium payments cause the start of a new seven-year test period or cause the policy to become a MEC.
Once a policy fails the 7-pay test, loans and distributions taken in the year of failure and in future years are taxable as distributions from a MEC to the extent of gain in the policy. In addition, the IRS has authority to apply the MEC taxation rules to loans and other distributions received in anticipation of the policy failing the 7-pay test. The IRC authorizes the issuance of regulations providing that a loan or distribution, if taken within two years prior to the policy’s becoming a MEC, shall be treated as received in anticipation of failing the 7-pay test. However, such written authority has not yet been issued.
Under current circumstances, a loan, collateral assignment, or other distribution under a MEC may be taxable even though it exceeds the amount of gain accumulated in that particular policy. For purposes of determining the amount of taxable income received from a MEC, the law considers the total of all gain in all the MECs issued within the same calendar year to the same Owner by an insurer and its affiliates. Loans, collateral assignments, and distributions from any one MEC are taxable to the extent of this total gain.
A change of the Owner or an Insured, or an exchange or assignment of the policy, may cause the Owner to recognize taxable income.
The impact of federal income taxes on values under the policy and on the benefit to you or your beneficiary depends on MassMutual’s tax status and on the tax status of the individual concerned. We currently do not make any charge against the Separate Account for federal income taxes. We may make such a charge eventually in order to recover the future federal income tax liability to the Separate Account.
Under current laws in several states, we may incur state and local taxes (in addition to premium taxes). These taxes are not now significant and we are not currently charging for them. If they increase, we may deduct charges for such taxes.
Federal estate and gift taxes, state and local estate taxes, and other taxes depend on the circumstances of each Owner or beneficiary.
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The policy may be used as part of certain tax-qualified and/or ERISA employee benefit plans. Since the rules concerning the use of a policy with such plans are complex, you should not use the policy in this way until you have consulted a competent tax adviser. You may not use the policy as part of an Individual Retirement Account (IRA) or as part of a Tax-Sheltered Annuity (TSA) or an IRC Section 403(b) custodial account.
While the policy is owned by the qualified plan, we will only pay amounts under the policy while the Insured is still living (e.g., withdrawals, surrenders, and loans) to the qualified plan trustee or plan administrator. We will not make such payments directly to any other party, including the Insured participant. The only exception is for a Keogh plan, where the Insured participant is also the policy owner.
The IRC contains certain notice and consent requirements for ‘‘employer-owned life insurance’’ policies. The IRC defines ‘‘employer-owned life insurance’’ as a life insurance contract:
| that is owned by a person or entity engaged in a trade or business (including policies owned by related or commonly controlled parties); |
| insuring the life of a U.S. citizen or resident who is an employee on the date the contract is issued; and |
| under which the policyholder is directly or indirectly a beneficiary. |
The tax-free death benefit for employer-owned life insurance is limited to the amount of premiums paid unless certain notice and consent requirements are met. The notice requirements are met if, before the contract is issued, the employee is notified in writing of the following:
(1) | the employer intends to insure the employee’s life; |
(2) | the maximum face amount for which the employee could be insured at the time the contract was issued; and |
(3) | the employer will be the beneficiary of any proceeds payable on the death of the employee. |
Prior to issuance of the contract, the employee must provide written consent to being insured under the contract and to continuation of the coverage after employment terminates.
The law also imposes annual reporting and record keeping requirements for businesses owning employer-owned life insurance policies. The employer must maintain records of the employer’s notice and the employee’s consent, and must file certain annual reports with the IRS.
Provided that the notice and consent requirements are satisfied, the death proceeds of an employer-owned life insurance policy will generally be income tax-free in the following situations:
(1) | At the time the contract is issued, the insured employee is a director, highly compensated employee, or highly compensated individual within the meaning of IRC Section 101(j)(2)(A)(ii); |
(2) | The Insured was an employee at any time during the 12-month period before his or her death; |
(3) | The proceeds are paid to a member of the Insured’s family, an individual who is the designated beneficiary of the Insured under the contract, a trust established for the benefit of any such member of the family or designated beneficiary, or the Insured’s estate; or |
(4) | The proceeds are used to purchase an equity interest in the employer from any of the persons described in (3). |
Death proceeds that do not fall within one of the enumerated exceptions will be subject to ordinary income tax (even if the notice and consent requirements were met), and MassMutual will report payment of taxable proceeds to the IRS, where applicable.
Businesses can use the policies in various arrangements, including nonqualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, tax exempt and nonexempt welfare benefit plans, retiree medical benefit plans and others. The tax consequences of such plans may vary depending on the particular facts and circumstances. The Internal Revenue
55
Service and Treasury have issued guidance that may substantially affect these arrangements. If you are purchasing the policy for any arrangement the value of which depends in part on its tax consequences, you should consult a qualified tax adviser.
Prospective Owners that are corporations should consult a tax adviser about the treatment of the policy under the Treasury Regulations applicable to corporate tax shelters.
Generation Skipping Transfer Tax Withholding
Under certain circumstances, the IRC may impose a “generation skipping transfer tax” when all or part of a life insurance policy is transferred to, or a death benefit is paid to, an individual two or more generations younger than the Owner. Regulations issued under the IRC may require us to deduct the tax from your policy, or from any applicable payment, and pay it directly to the IRS.
To the extent that policy distributions are taxable, they are generally subject to withholding for the recipient’s federal income tax liability. Recipients can generally elect, however, not to have tax withheld from distributions.
Life Insurance Purchases by Residents of Puerto Rico
Income received by residents of Puerto Rico under life insurance policies issued by a United States life insurance company is U.S.-source income that is generally subject to United States federal income tax.
Non-Resident Aliens and Foreign Entities
Generally, a distribution from a contract to a non-resident alien or foreign entity is subject to federal income tax withholding at a rate of 30% of the amount of the income that is distributed. A non-resident alien is a person who is neither a citizen, nor a resident, of the United States of America (U.S.). We are required to withhold the tax and send it to the IRS. Some distributions to non-resident aliens or foreign entities may be subject to a lower (or no) tax if a treaty applies. In order to obtain the benefits of such a treaty, the non-resident alien must claim the treaty benefit on Form W-8BEN (or the equivalent entity form), providing us with:
| proof of residency (in accordance with IRS requirements); and |
| the applicable taxpayer identification number. |
If the above conditions are not met, we will withhold 30% of the income from the distribution. Additionally, under the Foreign Account Tax Compliance Act, effective July 1, 2014, U.S. withholding may be required for certain entity owners (including foreign financial institutions and non-financial foreign entities (such as corporations, partnerships and trusts)) at a rate of 30% without regard to lower treaty rates.
If you sell your policy to a viatical settlement provider, and the Insured is considered terminally or chronically ill within the meaning of IRC Section 101(g), the proceeds of the sale will be treated as death benefit proceeds, and will generally be received by you income tax-free.
However, the sale of your policy to an unrelated investor in a sale that does not qualify as a viatical settlement may have adverse tax consequences. IRS guidance issued in 2009 provides that the gain from such a sale is taxed as ordinary income to the extent that you would have realized ordinary income if you had instead surrendered your policy. Any amount you receive in excess of that amount is taxed as capital gain income. Under the Tax Cuts and Jobs Act of 2017, these sales may qualify as reportable sales and require the purchaser and the contract issuer to report the sale to the seller and the IRS. Previously the IRS had taken the position that your cost basis in the policy for computing the gain on the sale must be decreased by the cumulative cost of insurance charge incurred prior to the sale. The Tax Cuts and Jobs Act of 2017 provides that for reportable sales that take place after August 25, 2009, no reduction in the cost basis for the cost of insurance incurred is required.
56
Medicare Hospital Insurance Tax
A Medicare Hospital Insurance Tax (known as the “Unearned Income Medicare Contribution”) applies to all or part of a taxpayer’s “net investment income,” at a rate of 3.8%, when certain income thresholds are met. “Net investment income” is defined to include, among other things, non-qualified annuities and net gain attributable to the disposition of property.
Under final regulations, this definition includes the taxable portion of any annuitized payment from a life insurance contract and it may also include the gain from the sale of a life insurance contract. Under current guidance we are required to report to the IRS whether a distribution is potentially subject to the tax. You should consult a tax adviser as to the potential impact of the Medicare Hospital Insurance Tax on your policy.
Other Policy Rights and Limitations
Right to Assign the Policy
Generally, you may assign the policy as collateral for a loan or other obligation. For any assignment we allow to be binding on us, we must receive, in Good Order, written notice of the assignment and a signed copy of it at our Administrative Office. We are not responsible for the validity of any assignment. If you assign your policy, certain of your rights may only be exercised with the consent of the assignee of record.
Possible Restrictions on Financial Transactions
Federal laws designed to counter terrorism and prevent money laundering might, in certain circumstances, require us to reject a premium payment or block an Owner’s ability to make certain transactions and thereby refuse to accept any request for transfers, withdrawals, surrenders, loans, or death benefits, until the instructions are received from the appropriate regulator. We may also be required to provide additional information about you and your policy to government regulators.
Delay of Payment of Proceeds from the GPA
We may delay payment of any Cash Surrender Values, withdrawals, and loan proceeds that are based on the GPA for up to six months from the date the request is received at our Administrative Office.
Delay of Payment of Proceeds from the Separate Account
We may suspend or postpone transfers from the Separate Account Divisions, or delay payment of the Cash Surrender Values, withdrawals, loan proceeds and death benefits from the Separate Account during any period when:
| it is not reasonably practicable to determine the amount because the NYSE is closed (other than customary week-end and holiday closings); |
| trading is restricted by the SEC; |
| an emergency exists as a result of which disposal of shares of the Funds is not reasonably practicable or we cannot reasonably value the shares of the Funds; or |
| the SEC, by order, permits us to delay payment in order to protect our Owners. |
If, pursuant to SEC rules, a money market Fund suspends payment of redemption proceeds in connection with a liquidation of the Fund, we will delay payment of any transfer, partial withdrawal, surrender, loan, or death benefit from a money market division until the Fund is liquidated.
57
The policies are no longer for sale to the public. While the policies were offered for sale, they were sold by both registered representatives of MML Investors Services, LLC (MMLIS), a subsidiary of MassMutual, and by registered representatives of other broker-dealers who have entered into distribution agreements with MML Strategic Distributors, LLC (MSD), a subsidiary of MassMutual. Pursuant to separate underwriting agreements with the Company, on its own behalf and on behalf of the Separate Account, MMLIS serves as principal underwriter of the policies sold by its registered representatives, and MSD serves as principal underwriter of the policies sold by registered representatives of other broker-dealers who have entered into distribution agreements with MSD.
Both MMLIS and MSD are registered with the SEC as broker-dealers under the Securities Exchange Act of 1934 and are members of the Financial Industry Regulatory Authority (FINRA). MMLIS and MSD receive compensation for their actions as principal underwriters of the policies.
Commissions and Allowances Paid to MMLIS and Broker-Dealers
Commissions are paid to MMLIS and all broker-dealers involved in the sale of the policy. Commissions for sales of the policies by MMLIS registered representatives are paid by MassMutual on behalf of MMLIS to its registered representatives. Commissions for sales of the policies by registered representatives of other broker-dealers are paid by MassMutual on behalf of MSD to those broker-dealers.
Commissions are a percentage of the premium paid in each year of coverage and differ for premiums paid up to the Target Premium and for premiums paid in excess of the Target Premium. The Target Premium is based on the issue age, gender and risk classification of the Insured.
The maximum commission percentages we pay to MMLIS registered representatives and broker-dealers are:
First Year |
Commission |
Commission |
Commission |
Commission |
50% of premium paid up to the Target Premium and 2% of premium paid in excess of the Target Premium |
6% of premium paid up to the Target Premium and 2% of premium paid in excess of the Target Premium |
5% of premium paid up to the Target Premium and 2% of premium paid in excess of the Target Premium |
4% of premium paid up to the Target Premium and 2% of premium paid in excess of the Target Premium |
2% of premium paid up to the Target Premium and 2% of premium paid in excess of the Target Premium |
For Policy Years 2 - 20, we pay an annual commission of 0.15% of the average monthly account value after the first Policy Year. For Policy Years 21 and beyond, we pay an annual maximum commission of 0.05% of the average monthly account value.
Additional Compensation Paid to MMLIS
Most MMLIS registered representatives are also MassMutual insurance agents, and as such, are eligible for certain cash and non-cash benefits from MassMutual. Cash compensation includes bonuses and allowances based on factors such as sales, productivity and persistency (policy retention). Non-cash compensation includes various recognition items such as prizes and awards as well as attendance at, and payment of the costs associated with attendance at, conferences, seminars and recognition trips, and also includes contributions to certain individual plans such as pension and medical plans. Sales of this policy may help these registered representatives and their supervisors qualify for such benefits. MMLIS registered representatives who are also General Agents or sales managers of MassMutual also may receive overrides, allowances and other compensation that is based on sales of the policy by their registered representatives.
Additional Payments to Certain Broker-Dealers
In addition to the commissions described above, we may make cash payments to certain broker-dealers to attend sales conferences and educational seminars, thereby promoting awareness of our products. The broker-dealers may use these payments for any reason, including helping offset the costs of the conference or educational seminar.
58
We may also make cash payments to broker-dealers pursuant to marketing service agreements. These marketing service arrangements vary depending on a number of factors, including the specific level of support being provided. These payments are not made in connection with the sale of specific policies.
These additional payments are not offered to all broker-dealers and the terms of these arrangements may differ. Any such payments will be paid by MassMutual out of our assets and will not result in any additional direct charge to you. Such payments may give us greater access to the registered representatives of the broker-dealers that receive such payments and may influence the way that a broker-dealer markets the policy.
Compensation in General
The compensation arrangements described in the paragraphs above may have provided a registered representative with an incentive to sell this policy over other available policies whose issuers did not provide such compensation or which provided lower levels of compensation. You may want to take these compensation arrangements into account when evaluating any recommendations regarding this policy.
We intend to recoup a portion of the cash and non-cash compensation payments that we make through the assessment of certain charges described in this prospectus, including the contingent deferred sales charge. We may also use some of the 12b-1 distribution fee payments (if applicable) and other payments that we receive from certain Funds to help us make these cash and non-cash payments.
Your registered representative typically receives a portion of the compensation that is payable to his or her broker-dealer, depending on the agreement between the representative and their firm. MassMutual is not involved in determining compensation paid to a registered representative of an unaffiliated broker-dealer. You may contact, as applicable, MMLIS, your broker-dealer or registered representative to find out more information about the compensation they may receive in connection with your purchase of a policy.
Commissions or overrides may also be paid to broker-dealers providing wholesaling services (such as providing sales support and training for sales representatives who sell the policies).
Computer System, Cybersecurity, and Service Disruption Risks
The Company relies on its ultimate parent, MassMutual, for various operating and administrative services including computer systems. MassMutual and its business partners rely on computer systems to conduct business, including customer service, marketing and sales activities, customer relationship management and producing financial statements. While MassMutual and its business partners have policies, procedures, automation and backup plans designed to prevent or limit the effect of failures, their respective computer systems may be vulnerable to disruptions or breaches as the result of natural disasters, man-made disasters, criminal activity, pandemics, or other events beyond their control. The failure of MassMutual or its business partners’ computer systems for any reason could disrupt operations, result in the loss of customer business and adversely impact profitability.
The Company and its business partners retain confidential information on our respective computer systems, including customer information and proprietary business information. Any compromise of the security of our or our business partners’ computer systems that results in the disclosure of personally identifiable customer information could damage our reputation, expose us to litigation, increase regulatory scrutiny and require us to incur significant technical, legal, and other expenses. The risk of cyber-attacks may be higher during periods of geopolitical turmoil (such as the Russian invasion of Ukraine and the responses by the United States and other governments).
Geopolitical and other events, including natural disasters, war, terrorism, economic uncertainty, trade disputes, public health crises and related geopolitical events, and widespread disease, including pandemics (such as COVID-19) and epidemics, have led, and in the future may lead, to increased market volatility, which may disrupt U.S. and world economies and markets and may have significant adverse direct or indirect effects on the Company and MassMutual. These events may adversely affect computer and other systems on which the MassMutual and the Company rely, interfere with the processing of contract-related transactions (including the processing of orders from Owners and orders with the Funds) and the Company’s ability to administer this contract in a timely manner, or have other possible negative effects. These events may also impact the issuers of securities in which the Funds invest, which may cause the Funds underlying the contract to lose value. There can be no assurance that we, the Funds or our service providers will avoid losses affecting the contract due to these geopolitical and other events. If we are unable to receive U.S. mail or fax transmissions due to a
59
closure of U.S. mail delivery by the government or due to the need to protect the health of our employees, you may still be able to submit transaction requests to the Company electronically or over the telephone. Our inability to receive U.S. mail or fax transmissions may cause delays in the pricing and processing of transaction requests submitted to us by U.S. mail or by fax during that time period.
The Company is subject to legal and regulatory actions, including class action lawsuits, in the ordinary course of its business. Our pending legal and regulatory actions include proceedings specific to us, as well as proceedings generally applicable to business practices in the industry in which we operate. From time to time, we also are subject to governmental and administrative proceedings and regulatory inquiries, examinations, and investigations in the ordinary course of our business. In addition, we, along with other industry participants, may occasionally be subject to investigations, examinations, and inquiries (in some cases industry-wide) concerning issues upon which regulators have decided to focus. Some of these proceedings involve requests for substantial and/or unspecified amounts, including compensatory or punitive damages.
While it is not possible to predict with certainty the ultimate outcome of any pending litigation proceedings or regulatory action, management believes, based on information currently known to it, that the ultimate outcome of all pending litigation and regulatory matters, after consideration of applicable reserves and rights to indemnification, is not likely to have a material adverse effect upon the Separate Account, the ability of the principal underwriter(s) to perform in accordance with its contracts with the Company on behalf of the Separate Account, or the ability of the Company to meet its obligations under the policy.
For more information regarding the Company’s litigation and other legal proceedings, please see the notes to the Company’s financial statements contained within the SAI.
Every state has some form of unclaimed property law that imposes varying legal and practical obligations on insurers and, indirectly, on policy owners, Insureds, beneficiaries, and any other payees of proceeds from a policy. Unclaimed property laws generally provide for the transfer of benefits or payments under various circumstances to the abandoned property division or unclaimed property office in the state of last residence. This process is known as escheatment. To help avoid escheatment, keep your own information, as well as beneficiary and any other payee information up-to-date, including: full names, postal and electronic media addresses, telephone numbers, dates of birth, and social security numbers. To update this information, contact our Administrative Office.
We encourage both existing and prospective Owners to read and understand our financial statements and those of the Separate Account. Our audited statutory financial statements and the Separate Account’s audited U.S. GAAP financial statements are included in the SAI. You can request an SAI by contacting our Administrative Office.
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Funds Available Under the Policy
The following is a list of Funds currently available under the policy. This list of Funds is subject to change, as discussed in this prospectus for the policy. Before you invest, you should review the prospectuses for the Funds. These prospectuses contain more information about the Funds and their risks and may be amended from time to time. You can find the prospectuses and other information about the Funds online at www.MassMutual.com/VLS. You can also request this information at no cost by calling (800) 272-2216 or sending an email request to MassMutualServiceCenter@MassMutual.com.
The current expenses and performance information below reflects fees and expenses of the Funds, but does not reflect the other fees and expenses that your policy may charge. Expenses would be higher and performance would be lower if these charges were included. Each Fund’s past performance is not necessarily an indication of future performance.
Fund Type |
Fund and Adviser/Sub-Adviser |
Current Expenses (expenses/ average assets) |
Average Annual Total Returns |
||
1 Year |
5 Year |
10 Year |
|||
Money Market |
MML U.S. Government Money Market Fund (Initial Class)(1) |
0.52
%
|
0.00
%
|
0.72
%
|
0.37
%
|
Fixed Income |
Invesco V.I. Global Strategic Income Fund (Series I) |
0.87
%
(2)
|
–3.41
%
|
2.37
%
|
3.16
%
|
Fixed Income |
MML Managed Bond Fund (Initial Class) |
0.42
%
|
0.81
%
|
4.45
%
|
3.45
%
|
Balanced |
MML Blend Fund (Initial Class)(3) |
0.49
%
|
15.02
%
|
11.68
%
|
11.09
%
|
Large Cap Value |
American Century VP Disciplined Core Value Fund (Class I) |
0.70
%
|
23.65
%
|
13.97
%
|
13.70
%
|
Large Cap Value |
MML Equity Fund (Initial Class) |
0.43
%
|
30.26
%
|
11.99
%
|
12.70
%
|
Large Cap Blend |
Fidelity® VIP Contrafund® Portfolio (Initial Class) |
0.60
%
|
27.83
%
|
20.17
%
|
16.64
%
|
Large Cap Blend |
MML Equity Index Fund (Class II) |
0.27
%
|
28.37
%
|
18.17
%
|
16.24
%
|
Large Cap Growth |
Invesco V.I. Capital Appreciation Fund (Series I) |
0.80
%
(2)
|
22.57
%
|
22.21
%
|
16.78
%
|
Small/Mid-Cap Blend |
MML Small Cap Equity Fund (Initial Class) |
0.68
%
|
22.75
%
|
13.99
%
|
14.93
%
|
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Fund Type |
Fund and Adviser/Sub-Adviser |
Current Expenses (expenses/ average assets) |
Average Annual Total Returns |
||
1 Year |
5 Year |
10 Year |
|||
Small/Mid-Cap Growth |
Invesco V.I. Discovery Mid Cap Growth Fund (Series I) |
0.83
%
|
19.10
%
|
23.08
%
|
17.84
%
|
Small/Mid-Cap Growth |
T. Rowe Price Mid-Cap Growth Portfolio |
0.84
%
(2)
|
14.85
%
|
17.94
%
|
16.36
%
|
International/Global |
Invesco V.I. Global Fund (Series I) |
0.78
%
|
15.49
%
|
18.18
%
|
14.24
%
|
(1) | You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time. The yield of this Fund may become very low during periods of low interest rates. After deduction of Separate Account charges, the yield in the division that invests in this Fund could be negative. |
(2) | These Funds, and their investment advisers, have entered into contractual fee waivers or expense reimbursements. These temporary fee reductions are reflected in their current expenses. Those contractual arrangements are designed to reduce the fund’s total current expenses for Owners and will continue past the current year. |
(3) | This is a fund-of-funds investment choice. It is known as a fund-of-funds because it invests in other underlying funds. A fund offered in a fund-of-funds structure may have higher expenses than a direct investment in its underlying funds because a fund-of-funds bears its own expenses and indirectly bears its proportionate share of expenses of the underlying funds in which it invests. |
62
Hypothetical Examples of the Impact of the Minimum Face Amount
Example I
Assume the following:
| Death Benefit Option 1 |
| Selected Face Amount is $500,000 |
| Account Value is $50,000 |
| No Policy Debt |
| Insured’s Attained Age is 45 |
| Minimum Face Amount Percentage is 2.15 |
The death benefit for death benefit option 1 is the greater of the Selected Face Amount or the minimum Face amount. The minimum face amount is calculated by multiplying the Account Value times the minimum face amount percentage.
The death benefit will be $500,000 based on the greater of:
| $500,000 or |
| $50,000 x 2.15 = $107,500 |
Example II
Assume the following:
| Death Benefit Option 1 |
| Selected Face Amount is $500,000 |
| Account Value is $250,000 |
| No Policy Debt |
| Insured’s Attained Age is 45 |
| Minimum Face Amount Percentage is 2.15 |
The death benefit for death benefit option 1 is the greater of the Selected Face Amount or the minimum face amount. The minimum Face Amount is calculated by multiplying the Account Value times the minimum face amount percentage.
The death benefit will be $537,500 based on the greater of:
| $500,000 or |
| $250,000 x 2.15 = $537,500 |
63
Hypothetical Examples of the Impact of the Account Value and Premiums
Example I ~ Death Benefit Option 1
Assume the following:
| Selected Face Amount is $1,000,000 |
| Account Value is $50,000 |
| Minimum face amount is $219,000 |
| No Policy Debt |
Based on these assumptions,
| the death benefit is $1,000,000. |
If the Account Value increases to $80,000 and the minimum face amount increases to $350,400,
| the death benefit remains at $1,000,000. |
If the Account Value decreases to $30,000 and the minimum face amount decreases to $131,400,
| the death benefit still remains at $1,000,000. |
Example II ~ Death Benefit Option 2
Assume the following:
| Selected Face Amount is $1,000,000 |
| Account Value is $50,000 |
| Minimum face amount is $219,000 |
| No Policy Debt |
Based on these assumptions,
| the death benefit is $1,050,000 (Selected Face Amount plus Account Value). |
If the Account Value increases to $80,000 and the minimum face amount increases to $350,400,
| the death benefit will increase to $1,080,000. |
If the Account Value decreases to $30,000 and the minimum face amount decreases to $131,400,
| the death benefit will decrease to $1,030,000. |
64
Hypothetical Examples of Death Benefit Option Changes
Example I ~ Change from Option 2 to Option 1
For a change from Option 2 to Option 1, the Selected Face Amount is increased by the amount of the Account Value on the effective date of the change.
For example, if the policy has a Selected Face Amount of $500,000 and an Account Value of $25,000, the death benefit under Option 2 is equal to the Selected Face Amount plus the Account Value, or $525,000. If you change from Option 2 to Option 1, the death benefit under Option 1 is equal to the policy Selected Face Amount. Since the death benefit under the policy does not change as the result of a death benefit option change, the Selected Face Amount will be increased from $500,000 under Option 2 to $525,000 under Option 1 and the death benefit after the change will remain at $525,000.
Example II ~ Change from Option 1 to Option 2
For a change from Option 1 to Option 2, the Selected Face Amount will be decreased by the amount of the Account Value on the effective date of the change.
For example, if the policy has a Selected Face Amount of $700,000 and an Account Value of $25,000, under Option 1 the death benefit is equal to the Selected Face Amount, or $700,000. If you change from Option 1 to Option 2, the death benefit under Option 2 is equal to the Selected Face Amount plus the Account Value. Since the death benefit does not change as the result of a death benefit option change, the Selected Face Amount will be decreased by $25,000 to $675,000, and the death benefit under Option 2 after the change will remain at $700,000.
65
Hypothetical Example – Accelerated Death Benefit Rider for Terminal Illness
The calculations below show the impact of accelerating the death benefit under this rider for a sample policy.
Policy details prior to the acceleration of the death benefit:
Death Benefit |
$250,000 |
Account Value |
$50,000 |
The Eligible Amount is the amount of death benefit under the policy that can be considered for acceleration.
Eligible Amount = Death Benefit - Account Value Eligible Amount = $250,000 - $50,000 = $200,000 |
The Amount To Be Accelerated cannot exceed 75% of the Eligible Amount, or $150,000.
The Insured is terminally ill as defined in the rider, and the Owner requests to accelerate $100,000 of death benefit. Alternatively, the Owner could request the Terminal Illness Benefit Payment amount rather than the amount to be accelerated. Assuming an Annual Interest Rate of 5%, the interest charge is calculated as follows:
Interest Charge = 5% x 100,000 / ( 1 + 5%) = $4,761.90
The terminal illness benefit payment is then calculated as follows:
Amount to Be Accelerated |
$100,000.00 |
Less Interest Charge |
-$4,761.90 |
Less administrative fee |
-$250.00 |
Terminal Illness Benefit Payment |
$94,988.10 |
A lien of $100,000 is placed on the policy. The death benefit after acceleration is reduced by the amount of the lien, from $250,000 to $150,000. No other policy values are impacted.
66
Hypothetical Example – Right to Exchange Insured Endorsement
Below is an example of exercising this endorsement.
Policy details prior to the exchange:
Issue Date |
1/1/2020 |
Insured Date of Birth |
1/1/1965 |
Issue Age |
55 |
Sex |
Male |
Risk Class |
Tobacco |
Selected Face Amount |
$250,000 |
Account Value on 1/1/30 |
$50,000 |
On 1/1/2030, the Right to Exchange Insured Endorsement is exercised with the following insured:
New Insured D.O.B |
1/1/1980 |
Issue Age |
40 |
Sex |
Female |
Risk Class |
Non-Tobacco |
A fee of $75 must be made before the exchange is processed. There is no other cost or credit associated with exercising the rider. The Selected Face Amount and Account Value will be the same after the exchange. All monthly charges, surrender charges, and other values after the exchange will be based on the life and risk class of the new insured. Below is the impact on the guaranteed monthly charges on the date the endorsement is exercised:
Breakdown of Guaranteed Monthly Charges on Date of Substitution |
||
Original Insured |
Substitute Insured |
|
Insurance Charge |
617.03 |
69.99 |
Selected Face Amount Charge |
0.00 |
0.00 |
Administrative Charge |
9.00 |
9.00 |
Surrender Charge |
0.00 |
0.00 |
Account Value After Charges |
49,373.97 |
49,921.01 |
67
The SAI contains additional information about the Separate Account and the policy. The SAI is incorporated into this prospectus by reference and is legally part of this prospectus. We filed the SAI with the SEC.
This prospectus and the SAI are available online at www.MassMutual.com/VLS. For a free copy of other information about this policy, or general inquiries, you can contact our Administrative Office:
MassMutual Customer Service Center
PO Box 1865
Springfield, MA 01102-1865
(800) 272-2216
(866) 329-4527 (Fax)
www.MassMutual.com
MassMutualServiceCenter@MassMutual.com (Email Requests)
Reports and other information about the Separate Account, including the SAI, are also available on the SEC website (www.sec.gov) and can be obtained, upon payment of a duplicating fee, by electronic request at the following email address: publicinfo@sec.gov.
You can also request, free of charge, a personalized illustration of death benefits, surrender values, and cash values from your registered representative or by calling our Administrative Office.
Investment Company Act file number: 811-03542
Securities Act file number: 033-82060
Class (Contract) Identifier: C000030140
STATEMENT OF ADDITIONAL INFORMATION
MML BAY STATE LIFE INSURANCE COMPANY
(Depositor)
MML BAY STATE VARIABLE LIFE SEPARATE ACCOUNT I
(Registrant)
Variable Life Select
May 1, 2022
This Statement of Additional Information (SAI) is not a prospectus. It should be read in conjunction with the statutory prospectus dated May 1, 2022, for the Variable Life Select (VLS) policy. The VLS policy and its statutory prospectus may be referred to in this SAI.
For a copy of the VLS statutory prospectus, contact your registered representative, our Administrative Office by mail at PO Box 1865, Springfield, Massachusetts, 01102-1865, or by phone (800) 272-2216, or access the internet at www.MassMutual.com/VLS, or access the Securities and Exchange Commission website at www.sec.gov.
TABLE OF CONTENTS
SAI
|
Prospectus |
|
Additional Information About the Operation of the Policy and the Registrant |
||
1
GENERAL INFORMATION AND HISTORY
In this Statement of Additional Information, the “Company,” “we,” “us,” and “our” refer to MML Bay State Life Insurance Company (MML Bay State). MML Bay State, a Connecticut corporation that was originally incorporated on April 1, 1935, is a wholly owned stock life insurance subsidiary of C.M. Life Insurance Company (C.M. Life) and an indirect subsidiary of Massachusetts Mutual Life Insurance Company (MassMutual). MML Bay State provides life insurance and annuities to individuals and group life insurance to institutions.
MassMutual and its subsidiaries provide individual and group life insurance, disability insurance, individual and group annuities and guaranteed interest contracts to individual and institutional customers in all 50 states of the U.S, the District of Columbia and Puerto Rico. Products and services are offered primarily through MassMutual’s distribution channels: MassMutual Financial Advisors, MassMutual Strategic Distributors, Digital Direct to Consumer and Business to Business, Institutional Solutions and Worksite.
MassMutual was established on May 15, 1851 and is organized as a mutual life insurance company in the Commonwealth of Massachusetts. MML Bay State’s home office is located at 100 Bright Meadow Boulevard, Enfield, Connecticut 06082-1981.
The Company’s Board of Directors established the Separate Account (MML Bay State Variable Life Separate Account I) on June 9, 1982, as a separate investment account of MML Bay State. It was established in accordance with the provisions of Chapter 376 of the Missouri Statutes. On June 30, 1997, MML Bay State redomesticated from the state of Missouri to the state of Connecticut. The Separate Account is registered with the Securities and Exchange Commission (SEC) as a unit investment trust under the provisions of the Investment Company Act of 1940.
The Separate Account exists to keep your life insurance assets separate from our other Company assets. As such, any income, gains, or losses credited to, or charged against, the Separate Account reflect only the Separate Account’s own investment experience. At no time will the Separate Account reflect the investment experience of the Company’s other assets.
We may not use the assets in the Separate Account to pay any liabilities of the Company other than those arising from the VLS policies. We may, however, transfer to our General Investment Account any assets that exceed anticipated obligations of the Separate Account. We are required to pay, from our general assets, if necessary, all amounts promised under the VLS policies.
The Company holds title to the assets of the Separate Account. The Company maintains the records and accounts relating to the Guaranteed Principal Account, the Separate Account, the segment within the Separate Account established to receive and invest premium payments for the policies, and divisions of that segment. The Company’s principal business address is 1295 State Street, Springfield, Massachusetts 01111-0001.
ADDITIONAL INFORMATION ABOUT THE OPERATION OF THE POLICY AND THE REGISTRANT
Purchase of Shares in Underlying Investment Funds
Shares are purchased and redeemed at net asset value. Fund dividends and capital gain distributions are automatically reinvested, unless the Company, on behalf of the Separate Account, elects otherwise.
Because the underlying funds are also offered in variable annuity contracts, it is possible that conflicts could arise between the owners of variable life insurance policies and the owners of variable annuity contracts. If a conflict exists, the fund’s board will notify the insurers and take appropriate action to eliminate the conflict. Additionally, if the insurer becomes aware of such conflicts, the insurer will work with the underlying fund’s board to resolve the conflict.
Each year within the 30 days following the Policy Anniversary date, we will provide the policy owner a report showing the following policy information:
| the Account Value at the beginning of the previous Policy Year; |
| all premiums paid since that time; |
| all additions to and deductions from the Account Value during the year; and |
| the Account Value, death benefit, Net Surrender Value and Policy Debt as of the current Policy Anniversary. This report may contain additional information if required by any applicable law or regulation. |
2
The policies are no longer for sale to the public. While the policies were offered for sale, they were sold by both registered representatives of MML Investors Services, LLC (MMLIS), a subsidiary of MassMutual, and by registered representatives of other broker-dealers who entered into distribution agreements with MML Strategic Distributors, LLC (MSD), a subsidiary of MassMutual. Pursuant to separate underwriting agreements with the Company, on its own behalf and on behalf of the Separate Account, MMLIS serves as principal underwriter of the policies sold by its registered representatives, and MSD serves as principal underwriter of the policies sold by registered representatives of other broker-dealers who entered into distribution agreements with MSD.
MMLIS and MSD are located at 1295 State Street, Springfield, MA 01111-0001. MMLIS and MSD are registered with the SEC as broker-dealers under the Securities Exchange Act of 1934 and are members of the Financial Industry Regulatory Authority (FINRA).
During the last three years, MMLIS, and MSD were paid the compensation amounts shown below for their actions as principal underwriters for the Contracts described in the statutory prospectus.
Year |
MMLIS |
MSD |
2021 |
$37,647 |
$4,736 |
2020 |
$37,785 |
$4,336 |
2019 |
$37,962 |
$2,328 |
We no longer offer this policy for sale to the public. However, policy owners may continue to make premium payments to their policies.
Commissions are a percentage of the premium paid in each year of coverage and differ for premiums paid up to the Target Premium and for premiums paid in excess of the Target Premium. The Target Premium is based on the issue age, gender, and risk classification of the Insured.
Commissions for sales of the policies by MMLIS registered representatives are paid by MassMutual on behalf of MMLIS to its registered representatives. Commissions for sales of the policies by registered representatives of other broker-dealers are paid by MassMutual on behalf of MSD to those broker-dealers.
During the last three years, commissions, as described in the satutory prospectus, were paid by MassMutual through MMLIS and MSD as shown below.
Year |
MMLIS |
MSD |
2021 |
$464,604 |
$71,380 |
2020 |
$374,652 |
$57,182 |
2019 |
$362,691 |
$70,670 |
Before issuing a policy we required evidence of insurability. This means that:
1. | you had to complete an application and submit it to our Administrative Office; and |
2. | we usually required that the Insured have a medical examination. |
Acceptance was subject to completion of all underwriting requirements and our underwriting rules.
Insurance charges will be determined on each Policy Anniversary based on a number of factors including, but not limited to, our expectations for future mortality, investment earnings, persistency and expense results, capital and reserve requirements, taxes, future profits, and other factors unrelated to mortality experience. The insurance charge rate will not exceed those shown on the policy’s schedule pages, which are based on the 1980 Commissioners’ Standard Ordinary Mortality Table (1980 CSO), male or female (unisex rates may be required in some states), the Nonsmoker or Smoker Table, and age of the Insured on their nearest birthday.
Special risk classifications are used when mortality experience in excess of the standard risk classifications is expected. These substandard risks will be charged a higher cost of insurance rate that will not exceed rates based on a multiple of the 1980 CSO, male or female (unisex rates may be required in some situations), the Nonsmoker or Smoker Table, and age of the Insured on their nearest birthday plus any flat extra amount assessed. The multiple will be based on the Insured’s substandard rating.
3
There are three non-rated classifications: preferred non-smoker, non-smoker, and smoker.
Increases in Selected Face Amount
A Selected Face Amount increase is accomplished by issuing an additional insurance coverage segment. Each such segment has a distinct issue age and risk classification.
It is possible for risk classifications of prior segments to change in order to match the risk classification of a new segment. In cases where the risk classifications are different, the Company may change the risk classification of prior segments if doing so will reduce the insurance charges associated with the prior segments. However, the Company will not change the risk classifications of prior segments when the Selected Face Amount increase coincides with a conversion of an existing term life insurance policy, unless evidence of insurability acceptable to us is provided. In addition, the Company will not change the risk classifications of prior segments if doing so will increase the insurance charges associated with the prior segments. Changing the risk classifications of prior segments may impact the maximum premium limits, MEC premiums and Minimum Death Benefit under the Cash Value Accumulation Test.
If you increase the Selected Face Amount, the insurance charge will increase. In addition, a separate surrender charge schedule will apply during the first 15 years of the segment’s coverage.
Premium payments received once an increase in Selected Face Amount becomes effective will be allocated to each segment of the Selected Face Amount. The premium allocation will be made on a pro rata basis. If the policy’s Account Value (or Cash Surrender Value if there is Policy Debt) is insufficient to continue the changed policy In Force for three months at the new monthly charges and interest, we will require a premium payment sufficient to increase the Account Value to such an amount.
From time to time, we may report historical performance for the Separate Account Divisions available under the policy. The investment performance figures are calculated using the actual historical performance of the investment options for the periods shown in the report. When applicable, the performance will include periods before the policy was available for sale.
The performance returns in these reports will reflect deductions for management fees and all other operating expenses of the underlying investment funds and an annual deduction for the Mortality and Expense Risk Charge. The returns will not reflect any deductions from premiums, monthly charges assessed against the Account Value of the policies, policy surrender charges, or other policy charges, which, if deducted, would reduce the returns.
From time to time, we may also report actual historical performance of the investment funds underlying each division of the Separate Account. These returns will reflect the fund operating expenses but they will not reflect the Mortality and Expense Risk Charge, any deductions from premiums, monthly charges assessed against the Account Value of the policies, policy surrender charges, or other policy charges. If these expenses and charges were deducted, the rates of return would be significantly lower.
The rates of return we report will not be illustrative of how actual investment performance will affect the benefits under the policy. Neither are they necessarily indicative of future performance. Actual rates may be higher or lower than those reported.
We currently post investment performance reports for VLS on our website at www.MassMutual.com. You can also request a copy of the most recent report from your registered representative or by calling our Administrative Office at (800) 272-2216, Monday – Friday, 8 AM to 8 PM Eastern Time. Questions about the information in these reports should be directed to your registered representative.
We may also distribute sales literature that includes historical performance of broad market indices, such as the Standard & Poor’s 500 Stock Index® and the Dow Jones Industrial Average. These indices are provided for informational purposes only.
The financial statements of MML Bay State Variable Life Separate Account I as of December 31, 2021 and for each of the years in the two-year period then ended and the financial highlights for each of the years in the five-year period then ended and the statutory financial statements of MML Bay State Life Insurance Company (the Company) as of December 31, 2021 and 2020, and for each of the years in the three-year period ended December 31, 2021, each have been included in this Statement of Additional Information herein in reliance upon the reports of KPMG LLP, an independent registered public accounting firm, each of which are also included herein, and upon the authority of said firm as experts in accounting and auditing. KPMG LLP’s report, dated February 25, 2022, states that the Company prepared its financial statements using statutory accounting practices prescribed or permitted by the State of Connecticut Insurance Department (statutory accounting practices), which is a basis of accounting other than U.S. generally accepted accounting principles. Accordingly, KPMG LLP’s report states that the financial statements of the Company are not intended to be and, therefore, are not presented fairly in accordance with U.S. generally accepted accounting principles and further states that those
4
statements are presented fairly, in all material respects, in accordance with the statutory accounting practices. The principal business address of KPMG LLP is One Financial Plaza, 755 Main Street, Hartford, Connecticut 06103.
Report of Independent Registered Public Accounting Firm
Statement of Assets and Liabilities as of December 31, 2021
Statements of Operations and Changes in Net Assets for the years ended December 31, 2021 and 2020
Notes to Financial Statements
Independent Auditors’ Report
Statutory Statements of Financial Position as of December 31, 2021 and 2020
Statutory Statements of Operations for the years ended December 31, 2021, 2020 and 2019
Statutory Statements of Changes in Shareholder’s Equity for the years ended December 31, 2021, 2020 and 2019
Statutory Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019
Notes to Statutory Financial Statements
5
KPMG LLP | |
Two Financial Center | |
60 South Street | |
Boston, MA 02111 |
Report of Independent Registered Public Accounting Firm
The Board of Directors of MML Bay State Life Insurance Company and Policy Owners of MML Bay State Variable Life Separate Account I:
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities of the divisions listed in Appendix A that comprise MML Bay State Variable Life Separate Account I (collectively, “the Separate Account”), as of December 31, 2021, the related statements of operations and changes in net assets for each of the years in the two-year period then ended, and the related notes including the financial highlights in Note 8 for each of the years in the five-year period then ended (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of each division as of December 31, 2021, and the results of their operations and changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Separate Account’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Separate Account in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Such procedures also included confirmation of securities owned as of December 31, 2021, by correspondence with the underlying mutual funds or their transfer agent. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ KPMG LLP |
We have served as the MassMutual Separate Accounts’ auditor since 2004.
Boston, Massachusetts
March 8, 2022
KPMG LLP, a Delaware limited liability partnership and
a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. |
F-1 |
Appendix A
Divisions
American Century VP Discipline Core Value Division
Fidelity® VIP Contrafund® Division
Invesco V.I. Capital Appreciation Division*
Invesco V.I. Discovery Mid Cap Growth Division*
Invesco V.I. Global Division*
Invesco V.I. Global Strategic Income Division*
MML Blend Division
MML Equity Division
MML Equity Index Division
MML Managed Bond Division
MML Small Cap Equity Division
MML U.S. Government Money Market Division
T. Rowe Price Mid-Cap Growth Division
* See Note 2 to the financial statements for the previous name of this division.
F-2 |
MML Bay State Variable Life Separate Account I
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 2021
American Century VP Disciplined Core Value Division |
Fidelity® VIP Contrafund® Division |
Invesco V.I. Capital Appreciation Division |
Invesco V.I. Discovery Mid Cap Growth Division |
Invesco V.I. Global Division |
Invesco V.I. Global Strategic Income Division |
MML Blend Division |
MML Equity Division |
||||||||||||||||||
ASSETS | |||||||||||||||||||||||||
Investments | |||||||||||||||||||||||||
Number of shares | 1,189,749 | 845,746 | 1,256,358 | 958,481 | 1,905,427 | 1,391,572 | 5,356,284 | 9,528,815 | |||||||||||||||||
Identified cost | $ | 11,070,498 | $ | 30,827,198 | $ | 70,023,161 | $ | 72,807,645 | $ | 76,865,670 | $ | 6,887,245 | $ | 111,912,957 | $ | 238,566,491 | |||||||||
Value | $ | 12,754,106 | $ | 45,966,319 | $ | 102,845,507 | $ | 109,870,689 | $ | 109,028,531 | $ | 6,192,496 | $ | 111,612,917 | $ | 305,791,158 | |||||||||
Receivable from MML Bay State Life Insurance Company | 1 | - | - | - | 4 | - | - | 6,041 | |||||||||||||||||
Total assets | 12,754,107 | 45,966,319 | 102,845,507 | 109,870,689 | 109,028,535 | 6,192,496 | 111,612,917 | 305,797,199 | |||||||||||||||||
LIABILITIES | |||||||||||||||||||||||||
Payable to MML Bay State Life Insurance Company | - | - | 4 | 3 | - | - | 4,075 | - | |||||||||||||||||
NET ASSETS | $ | 12,754,107 | $ | 45,966,319 | $ | 102,845,503 | $ | 109,870,686 | $ | 109,028,535 | $ | 6,192,496 | $ | 111,608,842 | $ | 305,797,199 | |||||||||
Outstanding units | |||||||||||||||||||||||||
Policy owners | 3,385,525 | 6,556,730 | 8,273,970 | 10,925,539 | 10,607,666 | 1,798,574 | 13,001,141 | 38,429,166 | |||||||||||||||||
UNIT VALUE | |||||||||||||||||||||||||
Variable Life (Note 3G) | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||
Variable Life Plus | - | - | - | - | 4.89 | - | 13.39 | 14.45 | |||||||||||||||||
Variable Life Select | 3.77 | 7.01 | 12.43 | 10.06 | 13.03 | 3.44 | 6.09 | 6.12 |
See Notes to Financial Statements.
F-3 |
MML Bay State Variable Life Separate Account I
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
December 31, 2021
MML Equity Index Division |
MML Managed Bond Division |
MML Small Cap Equity Division |
MML U.S. Government Money Market Division |
T. Rowe Price Mid-Cap Growth Division |
||||||||||||
ASSETS | ||||||||||||||||
Investments | ||||||||||||||||
Number of shares | 2,366,624 | 1,098,359 | 860,613 | 5,978,920 | 1,735,932 | |||||||||||
Identified cost | $ | 65,942,606 | $ | 13,952,795 | $ | 8,341,694 | $ | 5,978,797 | $ | 48,389,600 | ||||||
Value | $ | 83,352,503 | $ | 14,300,716 | $ | 10,983,023 | $ | 5,978,920 | $ | 59,837,589 | ||||||
Receivable from MML Bay State Life Insurance Company | - | 19 | - | - | - | |||||||||||
Total assets | 83,352,503 | 14,300,735 | 10,983,023 | 5,978,920 | 59,837,589 | |||||||||||
LIABILITIES | ||||||||||||||||
Payable to MML Bay State Life Insurance Company | - | - | - | 12 | 7 | |||||||||||
NET ASSETS | $ | 83,352,503 | $ | 14,300,735 | $ | 10,983,023 | $ | 5,978,908 | $ | 59,837,582 | ||||||
Outstanding units | ||||||||||||||||
Policy owners | 18,747,410 | 3,569,522 | 1,774,568 | 3,800,969 | 6,623,487 | |||||||||||
UNIT VALUE | ||||||||||||||||
Variable Life (Note 3G) | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||
Variable Life Plus | 4.20 | 6.30 | - | 2.16 | 8.10 | |||||||||||
Variable Life Select | 4.50 | 3.34 | 6.19 | 1.45 | 10.02 |
See Notes to Financial Statements.
F-4 |
MML Bay State Variable Life Separate Account I
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
For The Year Ended December 31, 2021
American Century VP Disciplined Core Value Division |
Fidelity® VIP Contrafund® Division |
Invesco V.I. Capital Appreciation Division |
Invesco V.I. Discovery Mid Cap Growth Division |
Invesco V.I. Global Division |
Invesco V.I. Global Strategic Income Division |
MML Blend Division |
MML Equity Division |
||||||||||||||||||
Investment Income | |||||||||||||||||||||||||
Dividends | $ | 130,409 | $ | 26,422 | $ | - | $ | - | $ | - | $ | 299,337 | $ | 2,307,961 | $ | 4,835,542 | |||||||||
Interest Income on Policy loans (Note 3F) | - | - | - | - | - | - | 11,016 | 58,443 | |||||||||||||||||
Total Income | 130,409 | 26,422 | - | - | - | 299,337 | 2,318,977 | 4,893,985 | |||||||||||||||||
Expenses | |||||||||||||||||||||||||
Mortality and expense risk fees | 66,568 | 230,966 | 534,491 | 582,356 | 566,228 | 35,104 | 507,135 | 1,418,870 | |||||||||||||||||
Net investment income (loss) | 63,841 | (204,544) | (534,491) | (582,356) | (566,228) | 264,233 | 1,811,842 | 3,475,115 | |||||||||||||||||
Net realized and unrealized gain (loss) on investments | |||||||||||||||||||||||||
Realized gain (loss) on sale of fund shares | 309,846 | 2,402,171 | 4,186,101 | 6,526,676 | 3,603,035 | (59,581) | 3,426,449 | 9,622,628 | |||||||||||||||||
Realized gain distribution | 1,747,635 | 5,295,819 | 5,246,916 | 11,360,602 | 5,494,874 | - | 27,675,455 | - | |||||||||||||||||
Realized gain (loss) | 2,057,481 | 7,697,990 | 9,433,017 | 17,887,278 | 9,097,909 | (59,581) | 31,101,904 | 9,622,628 | |||||||||||||||||
Change in net unrealized appreciation/depreciation of investments | 321,149 | 2,621,743 | 10,194,391 | 471,430 | 6,225,817 | (465,665) | (18,312,418) | 60,040,135 | |||||||||||||||||
Net gain (loss) on investments | 2,378,630 | 10,319,733 | 19,627,408 | 18,358,708 | 15,323,726 | (525,246) | 12,789,486 | 69,662,763 | |||||||||||||||||
Net increase (decrease) in net assets resulting from operations | 2,442,471 | 10,115,189 | 19,092,917 | 17,776,352 | 14,757,498 | (261,013) | 14,601,328 | 73,137,878 | |||||||||||||||||
Capital transactions: | |||||||||||||||||||||||||
Transfers of net premiums | 331,970 | 1,098,196 | 2,334,808 | 2,398,217 | 2,773,385 | 350,746 | 3,455,525 | 10,371,400 | |||||||||||||||||
Transfers due to death benefits | (62,969) | (669,650) | (1,027,030) | (960,822) | (1,561,790) | (26,632) | (912,559) | (2,404,000) | |||||||||||||||||
Transfers due to withdrawal of funds | (379,917) | (1,848,686) | (3,741,112) | (4,527,301) | (4,102,199) | (238,345) | (4,488,594) | (11,920,956) | |||||||||||||||||
Transfers due to policy loans, net of repayments | (66,874) | 152,904 | (292,174) | (333,760) | (270,905) | 14,083 | (367,149) | (1,915,500) | |||||||||||||||||
Transfers due to cost of insurance | - | - | - | - | - | - | (101,173) | (151,263) | |||||||||||||||||
Transfers due to changes for administrative costs | (344,257) | (1,407,210) | (2,865,208) | (3,083,377) | (3,428,404) | (293,432) | (4,248,229) | (11,652,256) | |||||||||||||||||
Transfers between divisions and to/from Guaranteed Principal Account | (1,072) | (95,391) | (807,375) | (698,629) | (715,000) | (97,974) | 404,951 | (1,711,443) | |||||||||||||||||
Net increase (decrease) in net assets resulting from capital transactions | (523,119) | (2,769,837) | (6,398,091) | (7,205,672) | (7,304,913) | (291,554) | (6,257,228) | (19,384,018) | |||||||||||||||||
Total increase (decrease) | 1,919,352 | 7,345,352 | 12,694,826 | 10,570,680 | 7,452,585 | (552,566) | 8,344,100 | 53,753,860 | |||||||||||||||||
NET ASSETS, at beginning of the year | 10,834,755 | 38,620,967 | 90,150,677 | 99,300,006 | 101,575,950 | 6,745,062 | 103,264,742 | 252,043,339 | |||||||||||||||||
NET ASSETS, at end of the year | $ | 12,754,107 | $ | 45,966,319 | $ | 102,845,503 | $ | 109,870,686 | $ | 109,028,535 | $ | 6,192,496 | $ | 111,608,842 | $ | 305,797,199 |
See Notes to Financial Statements.
F-5 |
MML Bay State Variable Life Separate Account I
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS (Continued)
For The Year Ended December 31, 2021
MML Equity Index Division |
MML Managed Bond Division |
MML Small Cap Equity Division |
MML U.S. Government Money Market Division |
T. Rowe Price Mid-Cap Growth Division |
||||||||||||
Investment Income | ||||||||||||||||
Dividends | $ | 1,082,778 | $ | 462,851 | $ | 46,246 | $ | - | $ | - | ||||||
Interest Income on Policy loans (Note 3F) | - | 9,765 | - | 323 | - | |||||||||||
Total Income | 1,082,778 | 472,616 | 46,246 | 323 | - | |||||||||||
Expenses | ||||||||||||||||
Mortality and expense risk fees | 393,748 | 72,523 | 57,936 | 30,910 | 283,565 | |||||||||||
Net investment income (loss) | 689,030 | 400,093 | (11,690) | (30,587) | (283,565) | |||||||||||
Net realized and unrealized gain (loss) on investments | ||||||||||||||||
Realized gain (loss) on sale of fund shares | 1,151,822 | 69,749 | 200,160 | 44 | 2,433,557 | |||||||||||
Realized gain distribution | 3,283,271 | 269,987 | 626,513 | - | 5,985,566 | |||||||||||
Realized gain (loss) | 4,435,093 | 339,736 | 826,673 | 44 | 8,419,123 | |||||||||||
Change in net unrealized appreciation/ | ||||||||||||||||
depreciation of investments | 13,194,078 | (692,850) | 1,207,346 | (43) | (275,300) | |||||||||||
Net gain (loss) on investments | 17,629,171 | (353,114) | 2,034,019 | 1 | 8,143,823 | |||||||||||
Net increase (decrease) in net assets | ||||||||||||||||
resulting from operations | 18,318,201 | 46,979 | 2,022,329 | (30,587) | 7,860,258 | |||||||||||
Capital transactions: | ||||||||||||||||
Transfers of net premiums | 556,241 | 828,369 | 257,992 | 366,532 | 980,747 | |||||||||||
Transfers due to death benefits | (374,056) | (147,030) | (30,521) | (7,392) | (1,489,563) | |||||||||||
Transfers due to withdrawal of funds | (775,944) | (711,275) | (379,484) | (1,804,398) | (2,187,825) | |||||||||||
Transfers due to policy loans, net of | ||||||||||||||||
repayments | (157,810) | (53,224) | (41,907) | (23,897) | (81,757) | |||||||||||
Transfers due to cost of insurance | - | (16,648) | - | (5,626) | - | |||||||||||
Transfers due to changes for administrative | ||||||||||||||||
costs | (1,622,454) | (846,720) | (296,909) | (395,688) | (1,581,452) | |||||||||||
Transfers between divisions and to/from | ||||||||||||||||
Guaranteed Principal Account | 159,136 | 337,847 | 180,971 | 1,712,773 | (667,491) | |||||||||||
Net increase (decrease) in net assets | ||||||||||||||||
resulting from capital transactions | (2,214,887) | (608,681) | (309,858) | (157,696) | (5,027,341) | |||||||||||
Total increase (decrease) | 16,103,314 | (561,702) | 1,712,471 | (188,282) | 2,832,917 | |||||||||||
NET ASSETS, at beginning of the year | 67,249,189 | 14,862,437 | 9,270,552 | 6,167,190 | 57,004,665 | |||||||||||
NET ASSETS, at end of the year | $ | 83,352,503 | $ | 14,300,735 | $ | 10,983,023 | $ | 5,978,908 | $ | 59,837,582 |
See Notes to Financial Statements.
F-6 |
MML Bay State Variable Life Separate Account I
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
For The Year Ended December 31, 2020
American Century VP Disciplined Core Value Division |
Fidelity® VIP Contrafund® Division |
Invesco Oppenheimer V.I. Capital Appreciation Division |
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Division |
Invesco Oppenheimer V.I. Global Division |
Invesco Oppenheimer V.I. Global Strategic Income Division |
MML Blend Division |
MML Equity Division |
||||||||||||||||||
Investment Income | |||||||||||||||||||||||||
Dividends | $ | 189,420 | $ | 83,499 | $ | - | $ | 30,970 | $ | 592,054 | $ | 382,077 | $ | - | $ | 5,274,449 | |||||||||
Interest Income on Policy loans (Note 3F) | - | - | - | - | - | - | 10,843 | 54,458 | |||||||||||||||||
Total Income | 189,420 | 83,499 | - | 30,970 | 592,054 | 382,077 | 10,843 | 5,328,907 | |||||||||||||||||
Expenses | |||||||||||||||||||||||||
Mortality and expense risk fees | 53,529 | 184,391 | 418,179 | 444,105 | 444,517 | 35,924 | 439,431 | 1,107,183 | |||||||||||||||||
Net investment income (loss) | 135,891 | (100,892) | (418,179) | (413,135) | 147,537 | 346,153 | (428,588) | 4,221,724 | |||||||||||||||||
Net realized and unrealized gain (loss) on investments | |||||||||||||||||||||||||
Realized gain (loss) on sale of fund shares | 282,169 | 1,468,243 | 4,104,185 | 4,653,250 | 2,817,271 | (75,573) | 2,298,608 | 3,319,462 | |||||||||||||||||
Realized gain distribution | 490,030 | 170,459 | 11,600,975 | 6,456,234 | 3,084,775 | - | 4,137,641 | 25,612,064 | |||||||||||||||||
Realized gain (loss) | 772,199 | 1,638,702 | 15,705,160 | 11,109,484 | 5,902,046 | (75,573) | 6,436,249 | 28,931,526 | |||||||||||||||||
Change in net unrealized appreciation/ | |||||||||||||||||||||||||
depreciation of investments | 161,450 | 7,400,273 | 9,113,657 | 18,187,041 | 15,672,400 | (98,214) | 5,283,255 | (28,911,324) | |||||||||||||||||
Net gain (loss) on investments | 933,649 | 9,038,975 | 24,818,817 | 29,296,525 | 21,574,446 | (173,787) | 11,719,504 | 20,202 | |||||||||||||||||
Net increase (decrease) in net assets | |||||||||||||||||||||||||
resulting from operations | 1,069,540 | 8,938,083 | 24,400,638 | 28,883,390 | 21,721,983 | 172,366 | 11,290,916 | 4,241,926 | |||||||||||||||||
Capital transactions: | |||||||||||||||||||||||||
Transfers of net premiums | 351,441 | 1,111,572 | 2,428,466 | 2,567,259 | 2,987,703 | 397,816 | 3,699,335 | 11,005,493 | |||||||||||||||||
Transfers due to death benefits | (19,973) | (68,040) | (593,059) | (721,809) | (865,180) | (93,565) | (1,063,808) | (4,057,049) | |||||||||||||||||
Transfers due to withdrawal of funds | (449,920) | (1,377,272) | (3,325,544) | (3,087,230) | (3,765,894) | (228,739) | (3,130,890) | (8,720,004) | |||||||||||||||||
Transfers due to policy loans, net of | |||||||||||||||||||||||||
repayments | 29,059 | 1,144,953 | (532,798) | (687,300) | (559,545) | (4,815) | (421,354) | (1,500,353) | |||||||||||||||||
Transfers due to cost of insurance | - | - | - | - | - | - | (100,268) | (149,674) | |||||||||||||||||
Transfers due to changes for administrative | |||||||||||||||||||||||||
costs | (349,537) | (1,459,762) | (2,900,319) | (3,057,351) | (3,397,293) | (362,805) | (4,457,878) | (11,958,223) | |||||||||||||||||
Transfers between divisions and to/from | |||||||||||||||||||||||||
Guaranteed Principal Account | (322,383) | (821,602) | (547,502) | (718,617) | (1,185,151) | (222,062) | 906,234 | (1,828,113) | |||||||||||||||||
Net increase (decrease) in net assets | |||||||||||||||||||||||||
resulting from capital transactions | (761,313) | (1,470,151) | (5,470,756) | (5,705,048) | (6,785,360) | (514,170) | (4,568,629) | (17,207,923) | |||||||||||||||||
Total increase (decrease) | 308,227 | 7,467,932 | 18,929,882 | 23,178,342 | 14,936,623 | (341,804) | 6,722,287 | (12,965,997) | |||||||||||||||||
NET ASSETS, at beginning of the year | 10,526,528 | 31,153,035 | 71,220,795 | 76,121,664 | 86,639,327 | 7,086,866 | 96,542,455 | 265,009,336 | |||||||||||||||||
NET ASSETS, at end of the year | $ | 10,834,755 | $ | 38,620,967 | $ | 90,150,677 | $ | 99,300,006 | $ | 101,575,950 | $ | 6,745,062 | $ | 103,264,742 | $ | 252,043,339 |
See Notes to Financial Statements.
F-7 |
MML Bay State Variable Life Separate Account I
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS (Continued)
For The Year Ended December 31, 2020
MML Equity Index Division |
MML Managed Bond Division |
MML Small Cap Equity Division |
MML U.S. Government Money Market Division |
T. Rowe Price Mid-Cap Growth Division |
||||||||||||
Investment Income | ||||||||||||||||
Dividends | $ | 1,088,119 | $ | 13,858 | $ | 39,703 | $ | 10,305 | $ | - | ||||||
Interest Income on Policy loans (Note 3F) | - | 9,349 | - | 289 | - | |||||||||||
Total Income | 1,088,119 | 23,207 | 39,703 | 10,594 | - | |||||||||||
Expenses | ||||||||||||||||
Mortality and expense risk fees | 304,466 | 71,507 | 40,799 | 29,159 | 234,306 | |||||||||||
Net investment income (loss) | 783,653 | (48,300) | (1,096) | (18,565) | (234,306) | |||||||||||
Net realized and unrealized gain (loss) on investments | ||||||||||||||||
Realized gain (loss) on sale of fund shares | 578,909 | (28,461) | 33,909 | 17 | 1,331,636 | |||||||||||
Realized gain distribution | 14,214,853 | - | 71,247 | - | 3,654,861 | |||||||||||
Realized gain (loss) | 14,793,762 | (28,461) | 105,156 | 17 | 4,986,497 | |||||||||||
Change in net unrealized appreciation/ | ||||||||||||||||
depreciation of investments | (5,514,069) | 1,073,735 | 1,417,346 | (17) | 6,038,513 | |||||||||||
Net gain (loss) on investments | 9,279,693 | 1,045,274 | 1,522,502 | - | 11,025,010 | |||||||||||
Net increase (decrease) in net assets | ||||||||||||||||
resulting from operations | 10,063,346 | 996,974 | 1,521,406 | (18,565) | 10,790,704 | |||||||||||
Capital transactions: | ||||||||||||||||
Transfers of net premiums | 602,593 | 830,951 | 255,363 | 312,544 | 1,138,309 | |||||||||||
Transfers due to death benefits | (176,325) | (104,239) | (27,373) | (31,652) | (141,726) | |||||||||||
Transfers due to withdrawal of funds | (920,092) | (591,162) | (324,460) | (1,363,127) | (2,232,297) | |||||||||||
Transfers due to policy loans, net of | ||||||||||||||||
repayments | (105,168) | (80,401) | (18,754) | 9,098 | (298,315) | |||||||||||
Transfers due to cost of insurance | - | (17,392) | - | (7,257) | - | |||||||||||
Transfers due to changes for administrative | ||||||||||||||||
costs | (1,532,520) | (972,649) | (267,744) | (396,036) | (1,609,343) | |||||||||||
Transfers between divisions and to/from | ||||||||||||||||
Guaranteed Principal Account | 75,599 | 765,721 | (91,055) | 3,248,952 | (1,495,494) | |||||||||||
Net increase (decrease) in net assets | ||||||||||||||||
resulting from capital transactions | (2,055,913) | (169,171) | (474,023) | 1,772,522 | (4,638,866) | |||||||||||
Total increase (decrease) | 8,007,433 | 827,803 | 1,047,383 | 1,753,957 | 6,151,838 | |||||||||||
NET ASSETS, at beginning of the year | 59,241,756 | 14,034,634 | 8,223,169 | 4,413,233 | 50,852,827 | |||||||||||
NET ASSETS, at end of the year | $ | 67,249,189 | $ | 14,862,437 | $ | 9,270,552 | $ | 6,167,190 | $ | 57,004,665 |
See Notes to Financial Statements.
F-8 |
MML Bay State Variable Life Separate Account I
Notes To Financial Statements
1. | ORGANIZATION |
MML Bay State Variable Life Separate Account I (“the Separate Account”) is a separate investment account of MML Bay State Life Insurance Company (“MML Bay State”) established on June 9, 1982. The Separate Account is registered as a unit investment trust under the Investment Company Act of 1940 (“the 1940 Act”).
On June 30, 1997, MML Bay State redomesticated from the state of Missouri to the state of Connecticut. MML Bay State is an indirect subsidiary of Massachusetts Mutual Life Insurance Company (“MassMutual”).
MML Bay State maintains the following three segments within the Separate Account: Variable Life, Variable Life Plus, and Variable Life Select.
The assets and liabilities of the Separate Account are clearly identified and distinguished from MML Bay State’s other assets and liabilities. The Separate Account assets are not chargeable with liabilities arising from any other MML Bay State business.
2. | INVESTMENT OF THE SEPARATE ACCOUNT’S ASSETS |
As of December 31, 2021, the Separate Account consists of thirteen divisions that invest in the following mutual funds. All of the funds may not be available to all of the three segments of the Separate Account:
The division listed in the first column | |
Divisions | invests in the fund in this column |
American Century VP Disciplined Core Value Division | American Century VP Disciplined Core Value Fund1,10 |
Fidelity® VIP Contrafund® Division | Fidelity® VIP Contrafund® Portfolio2 |
Invesco V.I. Capital Appreciation Division3 | Invesco V.I. Capital Appreciation Fund3,7 |
Invesco V.I. Discovery Mid Cap Growth Division4 | Invesco V.I. Discovery Mid Cap Growth Fund4,7 |
Invesco V.I. Global Division5 | Invesco V.I. Global Fund5,7 |
Invesco V.I Global Strategic Income Division6 | Invesco V.I Global Strategic Income Fund6,7 |
MML Blend Division | MML Blend Fund8 |
MML Equity Division | MML Equity Fund8 |
MML Equity Index Division | MML Equity Index Fund8 |
MML Managed Bond Division | MML Managed Bond Fund8 |
MML Small Cap Equity Division | MML Small Cap Equity Fund8 |
MML U.S. Government Money Market Division | MML U.S. Government Money Market Fund8 |
T. Rowe Price Mid-Cap Growth Division | T. Rowe Price Mid-Cap Growth Portfolio9 |
In addition to the thirteen divisions, some contract owners may also allocate funds to the Guaranteed Principal Account (“GPA”), which is part of MML Bay State’s general investment account (“General Account”). Because of exemptive and exclusionary provisions in the securities law, interests in the GPA are not registered under the Securities Act of 1933, and the General Account and the GPA are not registered as an investment company under the 1940 Act.
1 American Century Investment Management, Inc. is the investment adviser to this Fund.
2 Fidelity Management & Research Company LLC is the investment adviser to this Portfolio.
3 Prior to April 30, 2021, known as Invesco Oppenheimer V.I. Capital Appreciation Division/Fund.
4 Prior to April 30, 2021, known as Invesco Oppenheimer V.I. Discovery Mid Cap Growth Division/Fund.
5 Prior to April 30, 2021, known as Invesco Oppenheimer V.I. Global Division/Fund.
6 Prior to April 30, 2021, known as Invesco Oppenheimer V.I. Global Strategic Income Division/Fund.
7 Invesco Advisers, Inc. is the investment adviser to this Fund.
8 MML Investment Advisers, LLC is the investment adviser to this Fund.
9 T. Rowe Price Associates, Inc. is the investment adviser to this Portfolio.
10 See Note 2 to the financial statements for the previous name of this division.
F-9 |
Notes To Financial Statements (Continued)
3. | SIGNIFICANT ACCOUNTING POLICIES |
The following is a summary of significant accounting policies followed by the Separate Account in preparation of the financial statements in conformity with generally accepted accounting principles. Separate Account MML Bay State Variable Life Separate Account I follows the accounting and reporting guidance in FASB Accounting Standards Codification 946.
A. | Investment Valuation |
Investments in the underlying funds held by each division are carried at fair value which is based on the closing net asset value of each of the respective underlying funds, which value their investment securities at fair value.
B. | Accounting for Investments |
Investment transactions are accounted for on a trade-date basis and identified cost is the basis followed in determining the cost of investments sold for financial statement purposes. Dividend income and gains from realized gain distributions are recorded on the ex-distribution date and are reinvested in the underlying investment divisions.
C. | Federal Income Taxes |
MML Bay State is taxed under federal law as a life insurance company under the provisions of the 1986 Internal Revenue Code, as amended. Under existing federal law, no taxes are payable on net investment income and net 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. MML Bay State may, however, make such a charge in the future if an unanticipated change of current law results in a tax liability attributable to the Separate Account.
D. | Policy Charges |
See Note 8B for charges associated with the policies.
E. | Estimates |
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
F. | Policy Loans |
When a policy loan is made, the Separate Account transfers the amount of the loan to MML Bay State, thereby decreasing both the investments and the net assets of the Separate Account by an equal amount. The policy owner is charged interest on the outstanding policy loan amount generally equal to either a fixed interest rate of 5% to 6% per year or (in all jurisdictions except Arkansas) an adjustable loan rate. The adjustable loan rate is determined each year for the following policy year.
As long as a loan is outstanding, a portion of the policy account value equal to the loan is invested in the GPA. The amount of the loan earns interest at a rate equal to the greater of either a fixed interest rate generally equal to 3% to 4% of the loan or the policy loan rate less the loan interest rate expense charge. The loan interest rate expense charge represents the difference (cost) between the loan interest rate charged and the interest credited on loaned amounts. This amount does not participate in the Separate Account’s investment performance.
Interest income presented in the Statement of Operations represents interest credited by MML Bay State to policyholders of the Variable Life product on their outstanding loan balance.
F-10 |
Notes To Financial Statements (Continued)
G. | Policy Owner’s Share of Net Assets |
The policy owner’s share of net assets in the Variable Life Segment is expressed in terms of dollars rather than shares or units of investments. Charges assessed by the Separate Account, for the Variable Life Segment as noted in Note 8B, shown as a reduction in units, or a redemption of units, are a reduction of assets.
H. | Life Reserves |
Life reserves are developed by using accepted actuarial methods and are computed using the 1958 CSO or 1980 CSO mortality tables.
4. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
The Separate Account defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Separate Account generally uses the market approach as the valuation technique due to the nature of the mutual fund investments offered in the Separate Account. This technique maximizes the use of observable inputs and minimizes the use of unobservable inputs. Investments in mutual funds are valued at the mutual fund’s closing net asset value per share on the day of valuation.
Valuation Inputs: Various inputs are used to determine the value of the Separate Account’s investments. These inputs are summarized in the three broad levels listed below:
• | Level 1 – quoted prices in active markets for identical securities |
• | Level 2 – observable inputs other than Level 1 quoted prices (including, but not limited to, quoted prices for similar securities, interest rates, prepayment speeds and credit risk) |
• | Level 3 – unobservable inputs |
The investments of the Separate Account are measured at fair value. All the investments are categorized as Level 1 as of December 31, 2021. There have been no transfers between levels for the year ended December 31, 2021.
5. | RELATED PARTY TRANSACTIONS |
A. | Sales Agreements |
Pursuant to separate underwriting agreements with MML Bay State, on its own behalf and on behalf of the Separate Account, MML Investors Services, LLC (“MMLIS”) serves as principal underwriter of the policies sold by its registered representatives, and MML Strategic Distributors, LLC (“MSD”) serves as principal underwriter of the policies sold by registered representatives of other broker-dealers who have entered into distribution agreements with MSD.
Both MMLIS and MSD are registered with the Securities and Exchange Commission (the “SEC”) as broker-dealers under the Securities Exchange Act of 1934 and are members of the Financial Industry Regulatory Authority (“FINRA”). Commissions for sales of policies by MMLIS registered representatives are paid on behalf of MMLIS to its registered representatives. Commissions for sales of policies by registered representatives of other broker-dealers are paid on behalf of MSD to those broker-dealers. MMLIS and MSD also receive compensation for their actions as principal underwriters of the policies.
The policies are no longer offered for sale to the public. Policy owners may continue, however, to make premium payments under existing policies.
B. | Receivable from/Payable to MML Bay State |
Certain fees such as cost of insurance fees and mortality and expense risk fees are charges paid between the General Account and the Separate Account.
F-11 |
Notes To Financial Statements (Continued)
6. | PURCHASES AND SALES OF INVESTMENTS |
The cost of purchases and proceeds from sales investments for the year ended December 31, 2021 were as follows:
|
American
Century VP Disciplined Core Value Division |
|
Fidelity® VIP Contrafund® Division |
|
Invesco
V.I. Capital Appreciation Division |
|
Invesco
V.I. Discovery Mid Cap Growth Division |
|
Invesco V.I. Global Division |
|||||
Cost of purchases | $ | 2,323,640 | $ | 6,909,736 | $ | 6,269,053 | $ | 12,511,784 | $ | 7,314,629 | ||||
Proceeds from sales | (1,035,285) | (4,588,297) | (7,954,716) | (8,939,206) | (9,690,899) |
|
Invesco
V.I. Global Strategic Income Division |
|
MML Blend Division |
|
MML Equity Division |
|
MML Equity Index Division |
|
MML Managed Bond Division |
|||||
Cost of purchases | $ | 544,348 | $ | 33,034,719 | $ | 8,564,133 | $ | 4,908,074 | $ | 1,747,511 | ||||
Proceeds from sales | (571,670) | (9,803,455) | (24,483,054) | (3,150,661) | (1,686,036) |
|
MML Small Cap Equity Division |
|
MML U.S. Government Money Market Division |
|
T.
Rowe Price Mid-Cap Growth Division |
|
|
|
|
|||||
Cost of purchases | $ | 1,254,969 | $ | 2,575,678 | $ | 7,025,946 | ||||||||
Proceeds from sales | (950,002) | (2,764,010) | (6,351,278) |
7. | NET INCREASE (DECREASE) IN OUTSTANDING UNITS |
The changes in outstanding units for the two years ended December 31, 2021 were as follows:
2021 |
American
Century VP Disciplined Core Value Division |
Fidelity® VIP Contrafund® Division |
Invesco
V.I. Capital Appreciation Division |
Invesco
V.I. Discovery Mid Cap Growth Division |
Invesco
V.I. Global Division |
||||||||||
Units purchased | 115,313 | 308,001 | 254,518 | 320,304 | 334,700 | ||||||||||
Units withdrawn | (225,854) | (751,937) | (781,631) | (1,068,010) | (1,027,653) | ||||||||||
Units transferred between divisions | |||||||||||||||
and to/from GPA | (40,678) | (3,109) | (39,646) | (22,547) | (49,675) | ||||||||||
Net increase (decrease) | (151,218) | (447,045) | (566,758) | (770,252) | (742,629) |
2021 (continued) |
Invesco
V.I. Global Strategic Income Division |
MML Blend Division |
MML Equity Division |
MML Equity Index Division |
MML Managed Bond Division |
||||||||||
Units purchased | 120,363 | 499,501 | 1,651,685 | 150,686 | 226,524 | ||||||||||
Units withdrawn | (172,944) | (1,244,996) | (3,780,907) | (768,510) | (465,190) | ||||||||||
Units transferred between divisions | |||||||||||||||
and to/from GPA | (30,665) | 40,987 | (249,917) | 44,780 | 91,424 | ||||||||||
Net increase (decrease) | (83,247) | (704,507) | (2,379,139) | (573,044) | (147,242) |
F-12 |
Notes To Financial Statements (Continued)
7. | NET INCREASE (DECREASE) IN OUTSTANDING UNITS (Continued) |
2021 (continued) |
MML Small Cap Equity Division |
|
MML U.S. Government Money Market Division |
|
T.
Rowe Price Mid-Cap Growth Division |
|
|
|
|
||||||
Units purchased | 55,243 | 261,567 | 138,370 | ||||||||||||
Units withdrawn | (119,897) | (1,420,435) | (663,524) | ||||||||||||
Units transferred between divisions | |||||||||||||||
and to/from GPA | 10,633 | 1,113,310 | (76,233) | ||||||||||||
Net increase (decrease) | (54,021) | (45,558) | (601,387) |
2020 |
American Century VP Disciplined Core Value Division |
Fidelity® VIP Contrafund® Division |
Invesco Oppenheimer V.I. Capital Appreciation Division |
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Division |
Invesco Oppenheimer V.I. Global Division |
||||||||||
Units purchased | 163,292 | 536,389 | 333,455 | 455,961 | 486,715 | ||||||||||
Units withdrawn | (358,521) | (723,782) | (934,103) | (1,226,776) | (1,266,464) | ||||||||||
Units transferred between divisions | |||||||||||||||
and to/from GPA | (88,845) | (144,730) | (46,063) | (78,074) | (151,084) | ||||||||||
Net increase (decrease) | (284,074) | (332,124) | (646,711) | (848,889) | (930,833) |
2020 (continued) |
Invesco Oppenheimer V.I. Global Strategic Income Division |
MML Blend Division |
MML Equity Division |
MML Equity Index Division |
MML Managed Bond Division |
||||||||||
Units purchased | 139,696 | 633,416 | 2,288,536 | 215,054 | 229,184 | ||||||||||
Units withdrawn | (259,242) | (1,375,445) | (4,828,432) | (913,785) | (472,012) | ||||||||||
Units transferred between divisions | |||||||||||||||
and to/from GPA | (31,842) | 150,011 | (300,703) | 1,877 | 184,015 | ||||||||||
Net increase (decrease) | (151,388) | (592,018) | (2,840,599) | (696,854) | (58,812) |
2020 (continued) |
MML Small Cap Equity Division |
|
MML U.S. Government Money Market Division |
|
T.
Rowe Price Mid-Cap Growth Division |
|
|
|
|
||||||
Units purchased | 76,887 | 313,265 | 203,244 | ||||||||||||
Units withdrawn | (177,709) | (1,091,871) | (777,352) | ||||||||||||
Units transferred between divisions | |||||||||||||||
and to/from GPA | (17,527) | 1,951,635 | (128,559) | ||||||||||||
Net increase (decrease) | (118,349) | 1,173,029 | (702,667) |
F-13 |
Notes To Financial Statements (Continued)
8. | FINANCIAL HIGHLIGHTS |
A. | A summary of units outstanding, unit values, net assets, investment income ratios, expense ratios (excluding expenses of the underlying funds) and total return ratios for each of the five years in the period ended December 31, 2021 follows: |
At December 31, | For the Years Ended December 31, | |||||||||||||||||||||||||||
Investment | ||||||||||||||||||||||||||||
Unit Value3 | Income | Expense Ratio2 | Total Return3 | |||||||||||||||||||||||||
Units4 | (Lowest to Highest) | Net Assets | Ratio1 | (Lowest to Highest) | (Lowest to Highest) | |||||||||||||||||||||||
American Century VP Disciplined Core Value Division5 | ||||||||||||||||||||||||||||
2021 | 3,385,525 | $ | $ | 3.77 | $ | 12,754,107 | 1.08 | % | % | 0.55 | % | % | 22.97 | % | ||||||||||||||
2020 | 3,536,742 | 3.06 | 10,834,755 | 1.95 | 0.55 | 11.20 | ||||||||||||||||||||||
2019 | 3,820,817 | 2.76 | 10,526,528 | 2.06 | 0.55 | 23.27 | ||||||||||||||||||||||
2018 | 4,351,780 | 2.23 | 9,726,143 | 1.92 | 0.55 | (7.38) | ||||||||||||||||||||||
2017 | 4,512,257 | 2.41 | 10,888,478 | 2.38 | 0.55 | 19.83 | ||||||||||||||||||||||
Fidelity® VIP Contrafund® Division | ||||||||||||||||||||||||||||
2021 | 6,556,730 | 7.01 | 45,966,319 | 0.06 | 0.55 | 27.13 | ||||||||||||||||||||||
2020 | 7,003,775 | 5.51 | 38,620,967 | 0.25 | 0.55 | 29.85 | ||||||||||||||||||||||
2019 | 7,335,899 | 4.25 | 31,153,035 | 0.46 | 0.55 | 30.86 | ||||||||||||||||||||||
2018 | 7,909,884 | 3.25 | 25,669,741 | 0.70 | 0.55 | (6.89) | ||||||||||||||||||||||
2017 | 8,462,782 | 3.49 | 29,497,142 | 0.99 | 0.55 | 21.21 | ||||||||||||||||||||||
Invesco V.I. Capital Appreciation Division5 | ||||||||||||||||||||||||||||
2021 | 8,273,970 | 12.43 | 102,845,503 | - | 0.55 | 21.90 | ||||||||||||||||||||||
2020 | 8,840,729 | 10.20 | 90,150,677 | - | 0.55 | 35.84 | ||||||||||||||||||||||
2019 | 9,487,440 | 7.51 | 71,220,795 | 0.06 | 0.55 | 35.45 | ||||||||||||||||||||||
2018 | 10,207,827 | 5.54 | 56,573,951 | 0.32 | 0.55 | (6.25) | ||||||||||||||||||||||
2017 | 10,805,419 | 5.91 | 63,877,526 | 0.24 | 0.55 | 26.14 | ||||||||||||||||||||||
Invesco V.I. Discovery Mid Cap Growth Division5 | ||||||||||||||||||||||||||||
2021 | 10,925,539 | 10.06 | 109,870,686 | - | 0.55 | 18.45 | ||||||||||||||||||||||
2020 | 11,695,792 | 8.49 | 99,300,006 | 0.04 | 0.55 | 39.92 | ||||||||||||||||||||||
2019 | 12,544,680 | 6.07 | 76,121,664 | - | 0.55 | 38.60 | ||||||||||||||||||||||
2018 | 13,535,826 | 4.38 | 59,261,792 | - | 0.55 | (6.60) | ||||||||||||||||||||||
2017 | 14,492,672 | 4.69 | 67,935,001 | 0.03 | 0.55 | 28.09 | ||||||||||||||||||||||
Invesco V.I. Global Division5 | ||||||||||||||||||||||||||||
2021 | 10,607,666 | 4.89 | to | 13.03 | 109,028,535 | - | 0.40 | to | 0.55 | 14.86 | to | 15.03 | ||||||||||||||||
2020 | 11,350,295 | 4.25 | to | 11.34 | 101,575,950 | 0.70 | 0.40 | to | 0.55 | 26.94 | to | 27.13 | ||||||||||||||||
2019 | 12,281,128 | 3.34 | to | 8.94 | 86,639,327 | 0.90 | 0.40 | to | 0.55 | 31.06 | to | 31.26 | ||||||||||||||||
2018 | 13,582,973 | 2.55 | to | 6.82 | 72,930,203 | 0.99 | 0.40 | to | 0.55 | (13.66) | to | (13.53) | ||||||||||||||||
2017 | 14,557,589 | 2.94 | to | 7.90 | 90,619,517 | 0.92 | 0.40 | to | 0.55 | 35.92 | to | 36.12 | ||||||||||||||||
Invesco V.I Global Strategic Income Division5 | ||||||||||||||||||||||||||||
2021 | 1,798,574 | 3.44 | 6,192,496 | 4.69 | 0.55 | (3.94) | ||||||||||||||||||||||
2020 | 1,881,821 | 3.58 | 6,745,062 | 5.85 | 0.55 | 2.83 | ||||||||||||||||||||||
2019 | 2,033,209 | 3.49 | 7,086,866 | 1.90 | 0.55 | 10.20 | ||||||||||||||||||||||
2018 | 6,795,368 | 3.16 | 21,494,153 | 5.00 | 0.55 | (4.92) | ||||||||||||||||||||||
2017 | 2,369,289 | 3.33 | 7,882,385 | 2.28 | 0.55 | 5.69 | ||||||||||||||||||||||
MML Blend Division | ||||||||||||||||||||||||||||
2021 | 13,001,141 | 6.09 | to | 13.39 | 111,608,842 | 2.13 | 0.25 | to | 0.55 | 14.39 | to | 14.74 | ||||||||||||||||
2020 | 13,705,648 | 5.32 | to | 11.69 | 103,264,742 | - | 0.25 | to | 0.55 | 12.25 | to | 12.58 | ||||||||||||||||
2019 | 14,297,666 | 4.74 | to | 10.40 | 96,542,455 | 2.44 | 0.25 | to | 0.55 | 20.72 | to | 21.08 | ||||||||||||||||
2018 | 15,301,156 | 3.93 | to | 8.60 | 85,867,703 | 2.12 | 0.25 | to | 0.55 | (4.87) | to | (4.58) | ||||||||||||||||
2017 | 16,433,268 | 4.13 | to | 9.03 | 96,942,162 | 2.12 | 0.25 | to | 0.55 | 14.62 | to | 14.97 |
F-14 |
Notes To Financial Statements (Continued)
8. | FINANCIAL HIGHLIGHTS (Continued) |
At December 31, | For the Years Ended December 31, | |||||||||||||||||||||||||||
Investment | ||||||||||||||||||||||||||||
Unit Value3 | Income | Expense Ratio2 | Total Return3 | |||||||||||||||||||||||||
Units4 | (Lowest to Highest) | Net Assets | Ratio1 | (Lowest to Highest) | (Lowest to Highest) | |||||||||||||||||||||||
MML Equity Division | ||||||||||||||||||||||||||||
2021 | 38,429,166 | $ | 6.12 | to | $ | 14.45 | $ | 305,797,199 | 1.66 | % | 0.25 | % | to | 0.55 | % | 29.55 | % | to | 29.93 | % | ||||||||
2020 | 40,808,306 | 4.72 | to | 11.14 | 252,043,339 | 2.32 | 0.25 | to | 0.55 | 2.46 | to | 2.77 | ||||||||||||||||
2019 | 43,648,905 | 4.61 | to | 10.85 | 265,009,336 | 2.04 | 0.25 | to | 0.55 | 25.23 | to | 25.61 | ||||||||||||||||
2018 | 46,951,238 | 3.68 | to | 8.65 | 227,988,528 | 1.77 | 0.25 | to | 0.55 | (10.49) | to | (10.22) | ||||||||||||||||
2017 | 50,380,428 | 4.11 | to | 9.65 | 275,093,201 | 1.82 | 0.25 | to | 0.55 | 15.16 | to | 15.50 | ||||||||||||||||
MML Equity Index Division | ||||||||||||||||||||||||||||
2021 | 18,747,410 | 4.20 | to | 4.50 | 83,352,503 | 1.44 | 0.40 | to | 0.55 | 27.67 | to | 27.86 | ||||||||||||||||
2020 | 19,320,454 | 3.29 | to | 3.53 | 67,249,189 | 1.87 | 0.40 | to | 0.55 | 17.57 | to | 17.74 | ||||||||||||||||
2019 | 20,017,308 | 2.79 | to | 3.00 | 59,241,756 | 3.30 | 0.40 | to | 0.55 | 30.34 | to | 30.53 | ||||||||||||||||
2018 | 15,835,769 | 2.14 | to | 2.30 | 35,723,436 | 1.68 | 0.40 | to | 0.55 | (5.16) | to | (5.01) | ||||||||||||||||
2017 | 22,721,842 | 2.25 | to | 2.43 | 54,328,435 | 1.19 | 0.40 | to | 0.55 | 20.83 | to | 21.01 | ||||||||||||||||
MML Managed Bond Division | ||||||||||||||||||||||||||||
2021 | 3,569,522 | 3.34 | to | 6.30 | 14,300,735 | 3.18 | 0.25 | to | 0.55 | 0.26 | to | 0.56 | ||||||||||||||||
2020 | 3,716,764 | 3.33 | to | 6.27 | 14,862,437 | 0.10 | 0.25 | to | 0.55 | 7.12 | to | 7.44 | ||||||||||||||||
2019 | 3,775,576 | 3.11 | to | 5.85 | 14,034,634 | 3.69 | 0.25 | to | 0.55 | 9.21 | to | 9.54 | ||||||||||||||||
2018 | 3,997,018 | 2.85 | to | 5.34 | 13,577,705 | 3.45 | 0.25 | to | 0.55 | (0.99) | to | (0.69) | ||||||||||||||||
2017 | 4,374,040 | 2.87 | to | 5.39 | 15,136,708 | 3.18 | 0.25 | to | 0.55 | 4.12 | to | 4.43 | ||||||||||||||||
MML Small Cap Equity Division | ||||||||||||||||||||||||||||
2021 | 1,774,568 | 6.19 | 10,983,023 | 0.44 | 0.55 | 22.08 | ||||||||||||||||||||||
2020 | 1,828,590 | 5.07 | 9,270,552 | 0.54 | 0.55 | 20.03 | ||||||||||||||||||||||
2019 | 1,946,939 | 4.22 | 8,223,169 | 0.47 | 0.55 | 25.77 | ||||||||||||||||||||||
2018 | 2,057,011 | 3.36 | 6,907,818 | 0.49 | 0.55 | (10.68) | ||||||||||||||||||||||
2017 | 2,182,776 | 3.76 | 8,206,763 | 0.84 | 0.55 | 13.74 | ||||||||||||||||||||||
MML U.S. Government Money Market Division | ||||||||||||||||||||||||||||
2021 | 3,800,969 | 1.45 | to | 2.16 | 5,978,908 | - | 0.25 | to | 0.55 | (0.55) | to | (0.25) | ||||||||||||||||
2020 | 3,846,528 | 1.46 | to | 2.17 | 6,167,190 | 0.18 | 0.25 | to | 0.55 | (0.32) | to | (0.02) | ||||||||||||||||
2019 | 2,673,499 | 1.46 | to | 2.17 | 4,413,233 | 1.70 | 0.25 | to | 0.55 | 1.15 | to | 1.45 | ||||||||||||||||
2018 | 2,888,232 | 1.45 | to | 2.15 | 4,690,956 | 1.33 | 0.25 | to | 0.55 | 0.78 | to | 1.08 | ||||||||||||||||
2017 | 3,244,096 | 1.44 | to | 2.13 | 5,227,827 | 0.36 | 0.25 | to | 0.55 | (0.19) | to | 0.11 | ||||||||||||||||
T. Rowe Price Mid-Cap Growth Division | ||||||||||||||||||||||||||||
2021 | 6,623,487 | 8.10 | to | 10.02 | 59,837,582 | - | 0.40 | to | 0.55 | 14.22 | to | 14.39 | ||||||||||||||||
2020 | 7,224,874 | 7.08 | to | 8.78 | 57,004,665 | - | 0.40 | to | 0.55 | 23.13 | to | 23.31 | ||||||||||||||||
2019 | 7,927,541 | 5.74 | to | 7.13 | 50,852,827 | 0.14 | 0.40 | to | 0.55 | 30.57 | to | 30.77 | ||||||||||||||||
2018 | 8,446,035 | 4.39 | to | 5.46 | 41,470,491 | - | 0.40 | to | 0.55 | (2.57) | to | (2.42) | ||||||||||||||||
2017 | 9,032,616 | 4.50 | to | 5.60 | 45,520,880 | - | 0.40 | to | 0.55 | 24.09 | to | 24.28 |
1The investment income ratios represent the dividends, excluding distributions of capital gains, received by the division from the underlying mutual fund, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that are assessed against policy owners accounts either through reductions in the unit values or the redemption of units. The recognition of investment income by the division is affected by the timing of the declaration of dividends by the underlying fund in which the division invests.
2The expense ratios represent the annualized policy expenses of the Separate Account, consisting primarily of mortality and expense charges, for each period indicated. The ratios include only those expenses that result in a direct reduction in unit values. Charges made directly to policy owner accounts through the redemption of units and expenses of the underlying fund have been excluded.
3The total returns are for the periods indicated, including changes in the value of the underlying fund, and the expenses assessed through the reduction in unit values. These ratios do not include any expenses assessed through the redemption of units. As the total return table is presented as a range of minimum to maximum values, based on the product grouping representing the minimum and maximum expense ratio amounts, some individual policy total returns and unit values are not within the ranges presented.
4See note 3G with respect to Variable Life.
5See Note 2 to the financial statements for the previous name of this division.
F-15 |
Notes To Financial Statements (Continued)
8. | FINANCIAL HIGHLIGHTS (Continued) |
B. | The Separate Account assesses “current” charges associated with each policy. These charges are either assessed as a direct reduction in unit values or through the redemption of units for all policies contained within the Separate Account (see note 3G). Charges shown below state charges assessed at a monthly rate unless otherwise specified. |
Administrative Charge | $2.50 to $6.00 per month |
This charge is assessed through the redemption of units. | |
Mortality and Expense Risk Charge | Effective annual rate of 0.25% to 0.55% of the policy’s average daily net assets in the Separate Account. |
This charge is assessed through reduction of unit values. | |
Mortality Charge | $0.01688 to $63.89 per $1,000 of insurance risk |
This charge is assessed through the redemption of units. | |
Additional Mortality Fees | $0.0042 to $83.33 per $1,000 of insurance risk |
This charge is assessed through the redemption of units. | $0.08 to $83.33 per $1,000 of face amount |
Loan Interest Rate Expense Charge | Effective annual rate of 0.90% to 1.00% of the loan amount |
This charge is assessed through the redemption of units. | |
Rider Charges: | |
The rider charges do not apply to all segments within the Separate Account. These charges are assessed through the redemption of units. | |
A. Accidental Death Benefit | $0.06591 to $1.42 per $1,000 of coverage |
B. Death Benefit Guarantee | $0.01 per $1,000 of face amount |
C. Insurability Protection | $0.043 to $0.179 per $1,000 of coverage |
D. Children’s Term | $5.00 per $1,000 of insurance risk |
E. Disability Benefit | $0.041 to $0.266 per $1 of monthly deductions |
$0.009 to $0.149 per $1 of specified premium | |
F. Renewal Term | $1.53 to $39.37 per $1,000 of insurance risk |
G. Waiver of Monthly Charges | $0.036 to $0.349 per $1 of monthly deductions |
H. Waiver of Premium | $0.11 to $3.51 per $1,000 of insurance risk |
9. | SUBSEQUENT EVENTS |
The Separate Account’s management has reviewed events occurring through March 8, 2022, the date the financial statements were issued, and no subsequent events occurred requiring accrual or disclosure.
F-16 |
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY FINANCIAL STATEMENTS
As of December 31, 2021 and 2020 and
for the years ended December 31, 2021, 2020 and 2019
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY FINANCIAL STATEMENTS
KPMG LLP
One Financial Plaza
755 Main Street
Hartford, CT 06103
The Board of Directors and Shareholder
MML Bay State Life Insurance Company:
Opinions
We have audited the financial statements of MML Bay State Life Insurance Company (the Company), which comprise the statutory statements of financial position as of December 31, 2021 and 2020, and the related statutory statements of operations and changes in capital and surplus, and cash flows for the three-year period ended December 31, 2021, and the related notes to the financial statements.
Unmodified Opinion on Statutory Basis of Accounting
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the three-year period ended December 31, 2021 in accordance with the statutory accounting practices prescribed or permitted by the State of Connecticut Insurance Department described in Note 2.
Adverse Opinion on U.S. Generally Accepted Accounting Principles
In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles section of our report, the financial statements do not present fairly, in accordance with U.S. generally accepted accounting principles, the financial position of the Company as of December 31, 2021 and 2020, or the results of its operations or its cash flows for the three-year period ended December 31, 2021.
Basis for Opinions
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles
As described in Note 2 of the financial statements, the financial statements are prepared by the Company using accounting practices prescribed or permitted by the State of Connecticut Insurance Department, which is a basis of accounting other than U.S. generally accepted accounting principles. Accordingly, the financial statements are not intended to be presented in accordance with U.S. generally accepted accounting principles. The effects on the financial statements of the variances between the statutory accounting practices described in Note 2 and U.S. generally accepted accounting principles, although not reasonably determinable, are presumed to be material and pervasive.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with statutory accounting practices prescribed or permitted by the State of Connecticut Insurance Department. Management is also responsible for the design, implementation, and maintenance of internal
KPMG LLP, a Delaware limited liability partnership and a member firm of
the KPMG global organization of independent member firms affiliated with
KPMG International Limited, a private English company limited by guarantee.
control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the financial statements are available to be issued.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in
the aggregate, they would influence the judgment made by a reasonable user based on the financial
statements.
In performing an audit in accordance with GAAS, we:
• | Exercise professional judgment and maintain professional skepticism throughout the audit. |
• | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. |
• | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed. |
• | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. |
• | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
/s/ KPMG LLP
Hartford, Connecticut
February 25, 2022
2 |
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY STATEMENTS OF FINANCIAL POSITION
Years Ended December 31, | ||||||||
As of | ||||||||
December 31, | ||||||||
2021 | 2020 | |||||||
($ In Millions Except for Par Value) | ||||||||
Assets: | ||||||||
Bonds | $ | 219 | $ | 243 | ||||
Mortgage loans | 2 | 2 | ||||||
Policy loans | 91 | 93 | ||||||
Cash, cash equivalents and short-term investments | 121 | 104 | ||||||
Total invested assets | 433 | 442 | ||||||
Investment income due and accrued | 4 | 4 | ||||||
Insurance amounts receivable | 45 | 41 | ||||||
Federal income taxes | 4 | 4 | ||||||
Net deferred income taxes | 2 | 2 | ||||||
Total assets excluding separate accounts | 488 | 493 | ||||||
Separate account assets | 4,975 | 4,859 | ||||||
Total assets | $ | 5,463 | $ | 5,352 | ||||
Liabilities: | ||||||||
Policyholders’ reserves | $ | 143 | $ | 143 | ||||
Liabilities for deposit-type contracts | 16 | 14 | ||||||
Contract claims and other benefits | 20 | 28 | ||||||
General expenses due or accrued | ||||||||
Transfers due to separate accounts | 17 | 14 | ||||||
Payable to affiliates | 4 | 2 | ||||||
Asset valuation reserve | 6 | 7 | ||||||
Other liabilities | 17 | 10 | ||||||
Total liabilities excluding separate accounts | 223 | 218 | ||||||
Separate account liabilities | 4,975 | 4,859 | ||||||
Total liabilities | 5,198 | 5,077 | ||||||
Capital and surplus: | ||||||||
Common stock, $200 par value 50,000 shares authorized 12,501 shares issued and outstanding | 2 | 2 | ||||||
Paid-in and contributed surplus | 144 | 144 | ||||||
Surplus | 119 | 129 | ||||||
Total capital and surplus | 265 | 275 | ||||||
Total liabilities and capital and surplus | $ | 5,463 | $ | 5,352 |
See accompanying notes to statutory financial statements
3 |
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY STATEMENTS OF OPERATIONS
Years Ended | ||||||||||||
December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(In Millions) | ||||||||||||
Revenue: | ||||||||||||
Premium income | $ | 12 | $ | (4 | ) | $ | 3 | |||||
Net investment income | 13 | 15 | 18 | |||||||||
Reserve adjustments on reinsurance ceded | (79 | ) | (70 | ) | (72 | ) | ||||||
Fees and other income | 79 | 77 | 74 | |||||||||
Total revenue | 25 | 18 | 23 | |||||||||
Benefits, expenses and other deductions: | ||||||||||||
Policyholders’ benefits | 83 | 46 | 50 | |||||||||
Change in policyholders’ reserves | - | (2 | ) | 2 | ||||||||
Net transfers from separate accounts | (89 | ) | (50 | ) | (57 | ) | ||||||
General insurance expenses | 8 | 9 | 10 | |||||||||
Commissions | 2 | 2 | 2 | |||||||||
State taxes, licenses and fees | 1 | 1 | 1 | |||||||||
Other deductions | (2 | ) | (2 | ) | (3 | ) | ||||||
Total benefits, expenses and other deductions | 3 | 4 | 5 | |||||||||
Net gain from operations before federal income taxes | 22 | 14 | 18 | |||||||||
Federal income tax expense | 3 | 1 | 4 | |||||||||
Net gain from operations | 19 | 13 | 14 | |||||||||
Net realized capital loss after tax and transfers to interest maintenance reserve | - | (1 | ) | - | ||||||||
Net income | $ | 19 | $ | 12 | $ | 14 |
See accompanying notes to statutory financial statements
4 |
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
Years Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(In Millions) | ||||||||||||
Capital and surplus, beginning of year | $ | 275 | $ | 293 | $ | 310 | ||||||
Net decrease due to: | ||||||||||||
Net income | 19 | 12 | 14 | |||||||||
Change in other net deferred income taxes | - | - | 2 | |||||||||
Change in nonadmitted assets | - | - | 1 | |||||||||
Change in reserve valuation basis | - | 1 | - | |||||||||
Change in asset valuation reserve | 1 | (1 | ) | - | ||||||||
Dividend paid | (27 | ) | (29 | ) | (30 | ) | ||||||
Other | (3 | ) | (1 | ) | (4 | ) | ||||||
Net decrease | (10 | ) | (18 | ) | (17 | ) | ||||||
Capital and surplus, end of year | $ | 265 | $ | 275 | $ | 293 |
See accompanying notes to statutory financial statements
5 |
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY STATEMENTS OF CASH FLOWS
Years Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(In Millions) | ||||||||||||
Cash from operations: | ||||||||||||
Premium collected net of reinsurance | $ | 3 | $ | 1 | $ | 2 | ||||||
Net investment income | 13 | 16 | 19 | |||||||||
Miscellaneous income | 10 | (5 | ) | - | ||||||||
Benefit payments | (89 | ) | (52 | ) | (46 | ) | ||||||
Net transfers from separate accounts | 92 | 62 | 51 | |||||||||
Commissions and other expenses | (9 | ) | (12 | ) | (13 | ) | ||||||
Federal and foreign income taxes paid | (3 | ) | (1 | ) | (5 | ) | ||||||
Net cash from operations | 17 | 9 | 8 | |||||||||
Cash from investments: | ||||||||||||
Proceeds from investments sold, matured or repaid: | ||||||||||||
Bonds | 33 | 76 | 53 | |||||||||
Total investment proceeds | 33 | 76 | 53 | |||||||||
Cost of investments acquired: | ||||||||||||
Bonds | (7 | ) | (13 | ) | (2 | ) | ||||||
Total investments acquired | (7 | ) | (13 | ) | (2 | ) | ||||||
Net decrease (increase) in policy loans | 2 | 4 | (1 | ) | ||||||||
Net cash from investing activities | 28 | 67 | 50 | |||||||||
Cash from financing and miscellaneous sources: | ||||||||||||
Net deposits (withdrawals) on deposit-type contracts | 2 | (3 | ) | 1 | ||||||||
Dividend paid | (27 | ) | (29 | ) | (30 | ) | ||||||
Other cash (used) provided | (3 | ) | - | 7 | ||||||||
Net cash applied to financing and miscellaneous sources | (28 | ) | (32 | ) | (22 | ) | ||||||
Net change in cash, cash equivalents and short-term investments | 17 | 44 | 36 | |||||||||
Cash, cash equivalents and short-term investments, beginning of year | 104 | 60 | 24 | |||||||||
Cash, cash equivalents and short-term investments, end of year | $ | 121 | $ | 104 | $ | 60 |
See accompanying notes to statutory financial statements
6 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
These statutory financial statements include MML Bay State Life Insurance Company (the Company), a wholly owned stock life insurance subsidiary of C.M. Life Insurance Company (C.M. Life). C.M. Life is a wholly owned stock life insurance subsidiary of Massachusetts Mutual Life Insurance Company (MassMutual). The Company is domiciled in the State of Connecticut. It provides life insurance and annuities to individuals and group life insurance to institutions.
MassMutual is a mutual life insurance company domiciled in the Commonwealth of Massachusetts. MassMutual and its subsidiaries provide individual and group life insurance, disability insurance, individual and group annuities and guaranteed interest contracts to individual and institutional customers in all 50 states of the United States of America (U.S.), the District of Columbia and Puerto Rico. Products and services are offered primarily through the Company’s MassMutual Financial Advisors (MMFA), Direct to Consumer, Institutional Solutions and Workplace Solutions distribution channels.
MMFA is a sales force that includes financial advisors that operate in the U.S. MMFA sells individual life and individual annuities. Individual life is currently in run-off and is primarily in the separate accounts business
2. Summary of significant accounting policies
a. Basis of presentation
The statutory financial statements have been prepared in conformity with the statutory accounting practices of the National Association of Insurance Commissioners (NAIC) and the accounting practices prescribed or permitted by the State of Connecticut Insurance Department (the Department).
Statutory accounting principles are different in some respects from financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The more significant differences between statutory accounting principles and U.S. GAAP are as follows:
Invested assets
· | Bonds are generally carried at amortized cost, whereas U.S. GAAP reports bonds at fair value for bonds available for sale and trading or at amortized cost for bonds held to maturity |
Policyholders’ liabilities
· | Statutory policy reserves are based upon prescribed methods, such as the Commissioners’ Reserve Valuation Method, Commissioners’ Annuity Reserve Valuation Method (CARVM) or net level premium method, and prescribed statutory mortality, morbidity and interest assumptions at the time of issuance, whereas U.S. GAAP policy reserves would generally be based upon the net level premium method or the estimated gross margin method with estimates, at time of issuance, of future mortality, morbidity, persistency and interest |
· | Liabilities for policyholders’ reserves, unearned premium, and unpaid claims are presented net of reinsurance ceded, whereas U.S. GAAP would present the liabilities on a direct basis and report an asset for the amounts due from reinsurers for the amounts ceded |
· | Payments received for universal and variable life insurance products and certain variable annuities contracts are reported as premium income and corresponding change in reserves, whereas U.S. GAAP would treat these payments as deposits to policyholders’ account balances |
General insurance expenses and commissions
· | Certain acquisition costs, such as commissions and other variable costs, directly related to successfully acquiring new business are charged to current operations as incurred, whereas U.S. GAAP generally would capitalize these expenses and amortize them based on profit emergence over the expected life of the policies or over the premium payment period |
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MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
Net realized capital gains (losses)
· | After-tax realized capital gains (losses) that result from changes in the overall level of interest rates for all types of fixed-income investments and interest-related hedging activities are deferred into the interest maintenance reserve (IMR) and amortized into revenue, whereas U.S. GAAP reports these gains and losses as revenue |
Capital and surplus
· | Changes in the balances of deferred income taxes, which provide for book versus tax temporary differences, are subject to limitation and are recorded in surplus, whereas U.S. GAAP would generally include the change in deferred taxes in net income without limitation |
· | Assets are reported at admitted asset value and assets designated as nonadmitted are excluded through a charge against surplus, whereas U.S. GAAP recognizes all assets, net of any valuation allowances |
· | An asset valuation reserve (AVR) is reported as a contingency reserve to stabilize surplus against fluctuations in the statement value of partnerships and LLCs and certain common stocks as well as credit-related changes in the value of bonds, mortgage loans and certain derivatives, whereas U.S. GAAP does not record this reserve |
· | Changes to the mortgage loan valuation allowance are recognized in net unrealized capital gains (losses), net of tax, in the Statutory Statements of Changes in Capital and Surplus, whereas U.S. GAAP reports these changes in net realized capital gains (losses) |
· | Statutory Statements of Changes in Capital and Surplus includes net income, change in net unrealized capital gains (losses), change in net unrealized foreign exchange capital gains (losses), change in other net deferred income taxes, change in nonadmitted assets, change in AVR prior period adjustments, whereas U.S. GAAP presents net income as retained earnings and net unrealized capital gains (losses), change in net unrealized foreign exchange capital gains (losses), change in minimum pension liability as other comprehensive income |
The preparation of financial statements requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities, the disclosure of assets and liabilities as of the date of the statutory financial statements and the reported amounts of revenues and expenses during the reporting periods. The most significant estimates include those used in determining the carrying values of investments including the amount of mortgage loan investment valuation reserves, other-than-temporary impairment(s) (OTTI), the liabilities for policyholders’ reserves, the determination of admissible deferred tax assets (DTA), the liability for taxes and the liability for litigation or other contingencies. Future events including, but not limited to, changes in the level of mortality, morbidity, interest rates, persistency, asset valuations and defaults could cause results to differ from the estimates used in the statutory financial statements. Although some variability is inherent in these estimates, management believes the amounts presented are appropriate.
b. Bonds
Bonds are generally valued at amortized cost using the constant yield interest method with the exception of NAIC Category 6 bonds, which are in or near default, and certain residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS), which are rated by outside modelers, which are carried at the lower of amortized cost or fair value. NAIC ratings are applied to bonds and other securities. Categories 1 and 2 are considered investment grade, while Categories 3 through 6 are considered below investment grade. Bonds are recorded on a trade date basis, except for private placement bonds, which are recorded on the funding date.
For loan-backed and structured securities, such as asset-backed securities (ABS), mortgage-backed securities (MBS), including RMBS and CMBS, and structured securities, including collateralized debt obligations (CDOs), amortization or accretion is revalued quarterly based on the current estimated cash flows, using either the prospective or retrospective adjustment methodologies.
All other fixed income securities, such as floating rate bonds and interest only securities, including those that have been impaired, follow the prospective method of accounting.
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MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
The fair value of bonds is based on quoted market prices when available. If quoted market prices are not available, values provided by other third-party organizations are used. If values provided by other third-party organizations are unavailable, fair value is estimated using internal models by discounting expected future cash flows using observable current market rates applicable to yield, credit quality and maturity of the investment or using quoted market values for comparable investments. Internal inputs used in the determination of fair value include estimated prepayment speeds, default rates, discount rates and collateral values, among others. Structure characteristics and cash flow priority are also considered. Fair values resulting from internal models are those expected to be received in an orderly transaction between willing market participants.
Refer to Note 2s. “Realized capital gains (losses) including other-than-temporary impairments and unrealized capital gains (losses)” for information on the Company’s policy for determining OTTI.
c. Mortgage loans
Mortgage loans are valued at the unpaid principal balance of the loan, net of unamortized premium, discount, mortgage origination fees and valuation allowances.
d. Policy loans
Policy loans are carried at the outstanding loan balance less amounts unsecured by the cash surrender value of the policy.
e. Cash, cash equivalents and short-term investments
Cash and cash equivalents, which are carried at amortized cost, consist of all highly liquid investments purchased with original maturities of three months or less.
Short-term investments, which are carried at amortized cost, consist of short-term bonds and all highly liquid investments purchased with maturities of greater than three months and less than or equal to 12 months.
The carrying value reported in the Statutory Statements of Financial Position for cash, cash equivalents and short-term investment instruments approximates the fair value.
f. Investment income due and accrued
Accrued investment income consists primarily of interest, which is recognized on an accrual basis.
g. Insurance amounts receivable
Insurance amounts receivable primarily includes reinsurance recoverables and other receivables, including deferred and uncollected premium.
h. Federal income taxes
Total federal income taxes are based upon the Company’s best estimate of its current and DTAs or liabilities (DTA(L)). Current tax expense (benefit) is reported in the Statutory Statements of Operations as federal income tax expense (benefit) if resulting from operations and within net realized capital gains (losses) if resulting from invested asset transactions. Changes in the balances of deferred taxes, which provide for book-to-tax temporary differences, are subject to limitations and are reported within various lines within surplus. Accordingly, the reporting of book-to-tax temporary differences, such as reserves and policy acquisition costs, and of book-to-tax permanent differences, such as tax-exempt interest and tax credits, results in effective tax rates in the Statutory Statements of Operations that differ from the federal statutory tax rate.
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MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
i. Nonadmitted assets
Assets designated as nonadmitted by the NAIC primarily include the amount of DTAs (subject to certain limitations) that will not be realized by the end of the third calendar year following the current year end. These assets are designated as nonadmitted and are excluded from Statutory Statements of Financial Position through a charge against surplus.
j. Separate accounts
Separate and sub-accounts are segregated funds administered and invested by the Company, the performance of which primarily benefits the policyholders/contract holders with an interest in the separate accounts. Group and individual variable annuity, variable life and other insurance policyholders/contract holders select from among the separate accounts and sub-accounts made available by the Company. The separate accounts and sub-accounts are offered as investment options under certain insurance contracts or policies. The returns produced by separate account assets increase or decrease separate account reserves. Separate account assets consist principally of marketable securities reported at fair value. Except for the Company’s seed money, and certain book value separate accounts, separate account assets can only be used to satisfy separate account liabilities and are not available to satisfy the general obligations of the Company. Separate account administrative and investment advisory fees are included in fees and other income.
Assets may be transferred from the general investments of the Company to seed the separate accounts. When assets are transferred to separate accounts, they are transferred at fair market value. Gains related to the transfer are deferred to the extent that the Company maintains a proportionate interest in the separate account. The deferred gain is recognized as the Company’s ownership decreases or when the separate account sells the underlying asset during the normal course of business. Losses associated with these transfers are recognized immediately.
Separate accounts reflect two categories of risk assumption: nonguaranteed separate accounts for which the policyholder/contract holder assumes the investment risk and guaranteed separate accounts for which the Company contractually guarantees a minimum return, a minimum account value, or both to the policyholder/contract holder.
Premium income, benefits and expenses of the separate accounts are included in the Statutory Statements of Operations with the offset recorded in the change in policyholders’ reserves. Investment income, realized capital gains (losses) and unrealized capital gains (losses) on the assets of separate accounts, other than seed money, accrue to policyholders/contract holders and are not recorded in the Statutory Statements of Operations.
k. Policyholders’ reserves
Policyholders’ reserves are developed by actuarial methods and are determined based on statutory prescribed mortality/morbidity tables using specified interest rates and valuation methods that will provide for the present value of estimated future obligations in excess of estimated future premium on policies in force.
The Company charges a higher premium on certain contracts that cover substandard mortality risk. For these policies, the reserve calculations are based on a substandard mortality rate, which is a multiple of the standard mortality tables.
Certain individual variable annuity products issued by the Company offer guaranteed minimum death benefits (GMDBs). The liability for GMDBs is included in policyholders’ reserves and the related change in this liability is included in change in policyholders’ reserves.
Tabular interest, tabular reserves less actual reserves released, and tabular cost for all life and annuity contracts and supplementary contracts involving life contingencies are determined in accordance with NAIC Annual Statement instructions. For tabular interest, variable life uses a formula that applies a weighted average interest rate determined from a seriatim valuation file to the mean average reserves. Variable universal life, group life, annuity and supplemental contracts use a formula that applies a weighted average credited rate to the mean account value. For contracts without an account value a weighted average statutory valuation rate is applied to the mean statutory reserve or accepted actuarial methods using applicable interest rates are applied.
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MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
All policyholders’ reserves and accruals are presented net of reinsurance. Management believes that these liabilities and accruals represent management’s best estimate and will be sufficient, in conjunction with future revenues, to meet future anticipated obligations of policies and contracts in force.
l. Liabilities for deposit-type contracts
Liabilities for investment-type contracts such as supplementary contracts not involving life contingencies are based on account value or accepted actuarial methods using applicable interest rates.
m. Transfers due to separate accounts
Transfers due to separate accounts represent a net payable to the Company’s separate accounts.
n. Asset valuation reserve
The Company maintains an AVR that is a contingency reserve to stabilize capital and surplus against credit-related changes in the value of bonds and mortgage loans. The AVR is reported as a liability and the change in AVR, net of tax, is reported in capital and surplus.
o. Interest maintenance reserve
The Company maintains an IMR that is used to stabilize net income against fluctuations in interest rates. After-tax realized capital gains (losses), which result from changes in interest rates for all types of fixed-income investments, are deferred into the IMR and amortized into net investment income using the grouped amortization method. In the grouped amortization method, assets are grouped based on years of maturity. IMR is reduced by the amount ceded to reinsurers when entering into in force coinsurance ceding agreements. The IMR is included in other liabilities, or if negative, is recorded as a nonadmitted asset.
p. Other liabilities
Other liabilities primarily consist of due and accrued separate account transfers, remittances and items not allocated, affiliated payables and accounts payable.
q. Reinsurance
The Company enters into reinsurance agreements with affiliated and unaffiliated insurers in the normal course of business to limit its insurance risk.
Premium income, benefits to policyholders (including unpaid claims) and policyholders’ reserves are reported net of reinsurance. Premium, benefits and reserves related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. The Company records a receivable for reinsured benefits paid, but not yet reimbursed by the reinsurer and reduces policyholders’ reserves for the portion of insurance liabilities that are reinsured. Commissions and expense allowances on reinsurance ceded and modified coinsurance (Modco) reserve adjustments on reinsurance ceded are recorded as revenue.
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MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
r. Premium and related expense recognition
Life insurance premium revenue is generally recognized annually on the anniversary date of the policy. However, premium for flexible products, primarily variable life contracts, is recognized as revenue when received. Annuity premium is recognized as revenue when received.
Premium revenue is adjusted by the related deferred premium adjustment. Deferred premium adjusts for the overstatement created in the calculation of reserves as the reserve computation assumes the entire year’s net premium is collected annually at the beginning of the policy year and does not take into account installment or modal payments. Commissions and other costs related to issuance of new policies and policy maintenance and settlement costs are charged to current operations when incurred. Surrender fee charges on certain life and annuity products are recorded as a reduction of benefits and expenses.
s. Realized capital gains (losses) including other-than-temporary impairments and unrealized capital gains (losses)
Realized capital gains (losses), net of taxes, exclude gains (losses) deferred into the IMR and gains (losses) of the separate accounts. Realized capital gains (losses), including OTTI, are recognized in net income and are determined using the specific identification method.
Bonds – general
The Company employs a systematic methodology to evaluate OTTI by conducting a quarterly analysis of bonds. OTTI is evaluated in a manner consistent with market participant assumptions. The Company considers the following factors, where applicable depending on the type of securities, in the evaluation of whether a decline in value is other than temporary: (a) the likelihood that the Company will be able to collect all amounts due according to the contractual terms of the debt security; (b) the present value of the expected future cash flows of the security; (c) the characteristics, quality and value of the underlying collateral or issuer securing the position; (d) collateral structure; (e) the length of time and extent to which the fair value has been below amortized cost; (f) the financial condition and near-term prospects of the issuer; (g) adverse conditions related to the security or industry; (h) the rating of the security; (i) the Company’s ability and intent to hold the investment for a period of time sufficient to allow for an anticipated recovery to amortized cost; and (j) other qualitative and quantitative factors in determining the existence of OTTI including, but not limited to, unrealized loss trend analysis and significant short-term changes in value.
In addition, if the Company has the intent to sell, or the inability, or lack of intent to retain the investment for a period sufficient to recover the amortized cost basis, an OTTI is recognized as a realized loss equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date.
When a bond is other-than-temporarily impaired, a new cost basis is established.
Bonds – corporate
For corporate securities, if it is determined that a decline in the fair value of a bond is other than temporary, OTTI is recognized as a realized loss equal to the difference between the investment’s amortized cost basis and, generally, its fair value at the balance sheet date.
Bonds loan-backed and structured securities
For loan-backed and structured securities, if the present value of cash flows expected to be collected is less than the amortized cost basis of the security, an OTTI is recognized as a realized loss equal to the difference between the investment’s amortized cost basis and the present value of cash flows expected to be collected. The expected cash flows are discounted at the security’s effective interest rate. Internal inputs used in determining the amount of the OTTI on structured securities include collateral performance, prepayment speeds, default rates, and loss severity based on borrower and loan characteristics, as well as deal structure including subordination, over-collateralization and cash flow priority.
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MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
ABS and MBS are evaluated for OTTI using scenarios and assumptions based on the specifics of each security including collateral type, loan type, vintage and subordination level in the structure. Cash flow estimates are based on these assumptions and inputs obtained from external industry sources along with internal analysis and actual experience. Where applicable, assumptions include prepayment speeds, default rates and loss severity, weighted average maturity and changes in the underlying collateral values.
The Company has a review process for determining if CDOs are at risk for OTTI. For the senior, mezzanine and junior debt tranches, cash flows are modeled using multiple scenarios based on the current ratings and values of the underlying corporate credit risks and incorporating prepayment and default assumptions that vary according to collateral attributes of each CDO. The prepayment and default assumptions are varied within each model based upon rating (base case), historical expectations (default), rating change improvement (optimistic), rating change downgrade (pessimistic) and fair value (market). The default rates produced by these multiple scenarios are assigned an expectation weight according to current market and economic conditions and fed into a final scenario. OTTI is recorded if this final scenario results in the loss of any principal or interest payments due.
For the most subordinated junior CDO tranches, the present value of the projected cash flows in the final scenario is measured using an effective yield. If the current book value of the security is greater than the present value measured using an effective yield, an OTTI is taken in an amount sufficient to produce its effective yield. Certain CDOs cannot be modeled using all of the scenarios because of limitations on the data needed for all scenarios. The cash flows for these CDOs, including foreign currency denominated CDOs, are projected using a customized scenario management believes is reasonable for the applicable collateral pool.
For loan-backed and structured securities, any difference between the new amortized cost basis and any increased present value of future cash flows expected to be collected is accreted into net investment income over the expected remaining life of the bond.
Unrealized capital gains (losses)
Unrealized capital gains (losses) include changes in the fair value of bonds held at fair value and are recorded as a change in capital and surplus net of tax.
Adoption of new accounting standards
In July 2020, the NAIC adopted modifications to Statements of Statutory Accounting Principles (SSAP) No. 26R, Bonds, effective January 1, 2021. The modifications apply similar reporting for gains or losses due to a tender offer as previously adopted for calls. The difference between consideration and par is recognized as net investment income, while any difference between book value and par is recognized as realized gain or loss. The modifications did not have a material effect on the Company’s financial statements.
In March 2021, the NAIC adopted modifications to SSAP No. 26R, Bonds, effective January 1, 2021. The modifications expand the called bond disclosures to also include bonds terminated early through a tender offer. The modifications did not have a material effect on the Company’s financial statements.
In March 2021, the NAIC adopted modifications to SSAP No. 26R, Bonds, effective January 1, 2021. The modifications clarify that perpetual bonds are within scope. Perpetual bonds shall be reported at fair value regardless of NAIC designation, not to exceed any current effective call price. For perpetual bonds with an effective call option, any applicable premium shall be amortized to the next effective call date. For perpetual bonds purchased at a discount, any applicable discount shall be accreted utilizing the yield-to-worst concept. The modifications did not have a material effect on the Company’s financial statements.
In May 2021, the NAIC adopted modifications to SSAP No. 2R, Cash, Cash Equivalents, Drafts and Short-Term Investments, effective May 20, 2021. The modifications clarify that cryptocurrencies do not meet the definition of cash, cash equivalents and short-term investments and therefore should be non-admitted assets if held directly by an insurer. The modifications did not have any effect on the Company’s financial statements.
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MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
Future adoption of new accounting standards
In November 2021, the NAIC adopted modifications to SSAP No. 43R, Loan-Backed and Structured Securities, effective December 31, 2022. The modifications require investments in residual tranches to be reported on Schedule BA as Other Invested Assets. Residual tranches will be carried at the lower of amortized cost or fair value, with changes in value recorded as unrealized gains or losses. The modifications are not expected to have a material effect on the Company’s financial statements.
4. Fair value of financial instruments
The following presents a summary of the carrying values and fair values of the Company’s financial instruments:
December 31, 2021 | ||||||||||||||||||||
Carrying | Fair | |||||||||||||||||||
Value | Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
(In Millions) | ||||||||||||||||||||
Financial assets: | ||||||||||||||||||||
Bonds: | ||||||||||||||||||||
U.S. government and agencies | $ | 4 | $ | 4 | $ | - | $ | 4 | $ | - | ||||||||||
Industrial and miscellaneous | 214 | 228 | - | 228 | - | |||||||||||||||
Parent, subsidiaries and affiliates | 1 | 1 | - | 1 | - | |||||||||||||||
Mortgage loans – residential | 2 | 2 | - | - | 2 | |||||||||||||||
Cash, cash equivalents and short-term investments | 121 | 121 | 7 | 114 | - | |||||||||||||||
Separate account assets | 4,975 | 4,994 | 1,378 | 3,607 | 9 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Individual annuity contracts | 3 | 3 | - | - | 3 | |||||||||||||||
Supplementary contracts | 15 | 15 | - | - | 15 |
December 31, 2020 | ||||||||||||||||||||
Carrying | Fair | |||||||||||||||||||
Value | Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
(In Millions) | ||||||||||||||||||||
Financial assets: | ||||||||||||||||||||
Bonds: | ||||||||||||||||||||
U.S. government and agencies | $ | 5 | $ | 5 | $ | - | $ | 5 | $ | - | ||||||||||
Industrial and miscellaneous | 238 | 261 | - | 261 | - | |||||||||||||||
Mortgage loans – residential | 2 | 2 | - | - | 2 | |||||||||||||||
Cash, cash equivalents and short-term investments | 104 | 104 | (2 | ) | 106 | - | ||||||||||||||
Separate account assets | 4,859 | 4,929 | 1,196 | 3,723 | 10 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Individual annuity contracts | 3 | 3 | - | - | 3 | |||||||||||||||
Supplementary contracts | 13 | 13 | - | - | 13 |
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value establishes a measurement framework that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques into three levels. Each level reflects a unique description of the inputs that are significant to the fair value measurements. The levels of the fair value hierarchy are as follows:
Level 1 – Observable inputs in the form of quoted prices for identical instruments in active markets.
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MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be derived from observable market data for substantially the full term of the assets or liabilities.
Level 3 – One or more unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using internal models, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
When available, the Company generally uses unadjusted quoted market prices from independent sources to determine the fair value of investments and classifies such items within Level 1 of the fair value hierarchy. If quoted prices are not available, prices are derived from observable market data for similar assets in an active market or obtained directly from brokers for identical assets traded in inactive markets. Investments that are priced using these inputs are classified within Level 2 of the fair value hierarchy. When some of the necessary observable inputs are unavailable, fair value is based upon internally developed models. These models use inputs not directly observable or correlated with observable market data. Typical inputs, which are integrated in the Company’s internal discounted cash flow models and discounted earnings models include, but are not limited to, issuer spreads derived from internal credit ratings and benchmark yields such as LIBOR, cash flow estimates and earnings before interest, taxes, depreciation and amortization estimates. Investments that are priced with such unobservable inputs are classified within Level 3 of the fair value hierarchy.
The Company has established and maintains policies and guidelines that govern its valuation methodologies and their consistent application. These policies and guidelines address the use of inputs, price source hierarchies and provide controls around the valuation processes. These controls include appropriate review and analysis of prices against market activity or indicators for reasonableness, approval of price source changes, price overrides, methodology changes and classification of fair value hierarchy levels. The valuation policies and guidelines are reviewed and updated as appropriate.
Annually, the Company reviews the primary pricing vendor to validate that the inputs used in that vendor’s pricing process are deemed to be market observable as defined above. While the Company was not provided access to proprietary models of the vendor, the reviews have included on-site walk-throughs of the pricing process, methodologies and control procedures for each asset class and level for which prices are provided. The review also included an examination of the underlying inputs and assumptions for a sample of individual securities across asset classes. In addition, the Company and its pricing vendors have an established challenge process in place for all security valuations, which facilitates identification and resolution of prices that fall outside expected ranges. The Company believes that the prices received from the pricing vendors are representative of prices that would be received to sell the assets at the applicable measurement date (exit prices) and are classified appropriately in the hierarchy.
The Company reviews the fair value hierarchy classifications at each reporting period. Overall, reclassifications between levels occur when there are changes in the observability of inputs and market activity used in the valuation of a financial asset or liability. Such reclassifications are reported as transfers between levels at the beginning fair value for the reporting period in which the changes occur. Given the types of assets classified as Level 1, transfers between Level 1 and Level 2 measurement categories are expected to be infrequent.
The fair value of individual annuity and supplementary contracts is determined using one of several methods based on the specific contract type. For short-term contracts, generally less than 30 days, the fair value is assumed to be the book value. For investment-type contracts, the fair value is determined by calculating the present value of future cash flows discounted at current market interest rates, the risk-free rate or a current pricing yield curve based on pricing assumptions using assets of a comparable corporate bond quality. Annuities are valued using cash flow projections from the Company’s asset-liability management analysis.
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MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
The following presents the Company’s fair value hierarchy for assets and liabilities that are carried at fair value:
December 31, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(In Millions) | ||||||||||||||||
Financial assets: | ||||||||||||||||
Separate account assets | $ | 1,378 | $ | 2,365 | $ | - | $ | 3,743 |
$1,222 million of book value separate account assets are not carried at fair value and, therefore, are not included in this table.
For the year ended December 31, 2021, there were no significant transfers between Level 1 and Level 2.
December 31, 2020 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(In Millions) | ||||||||||||||||
Financial assets: | ||||||||||||||||
Separate account assets | $ | 1,196 | $ | 2,480 | $ | - | $ | 3,676 |
$1,183 million of book value separate account assets are not carried at fair value and, therefore, are not included in this table.
For the year ended December 31, 2020, there were no significant transfers between Level 1 and Level 2.
Valuation Techniques and Inputs
The Company determines the fair value of its investments using primarily the market approach or the income approach. The use of quoted prices for identical assets and matrix pricing or other similar techniques are examples of market approaches, while the use of discounted cash flow methodologies is an example of the income approach. The Company attempts to maximize the use of observable inputs and minimize the use of unobservable inputs in selecting whether the market or the income approach is used.
A description of the significant valuation techniques and inputs to the determination of estimated fair value for the more significant asset and liability classes measured at fair value on a recurring basis and categorized within Level 2 and Level 3 of the fair value hierarchy is as follows:
Separate account assets – These assets primarily include bonds (industrial and miscellaneous; U.S. government and agencies) and derivatives. Their fair values are determined as follows:
Bonds (Industrial and miscellaneous) - These securities are principally valued using the market or the income approaches. Level 2 valuations are based primarily on quoted prices in markets that are not active, broker quotes, matrix pricing or other similar techniques that use standard market observable inputs such as benchmark yields, spreads versus benchmark yields, new issuances, issuer ratings, duration, and trades of identical or comparable securities. Privately placed securities are valued using discounted cash flow models using standard market observable inputs, and inputs derived from, or corroborated by, market observable data including market yield curve, duration, call provisions, observable prices and spreads for similar publicly traded or privately traded issues that incorporate the credit quality and industry sector of the issuer. This level also includes securities priced by independent pricing services that use observable inputs. Valuations based on matrix pricing or other similar techniques that utilize significant unobservable inputs or inputs that cannot be derived principally from, or corroborated by, observable market data, including adjustments for illiquidity, delta spread adjustments or spreads to reflect industry trends or specific credit−related issues are classified as Level 3. In addition, inputs including quoted prices for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2 are classified as Level 3.
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MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
Bonds (U.S. government and agencies) - These securities are principally valued using the market approach. Level 2 valuations are based primarily on quoted prices in markets that are not active, or using matrix pricing or other similar techniques using standard market observable inputs such as the benchmark U.S. Treasury yield curve, the spreads versus the U.S. Treasury yield curve for the identical security and comparable securities that are actively traded.
Derivative assets and liabilities - These financial instruments are primarily valued using the market approach. The estimated fair value of derivatives is based primarily on quotations obtained from counterparties and independent sources, such as quoted market values received from brokers. These quotations are compared to internally derived prices and a price challenge is lodged with the counterparties and an independent source when a significant difference cannot be explained by appropriate adjustments to the internal model. When quoted market values are not reliable or available, the value is based upon an internal valuation process using market observable inputs that other market participants would use. Significant inputs to the valuation of derivative financial instruments include overnight index swaps and LIBOR basis curves, interest rate volatility, swap yield curve, currency spot rates, cross currency basis curves and dividend yields. Due to the observability of the significant inputs to these fair value measurements, they are classified as Level 2.
The use of different assumptions or valuation methodologies may have a material impact on the estimated fair value amounts. For the periods presented, there were no significant changes to the Company’s valuation techniques.
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.
The carrying value and fair value of bonds were as follows:
December 31, 2021 | ||||||||||||||||
Gross | Gross | |||||||||||||||
Carrying | Unrealized | Unrealized | Fair | |||||||||||||
Value | Gains | Losses | Value | |||||||||||||
(In Millions) | ||||||||||||||||
U.S. government and agencies | $ | 4 | $ | - | $ | - | $ | 4 | ||||||||
Industrial and miscellaneous | 214 | 14 | - | 228 | ||||||||||||
Parent, subsidiaries and affiliates | 1 | - | - | 1 | ||||||||||||
Total | $ | 219 | $ | 14 | $ | - | $ | 233 |
December 31, 2020 | ||||||||||||||||
Gross | Gross | |||||||||||||||
Carrying | Unrealized | Unrealized | Fair | |||||||||||||
Value | Gains | Losses | Value | |||||||||||||
(In Millions) | ||||||||||||||||
U.S. government and agencies | $ | 5 | $ | - | $ | - | $ | 5 | ||||||||
Industrial and miscellaneous | 238 | 24 | 1 | 261 | ||||||||||||
Total | $ | 243 | $ | 24 | $ | 1 | $ | 266 |
17 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
The quality of the bond portfolio is determined by the use of NAIC’s Securities Valuation Office ratings and the equivalent rating agency designations, except for RMBS and CMBS that use outside modelers. The following sets forth the NAIC class ratings for the bond portfolio including RMBS and CMBS:
December 31, | |||||||||||||||
2021 | 2020 | ||||||||||||||
NAIC | Equivalent Rating | Carrying | % of | Carrying | % of | ||||||||||
Class | Agency Designation | Value | Total | Value | Total | ||||||||||
($ In Millions) | |||||||||||||||
1 | Aaa/ Aa/ A | $ | 130 | 59 | % | $ | 132 | 54 | % | ||||||
2 | Baa | 79 | 36 | 85 | 35 | ||||||||||
3 | Ba | 7 | 3 | 20 | 8 | ||||||||||
4 | B | 1 | 1 | 5 | 2 | ||||||||||
5 | Caa and lower | 1 | - | - | - | ||||||||||
6 | In or near default | 1 | 1 | 1 | 1 | ||||||||||
Total | $ | 219 | 100 | % | $ | 243 | 100 | % |
The following summarizes NAIC ratings for RMBS and CMBS subject to NAIC modeling:
December 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
RMBS | CMBS | RMBS | CMBS | ||||||||||||||||||||
NAIC | Carrying | % of | Carrying | % of | Carrying | % of | Carrying | % of | |||||||||||||||
Class | Value | Total | Value | Total | Value | Total | Value | Total | |||||||||||||||
($ In Millions) | |||||||||||||||||||||||
1 | $ | 2 | 100 | % | $ | 61 | 89 | % | $ | 1 | 100 | % | $ | 58 | 67 | % | |||||||
2 | - | - | 3 | 4 | - | - | 6 | 7 | |||||||||||||||
3 | - | - | 3 | 4 | - | - | 16 | 19 | |||||||||||||||
4 | - | - | 1 | 2 | - | - | 5 | 6 | |||||||||||||||
5 | - | - | - | - | - | - | - | - | |||||||||||||||
6 | - | - | 1 | 1 | - | - | 1 | 1 | |||||||||||||||
$ | 2 | 100 | % | $ | 69 | 100 | % | $ | 1 | 100 | % | $ | 86 | 100 | % |
The following is a summary of the carrying value and fair value of bonds as of December 31, 2021 by contractual maturity. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without prepayment penalties. Securities with more than one maturity date are included in the table using the final maturity date.
18 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
Carrying | Fair | |||||||
Value | Value | |||||||
(In Millions) | ||||||||
Due in one year or less | $ | 3 | $ | 3 | ||||
Due after one year through five years | 69 | 73 | ||||||
Due after five years through ten years | 69 | 75 | ||||||
Due after ten years | 78 | 82 | ||||||
Total | $ | 219 | $ | 233 |
Sales proceeds and related gross realized capital gains (losses) from bonds were as follows:
Years Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(In Millions) | ||||||||||||
Proceeds from sales | $ | 18 | $ | 29 | $ | 18 | ||||||
Gross realized capital gains from sales | 1 | - | - | |||||||||
Gross realized capital losses from sales | - | - | - |
Gross realized capital gains (losses) from sales were $1 million for the year ended December 31, 2021, and less than $1 million for the years ended December 31, 2020 and 2019.
Gross unrealized losses of bonds were less than $1 million for the year ended December 31, 2021. The following is a summary of the fair values and gross unrealized losses aggregated by bond category and length of time that the securities were in a continuous unrealized loss position:
December 31, 2021 | |||||||||||||||||
Less Than 12 Months | 12 Months or Longer | ||||||||||||||||
Number | Number | ||||||||||||||||
Fair | Unrealized | of | Fair | Unrealized | of | ||||||||||||
Value | Losses | Issuers | Value | Losses | Issuers | ||||||||||||
($ In Millions) | |||||||||||||||||
U.S. government and agencies | $ | 4 | $ | - | 1 | $ | - | $ | - | - | |||||||
Industrial and miscellaneous | 16 | - | 16 | 2 | - | 12 | |||||||||||
Parent, subsidiaries and affiliates | 1 | - | 1 | - | - | - | |||||||||||
Total | $ | 21 | $ | - | 18 | $ | 2 | $ | - | 12 |
19 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
December 31, 2020 | |||||||||||||||||
Less Than 12 Months | 12 Months or Longer | ||||||||||||||||
Number | Number | ||||||||||||||||
Fair | Unrealized | of | Fair | Unrealized | of | ||||||||||||
Value | Losses | Issuers | Value | Losses | Issuers | ||||||||||||
($ In Millions) | |||||||||||||||||
Industrial and miscellaneous | 13 | 1 | 23 | 2 | - | 8 | |||||||||||
Total | $ | 13 | $ | 1 | 23 | $ | 2 | $ | - | 8 |
Gross unrealized losses of bonds less than 12 months were $1 million with a fair value of $13 million on 23 issuers and gross unrealized losses of bonds 12 months or longer were less than $1 million with a fair value of $2 million on 8 issuers for the year ended December 31, 2020.
As of December 31, 2021 and 2020, management has not deemed these unrealized losses to be other than temporary because the investment’s carrying value is expected to be realized and the Company has the ability and intent not to sell these investments until recovery, which may be at maturity.
As of December 31, 2021, investments in structured and loan-backed securities that had unrealized losses, which were not recognized in earnings, had a fair value of $15 million. Securities in an unrealized loss position for less than 12 months had a fair value of $13 million and unrealized losses less than $1 million. Securities in an unrealized loss position for greater than 12 months had a fair value of $2 million and unrealized losses of less than $1 million. These securities were categorized as industrial and miscellaneous.
As of December 31, 2020, investments in structured and loan-backed securities that had unrealized losses, which were not recognized in earnings, had a fair value of $13 million. Securities in an unrealized loss position for less than 12 months had a fair value of $12 million and unrealized losses of $1 million. Securities in an unrealized loss position for greater than 12 months had a fair value of $1 million and unrealized losses of less than $1 million. These securities were categorized as industrial and miscellaneous.
In the course of the Company’s investment management activities, securities may be sold and reacquired within 30 days to enhance the Company’s yield on its investment portfolio. The Company did not sell any securities with the NAIC Designation 3 or below for the years ended December 31, 2021 or 2020, that were reacquired within 30 days of the sale date.
The Company had assets on deposit with government authorities or trustees, as required by law, in the amount of $4 million as of December 31, 2021 and 2020.
Residential mortgage-backed exposure
RMBS are included in the U.S. government and agencies, special revenue, and industrial and miscellaneous bond categories. The Alt-A category includes option adjustable-rate mortgages and the subprime category includes ‘scratch and dent’ or reperforming pools, high loan-to-value pools and pools where the borrowers have very impaired credit but the average loan-to-value is low, typically 70% or below. In identifying Alt-A and subprime exposure, management used a combination of qualitative and quantitative factors, including FICO scores and loan-to-value ratios.
As of December 31, 2021, RMBS had a total carrying value of $3 million and a fair value of $3 million, of which approximately 52%, based on carrying value, was classified as Alt-A. Alt-A and subprime RMBS had a total carrying value of $3 million and a fair value of $3 million. As of December 31, 2020, RMBS had a total carrying value of $1 million and a fair value of $2 million, of which approximately 58%, based on carrying value, was classified as Alt-A. Alt-A and subprime RMBS had a total carrying value of $1 million and a fair value of $1 million.
20 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
During the year ended December 31, 2021, there were no significant credit downgrades for the securities held by the Company that were backed by residential mortgage pools.
Leveraged loan exposure
Leveraged loans are loans extended to companies that already have considerable amounts of debt. The Company reports leveraged loans as bonds. These leveraged loans have interest rates higher than typical loans, reflecting the additional risk of default from issuers with high debt-to-equity ratios.
As of December 31, 2021, the Company did not have any leveraged loans and leveraged loan CDOs. As of December 31, 2020, total leveraged loans and leveraged loan CDOs had a carrying value and fair value of less than a million dollars.
Commercial mortgage-backed exposure
The Company holds bonds backed by pools of commercial mortgages. The mortgages in these pools have varying risk characteristics related to underlying collateral type, borrower’s risk profile and ability to refinance and the return provided to the borrower from the underlying collateral. These investments had a carrying value of $69 million and fair value of $70 million as of December 31, 2021 and a carrying value of $86 million and fair value of $91 million as of December 31, 2020.
Residential mortgage loans include seasoned pools of homogeneous residential mortgage loans substantially backed by Federal Housing Administration and Veterans Administration guarantees. As of December 31, 2021 and December 31, 2020, the Company did not have any direct subprime exposure through the purchases of unsecuritized whole-loan pools.
Geographical concentration is considered prior to the purchase of residential mortgage loan pools. The mortgage loan portfolio is diverse with no significant collateral concentrations in any particular geographic region as of December 31, 2021 or 2020.
The carrying and fair values of the Company’s residential mortgage loans were $2 million as of December 31, 2021 and $2 million as of December 31, 2020.
The Company uses an internal rating system as its primary method of monitoring credit quality. The residential mortgage loan portfolio translated into the equivalent rating agency designation of AAA/AA/A and had carrying values of $2 million as of December 31, 2021 and $2 million as of December 31, 2020.
Interest rates, including fixed and variable, on the Company’s portfolio of mortgage loans were:
December 31, | |||||||||
2021 | 2020 | ||||||||
Low | High | Low | High | ||||||
Residential mortgage loans | 3.9 | % | 6.7 | % | 3.9 | % | 7.0 | % |
The Company did not purchase any residential mortgage loans during the years ended December 31, 2021 or 2020.
The Company did not hold any impaired residential mortgage loans and had no valuation allowances recorded as of December 31, 2021, 2020 or 2019. The Company did not hold any restructured residential mortgage loans or residential mortgage loans with principal or interest past due as of December 31, 2021 or 2020.
21 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
Net investment income comprised the following:
Years Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(In Millions) | ||||||||||||
Bonds | $ | 9 | $ | 10 | $ | 12 | ||||||
Policy loans | 5 | 5 | 5 | |||||||||
Cash, cash equivalents and short-term investments | - | 1 | 2 | |||||||||
Subtotal investment income | 14 | 16 | 19 | |||||||||
Investment expenses | (1 | ) | (1 | ) | (1 | ) | ||||||
Net investment income | $ | 13 | $ | 15 | $ | 18 |
d. Net realized capital gains (losses)
Net realized capital gains after tax and transfer to the IMR were less than $1 million for the years ended December 31, 2021, 2020 and 2019.
The IMR liability balance was less than $1 million as of December 31, 2021 and 2020 and was included in other liabilities on the Statutory Statements of Financial Position. Refer to Note 2o. “Interest maintenance reserve” for information on the Company’s policy for IMR.
For the years ended December 31, 2021, 2020 and 2019, the Company recognized less than $1 million for each year, of OTTI on structured and loan-backed securities, primarily due to the present value of expected cash flows being less than the amortized cost.
The remaining OTTI amounts were determined using external inputs such as publicly observable fair values and credit ratings. Refer to Note 2s. “Realized capital gains (losses) including other-than-temporary impairments and unrealized capital gains (losses)” for more information on assumptions and inputs used in the Company’s OTTI models.
Refer to Note 17. “Impairment listing for loan-backed and structured securities” for a CUSIP level list of impaired structured securities where the present value of cash flows expected to be collected is less than the amortized cost basis.
22 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
In response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and the Consolidated Appropriations Act (CAA), 2021 was signed into law on December 27, 2020. The CARES Act, among other things, permits net operating loss (NOL) carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The CAA extends and expands certain tax provisions of the CARES Act. The CARES Act as well as the CAA did not have a material effect on the financial statements.
The Company provides for DTAs in accordance with statutory accounting practices, and has met the required threshold to utilize the three-year reversal period and 15% of surplus limitation.
The net DTA or deferred tax liability (DTL) recognized in the Company’s assets, liabilities and surplus is as follows:
December 31, 2021 | ||||||||||||
Ordinary | Capital | Total | ||||||||||
(In Millions) | ||||||||||||
Gross DTAs | $ | 4 | $ | 1 | $ | 5 | ||||||
Statutory valuation allowance adjustment | - | - | - | |||||||||
Adjusted gross DTAs | 4 | 1 | 5 | |||||||||
DTAs nonadmitted | (2 | ) | - | (2 | ) | |||||||
Subtotal net admitted DTA | 2 | 1 | 3 | |||||||||
Total gross DTLs | 1 | - | 1 | |||||||||
Net admitted DTA(L) | $ | 1 | $ | 1 | $ | 2 |
December 31, 2020 | ||||||||||||
Ordinary | Capital | Total | ||||||||||
(In Millions) | ||||||||||||
Gross DTAs | $ | 4 | $ | 1 | $ | 5 | ||||||
Statutory valuation allowance adjustment | - | - | - | |||||||||
Adjusted gross DTAs | 4 | 1 | 5 | |||||||||
DTAs nonadmitted | (2 | ) | - | (2 | ) | |||||||
Subtotal net admitted DTA | 2 | 1 | 3 | |||||||||
Total gross DTLs | 1 | - | 1 | |||||||||
Net admitted DTA(L) | $ | 1 | $ | 1 | $ | 2 |
Change | ||||||||||||
Ordinary | Capital | Total | ||||||||||
(In Millions) | ||||||||||||
Gross DTAs | $ | - | $ | - | $ | - | ||||||
Statutory valuation allowance adjustment | - | - | - | |||||||||
Adjusted gross DTAs | - | - | - | |||||||||
DTAs nonadmitted | - | - | - | |||||||||
Subtotal net admitted DTA | - | - | - | |||||||||
Total gross DTLs | - | - | - | |||||||||
Net admitted DTA(L) | $ | - | $ | - | $ | - |
23 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
The amount of adjusted gross DTA admitted under each component of the guidance and the resulting change by tax character are as follows:
December 31, 2021 | ||||||||||||
Ordinary | Capital | Total | ||||||||||
(In Millions) | ||||||||||||
Admitted DTA 3 years: | ||||||||||||
Federal income taxes that can be recovered | $ | - | $ | - | $ | - | ||||||
Remaining adjusted gross DTAs expected to be realized within 3 years: | ||||||||||||
1. Adjusted gross DTA to be realized | 2 | - | 2 | |||||||||
2. Adjusted gross DTA allowed per limitation threshold | 39 | - | 39 | |||||||||
Lesser of lines 1 or 2 | 2 | - | 2 | |||||||||
Adjusted gross DTAs offset by existing DTLs | 1 | - | 1 | |||||||||
Total admitted DTA realized within 3 years | $ | 3 | $ | - | $ | 3 |
December 31, 2020 | ||||||||||||
Ordinary | Capital | Total | ||||||||||
(In Millions) | ||||||||||||
Admitted DTA 3 years: | ||||||||||||
Federal income taxes that can be recovered | $ | - | $ | - | $ | - | ||||||
Remaining adjusted gross DTAs expected to be realized within 3 years | ||||||||||||
1. Adjusted gross DTA to be realized | 2 | - | 2 | |||||||||
2. Adjusted gross DTA allowed per limitation threshold | 41 | - | 41 | |||||||||
Lesser of lines 1 or 2 | 2 | - | 2 | |||||||||
Adjusted gross DTAs offset by existing DTLs | 1 | - | 1 | |||||||||
Total admitted DTA realized within 3 years | $ | 3 | $ | - | $ | 3 |
Change | ||||||||||||
Ordinary | Capital | Total | ||||||||||
(In Millions) | ||||||||||||
Admitted DTA 3 years: | ||||||||||||
Federal income taxes that can be recovered | $ | - | $ | - | $ | - | ||||||
Remaining adjusted gross DTAs expected to be realized within 3 years | ||||||||||||
1. Adjusted gross DTA to be realized | - | - | - | |||||||||
2. Adjusted gross DTA allowed per limitation threshold | (2 | ) | - | (2 | ) | |||||||
Lesser of lines 1 or 2 | - | - | - | |||||||||
Adjusted gross DTAs offset by existing DTLs | - | - | - | |||||||||
Total admitted DTA realized within 3 years | $ | - | $ | - | $ | - |
24 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
The Company’s total realization threshold limitations are as follows:
December 31, | ||||||||
2021 | 2020 | |||||||
($ In Millions) | ||||||||
Ratio percentage used to determine recovery period and threshold limitation | 9,449 | % | 8,693 | % | ||||
Amount of adjusted capital and surplus used to determine recovery period and threshold limitation above | $ | 261 | $ | 270 |
The ultimate realization of DTAs depends on the generation of future taxable income during the periods in which the temporary differences are deductible. Management considers the scheduled reversal of DTLs, including the impact of available carryback and carryforward periods, projected taxable income and tax-planning strategies in making this assessment. The impact of tax-planning strategies is as follows:
December 31, 2021 | ||||||||||||
Ordinary | Capital | Total | ||||||||||
(Percent) | ||||||||||||
Impact of tax planning strategies: | ||||||||||||
Adjusted gross DTAs (% of total adjusted gross DTAs) | - | % | - | % | - | % | ||||||
Net admitted adjusted gross DTAs (% of total net admitted adjusted gross DTAs) | - | % | 100 | % | 1 | % |
December 31, 2020 | ||||||||||||
Ordinary | Capital | Total | ||||||||||
(Percent) | ||||||||||||
Impact of tax planning strategies: | ||||||||||||
Adjusted gross DTAs (% of total adjusted gross DTAs) | - | % | - | % | - | % | ||||||
Net admitted adjusted gross DTAs (% of total net admitted adjusted gross DTAs) | - | % | 100 | % | - | % |
Change | ||||||||||||
Ordinary | Capital | Total | ||||||||||
(Percent) | ||||||||||||
Impact of tax planning strategies: | ||||||||||||
Adjusted gross DTAs (% of total adjusted gross DTAs) | - | % | - | % | - | % | ||||||
Net admitted adjusted gross DTAs (% of total net admitted adjusted gross DTAs) | - | % | - | % | 1 | % |
There are no reinsurance strategies included in the Company’s tax-planning strategies.
25 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
The provision for current tax expense on earnings is as follows:
Years Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(In Millions) | ||||||||||||
Federal income tax expense on operating earnings | $ | 3 | $ | 1 | $ | 4 | ||||||
Foreign income tax expense on operating earnings | - | - | - | |||||||||
Total federal and foreign income tax expense on operating earnings | 3 | 1 | 4 | |||||||||
Federal income tax expense on net realized capital gains (losses) | - | - | - | |||||||||
Total federal and foreign income tax expense | $ | 3 | $ | 1 | $ | 4 |
The tax effects of temporary differences that give rise to significant portions of the DTAs and DTLs are as follows:
December 31, | ||||||||||||
2021 | 2020 | Change | ||||||||||
(In Millions) | ||||||||||||
DTAs: | ||||||||||||
Ordinary | ||||||||||||
Policy acquisition costs | $ | 3 | $ | 3 | $ | - | ||||||
Reserve items | 1 | 1 | - | |||||||||
Other | 1 | - | 1 | |||||||||
Total ordinary DTAs | 5 | 4 | 1 | |||||||||
Nonadmitted DTAs | (2 | ) | (2 | ) | - | |||||||
Admitted ordinary DTAs | 3 | 2 | 1 | |||||||||
Capital | ||||||||||||
Investment items | - | 1 | (1 | ) | ||||||||
Total capital DTAs | - | 1 | (1 | ) | ||||||||
Nonadmitted DTAs | - | - | - | |||||||||
Admitted capital DTAs | - | - | - | |||||||||
Admitted DTAs | 3 | 3 | - | |||||||||
DTLs: | ||||||||||||
Ordinary | ||||||||||||
Other | 1 | 1 | - | |||||||||
Total ordinary DTLs | 1 | 1 | - | |||||||||
Capital | ||||||||||||
Investment items | - | - | - | |||||||||
Total capital DTLs | - | - | - | |||||||||
Total DTLs | 1 | 1 | - | |||||||||
Net admitted DTA | $ | 2 | $ | 2 | $ | - |
26 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
The change in net deferred income taxes comprised the following:
Years Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(In Millions) | ||||||||||||
Net DTA(L) | $ | - | $ | - | $ | 2 | ||||||
Less: Items not recorded in the change in net deferred income taxes: | ||||||||||||
Change in net deferred income taxes | $ | - | $ | - | $ | 2 |
As of December 31, 2021, the Company had no net operating or capital loss carryforwards to include in deferred income taxes. The Company has no tax credit carryforwards included in deferred taxes.
The components of federal and foreign income tax are recorded in the Statutory Statements of Operations and the Statutory Statements of Changes in Capital and surplus and are different from those which would be obtained by applying the prevailing federal income tax rate to net gain from operations before federal income taxes. The significant items causing this difference are as follows:
Years Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(In Millions) | ||||||||||||
21% | 21% | 21% | ||||||||||
Provision computed at statutory rate | $ | 5 | $ | 3 | $ | 4 | ||||||
Investment items | (2 | ) | (2 | ) | (2 | ) | ||||||
Change in tax treatment of a prior year reinsurance transaction | ||||||||||||
Total statutory income tax expense | $ | 3 | $ | 1 | $ | 2 | ||||||
Federal and foreign income tax expense | $ | 3 | $ | 1 | $ | 4 | ||||||
Change in net deferred income taxes | - | - | (2 | ) | ||||||||
Total statutory income tax expense | $ | 3 | $ | 1 | $ | 2 |
The Company paid federal income taxes of $3 million in 2021, $1 million in 2020 and $5 million in 2019.
The total income taxes incurred in the current and prior years that will be available for recoupment in the event of future net capital losses totaled $0 million related to 2021, $5 million related to 2020, and $1 million related to 2019.
The Company is included in a consolidated U.S. federal income tax return with its parent, MassMutual, a mutual life insurance company domiciled in the Commonwealth of Massachusetts, and MassMutual’s eligible U.S. subsidiaries. The Company also files income tax returns in various states and foreign jurisdictions. The Company, MassMutual and MassMutual’s eligible subsidiaries and certain affiliates (the Parties) have executed and are subject to a written tax allocation agreement (the Agreement). The Agreement sets forth the manner in which the total combined federal income tax is allocated among the Parties. The Agreement provides the Company with the enforceable right to recoup federal income taxes paid in prior years in the event of future net capital losses, which it may incur. Further, the Agreement provides the Company with the enforceable right to utilize its net losses carried forward as an offset to future net income subject to federal income taxes.
27 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
Companies are generally required to disclose unrecognized tax benefits, which are the tax effect of positions taken on their tax returns that may be challenged by various taxing authorities, in order to provide users of financial statements more information regarding potential liabilities. The Company recognizes tax benefits and related reserves in accordance with existing statutory accounting practices for liabilities, contingencies and impairments of assets. As of December 31, 2021, the Company had no liabilities for unrecognized tax benefits.
The Internal Revenue Service (IRS) has completed its examination of MassMutual and its subsidiaries for the year 2013 and prior. The 2014-2016 tax years are in the process of going to Appeals for 3 carryforward issues. The IRS commenced its examination of years 2017-2018 in October 2020. The adjustments resulting from these examinations are not expected to materially affect the position or liquidity of the Company.
As of December 31, 2021 and 2020, the Company did not recognize any protective deposits as admitted assets.
7. Deferred and uncollected life insurance premium
Deferred and uncollected life insurance premium, net of loading and reinsurance, are included in insurance amounts receivable in the Company’s Statutory Statements of Financial Position.
The Company had $3.8 million of ordinary renewal as of December 31, 2021 and had $2.3 million as of December 31, 2020. As of December 31, 2021 the Company did not have group life. As of December31, 2020, the Company had less than $1 million of group life, on both a gross and net of loading and reinsurance basis, for deferred and uncollected life insurance premium and annuity considerations.
Deferred premium is the portion of the annual premium not earned at the reporting date. Loading on deferred premium is an amount obtained by subtracting the valuation net deferred premium from the gross deferred premium and generally includes allowances for acquisition costs and other expenses. Refer to Note 2k. “Policyholders’ reserves” for information on the Company’s accounting policies regarding gross premium and net premium.
Uncollected premium is gross premium net of reinsurance that is due and unpaid as of the reporting date, net of loading. Net premium is the amount used in the calculation of reserves. The change in deferred and uncollected life insurance premium is included in premium income. The change in loading is included as an expense and is not shown as a reduction to premium income.
Ordinary new business and ordinary renewal business consist of the basic amount of premium required on the underlying life insurance policies.
28 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
a. Policyholders’ reserves
The Company had life insurance in force of $11,002 million as of December 31, 2021 and $11,164 million as of December 31, 2020.
The following summarizes policyholders’ reserves, net of reinsurance, and the range of interest rates by type of product:
December 31, | ||||||||||||
2021 | 2020 | |||||||||||
Amount | Interest Rates | Amount | Interest Rates | |||||||||
($ In Millions) | ||||||||||||
Variable life | $ | 140 | 3.0% - 5.5% | $ | 141 | 3.0% - 5.5% | ||||||
Individual annuities | 3 | 5.0% - 7.3% | 2 | 3.8% - 7.3% | ||||||||
Total | $ | 143 | $ | 143 |
b. Liabilities for deposit-type contracts
Supplementary contracts not involving life contingencies of $16 million as of December 31, 2021 and $14 million as of December 31, 2020 were included in liabilities for deposit-type contracts. The interest rates on supplementary contracts ranged from 3.0% to 3.0% as of December 31, 2021 and 2.5% to 3.0% as of December 31, 2020.
c. Additional liability for annuity contracts
Certain variable annuity contracts include additional death benefit features. Election of these benefits is generally only available at contract issue.
The following shows the liabilities for GMDBs (in millions):
Liability as of January 1, 2020 | $ | 1 | |
Incurred guarantee benefits | - | ||
Paid guarantee benefits | - | ||
Liability as of December 31, 2020 | 1 | ||
Incurred guarantee benefits | - | ||
Paid guarantee benefits | - | ||
Liability as of December 31, 2021 | $ | 1 |
The Company held reserves in accordance with the standard scenario as of December 31, 2021 and December 31, 2020.
29 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
The following summarizes the account values, net amount at risk and weighted average attained age for variable annuity contracts with GMDBs classified as policyholders’ reserves and separate account liabilities. The net amount at risk is defined as the minimum guarantee less the account value calculated on a policy-by-policy basis, but not less than zero.
December 31, | |||||||||||||||
2021 | 2020 | ||||||||||||||
|
Account Value |
|
Net
Amount at Risk |
Weighted Average Attained Age |
|
Account Value |
|
Net
Amount at Risk |
Weighted Average Attained Age |
||||||
($ In Millions) | |||||||||||||||
GMDB | $ | 44 | $ | 3 | 73 | $ | 42 | $ | 4 | 72 |
Account values of variable annuity contracts with GMDBs are summarized below:
December 31, | ||||||||
2021 | 2020 | |||||||
(In Millions) | ||||||||
Separate account | $ | 42 | $ | 40 | ||||
General account | 2 | 2 | ||||||
Total | $ | 44 | $ | 42 |
The Company enters into reinsurance agreements with affiliated and unaffiliated insurers in the normal course of business in order to mitigate the impact of underwriting mortality and morbidity risks. Such transfers do not relieve the Company of its primary liability to its customers and, as such, failure of reinsurers to honor their obligations could result in credit losses that could arise if a reinsurer defaults. The Company reduces reinsurance default risk by evaluating the financial condition of reinsurers and monitoring for possible concentrations within the Company’s reinsurers and using trust structures, when appropriate. The Company reinsures a portion of its mortality risk in its life business under either a first dollar quota-share arrangement or an in excess of the retention limit arrangement with reinsurers. The amounts reinsured are on a yearly renewable term or Modco basis. The Company’s highest retention limit for new issues of life policies ranges from $15 million to $25 million.
Refer to Note 14. “Related party transactions” for information about the Company’s affiliated ceded reinsurance transactions.
The Company did not reinsure any policies with a company chartered in a country other than the U.S., excluding U.S. branches of these companies, which was owned in excess of 10% or controlled directly or indirectly by an insured, a beneficiary, a creditor or any other person not primarily engaged in the insurance business. There are no reinsurance agreements in effect under which the reinsurer may unilaterally cancel any reinsurance for reasons other than for nonpayment of premium or other similar credits. The Company has no reinsurance agreements in effect such that the amount of losses paid or accrued through the statement date may result in a payment to the reinsurer of amounts which, in aggregate and allowing for offset of mutual credits from other reinsurance agreements with the same reinsurer, exceed the total direct premium collected under the reinsured policies.
If all reinsurance agreements were terminated by either party as of December 31, 2021, the resulting reduction in surplus due to loss of reinsurance reserve credits, net of unearned premium, would be approximately $11 million assuming no return of the assets backing these reserves from the reinsurer to the Company.
30 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
Reinsurance amounts included in the Statutory Statements of Operations were as follows:
Years Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(In Millions) | ||||||||||||
Direct premium | $ | 40 | $ | 25 | $ | 32 | ||||||
Premium ceded | (28 | ) | (29 | ) | (29 | ) | ||||||
Total net premium | $ | 12 | $ | (4 | ) | $ | 3 | |||||
Ceded reinsurance recoveries | $ | 50 | $ | 47 | $ | 37 |
Reinsurance amounts included in the Statutory Statements of Financial Position were as follows:
December 31, | ||||||||
2021 | 2020 | |||||||
(In Millions) | ||||||||
Reinsurance reserves ceded | $ | (21 | ) | $ | (21 | ) | ||
Ceded amounts recoverable | 21 | 20 |
Reinsurance reserves ceded to affiliated and unaffiliated reinsurers as of December 31, 2021 include $21 million associated with life insurance policies. Reinsurance reserves ceded to affiliated and unaffiliated reinsurers as of December 31, 2020 include $21 million associated with life insurance policies.
As of December 31, 2021, one reinsurer accounted for 76% of the outstanding balance of the unaffiliated reinsurance recoverable and the next largest reinsurer had 10%. Overall, the Company believes that each of these exposures to a single reinsurer does not create an undue concentration of risk and the Company’s business is not substantially dependent upon any single reinsurer.
31 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
10. Withdrawal characteristics
a. Annuity actuarial reserves and liabilities for deposit-type contracts
The withdrawal characteristics of the Company’s annuity actuarial reserves and deposit-type contracts as of December 31, 2021 are illustrated below:
Individual annuities
General Account | Separate Account with Guarantees | Separate Account Non- guaranteed | Total | % of Total | |||||||||||||||
(In Millions) | |||||||||||||||||||
Subject to discretionary withdrawal: | |||||||||||||||||||
With market value adjustment | $ | 2 | $ | - | $ | - | $ | 2 | 4 | % | |||||||||
At fair value | - | - | 42 | 42 | 94 | ||||||||||||||
Total with market value adjustment or at fair value | 2 | - | 42 | 44 | 98 | ||||||||||||||
Not subject to discretionary withdrawal | 1 | - | - | 1 | 2 | ||||||||||||||
Total | $ | 3 | $ | - | $ | 42 | $ | 45 | 100 | % |
Deposit-type contracts
General Account | Separate Account with Guarantees | Separate Account Non- guaranteed | Total | % of Total | |||||||||||||||
(In Millions) | |||||||||||||||||||
Subject to discretionary withdrawal: | |||||||||||||||||||
At book value without adjustment (minimal or no charge or adjustment adjustment) | $ | 16 | $ | - | $ | - | $ | 16 | 100 | % | |||||||||
Total | $ | 16 | $ | - | $ | - | $ | 16 | 100 | % |
The following is a summary of total annuity actuarial reserves and liabilities for deposit-type contracts as of December 31, 2021 (in millions):
Statutory Statements of Financial Position: | ||||
Policyholders’ reserves – individual annuities | $ | 3 | ||
Liabilities for deposit-type contracts | 16 | |||
Subtotal | 19 | |||
Separate Account Annual Statement: | ||||
Annuities | 42 | |||
Total | $ | 61 |
32 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
b. Analysis of life actuarial reserves by withdrawal characteristics
The withdrawal characteristics of the Company’s life actuarial reserves as of December 31, 2021 are illustrated below:
General Account
Account | Cash | |||||||||||
Value | Value | Reserve | ||||||||||
Subject to discretionary withdrawal, surrender values, or policy loans: | ||||||||||||
Variable Life | $ | 3 | $ | 3 | $ | 2 | ||||||
Variable Universal Life | 143 | 142 | 150 | |||||||||
Not subject to discretionary withdrawal or no cash values: | ||||||||||||
Disability – Disabled Lives | - | - | 8 | |||||||||
Miscellaneous Reserves | - | - | 2 | |||||||||
Total (gross: direct + assumed) | 146 | 145 | 162 | |||||||||
Reinsurance Ceded | - | - | 21 | |||||||||
Total (net) | $ | 146 | $ | 145 | $ | 141 |
Separate Account with Guarantees
Account | Cash | |||||||||||
Value | Value | Reserve | ||||||||||
Subject to discretionary withdrawal, surrender values, or policy loans: | ||||||||||||
Variable Universal Life | 3,501 | 3,477 | 3,501 | |||||||||
Not subject to discretionary withdrawal or no cash values: | ||||||||||||
Total (gross: direct + assumed) | 3,501 | 3,477 | 3,501 | |||||||||
Total (net) | $ | 3,501 | $ | 3,477 | $ | 3,501 |
Separate Account Nonguaranteed
Account | Cash | |||||||||||
Value | Value | Reserve | ||||||||||
Subject to discretionary withdrawal, surrender values, or policy loans: | ||||||||||||
Variable Life | 8 | 8 | 13 | |||||||||
Variable Universal Life | 1,398 | 1,397 | 1,397 | |||||||||
Not subject to discretionary withdrawal or no cash values: | ||||||||||||
Total (gross: direct + assumed) | 1,406 | 1,405 | 1,410 | |||||||||
Total (net) | $ | 1,406 | $ | 1,405 | $ | 1,410 |
c. Separate accounts
The Company has guaranteed separate accounts classified as nonindexed to fund a long-term interest guarantee in excess of a year that does not exceed 4% rate of return. The Company has nonguaranteed separate accounts which are variable accounts where the benefit is determined by the performance and/or market value of the investments held in the separate account with incidental risk, notional expense and minimum death benefit guarantees.
33 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
Information regarding the separate accounts of the Company as of and for the year ended December 31, 2021 is as follows:
Guaranteed Nonindexed Less Than/ Equal to 4% |
Non Guaranteed |
Total | |||||||
(In Millions) | |||||||||
Net premium, considerations or deposits for the year ended December 31, 2021 | $ | - | $ | 26 | $ | 26 | |||
Reserves at December 31, 2021: | |||||||||
For accounts with assets at: | |||||||||
Fair value | $ | - | $ | 1,452 | $ | 1,452 | |||
Amortized cost/book value | 3,501 | - | 3,501 | ||||||
Subtotal | 3,501 | 1,452 | 4,953 | ||||||
Non policy liabilities | 1 | 21 | 22 | ||||||
Total | $ | 3,502 | $ | 1,473 | $ | 4,975 | |||
Reserves by withdrawal characteristics: | |||||||||
Subject to discretionary withdrawal: | |||||||||
At fair value | $ | - | $ | 1,452 | $ | 1,452 | |||
At book value without market value adjustment and current surrender charge of less than 5% | 3,501 | - | 3,501 | ||||||
Subtotal | 3,501 | 1,452 | 4,953 | ||||||
Non policy liabilities | 1 | 21 | 22 | ||||||
Total | $ | 3,502 | $ | 1,473 | $ | 4,975 |
The Company does not have any reserves in separate accounts for asset default risk in lieu of AVR. The Company has a general account AVR of $5 million for book value separate accounts.
The following is a reconciliation of amounts reported as transfers (from) to separate accounts in the Summary of Operations of the Company’s NAIC Separate Account Annual Statement to the amounts reported as net transfers (from) to separate accounts in change in policyholders’ reserves in the accompanying Statutory Statements of Operations:
Years Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(In Millions) | ||||||||||||
From the Separate Account Annual Statement: | ||||||||||||
Transfers to separate accounts | $ | 26 | $ | 28 | $ | 29 | ||||||
Transfers from separate accounts | (116 | ) | (78 | ) | (86 | ) | ||||||
Net transfers from separate accounts | $ | (90 | ) | $ | (50 | ) | $ | (57 | ) |
34 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
MassMutual has authorized the contribution of funds to the Company sufficient to meet the capital requirements of each state in the U.S. in which the Company is licensed to do business. Substantially all of the statutory capital and surplus is subject to dividend restrictions. Dividend restrictions, imposed by state regulations, limit the payment of dividends to the shareholder without prior approval from the Department. Under these regulations, $27 million of capital and surplus is available for distribution to the shareholder in 2022 without prior regulatory approval. The Company declared and paid a $27 million dividend to C.M. Life in 2021 and declared and paid a $29 million dividend to C.M. Life in 2020. The Company declared and paid a $30 million dividend to C.M. Life in 2019.
12. Presentation of the Statutory Statements of Cash Flows
The following table presents those transactions that have affected the Company’s recognized assets or liabilities but have not resulted in cash receipts or payments during the years ended December 31, 2021, 2020 and 2019. Accordingly, the Company has excluded these non-cash activities from the Statutory Statement of Cash Flows for the years ended December 31, 2021, 2020 and 2019.
Years Ended December 31, | ||||||||
2021 | 2020 | 2019 | ||||||
(In Millions) | ||||||||
Bond conversions and refinancing | $ | - | $ | 2 | $ | 6 |
13. Business risks, commitments and contingencies
a. Risks and uncertainties
The Company operates in a business environment subject to various risks and uncertainties. The principal risks include insurance and underwriting risks, investment and interest rate risks and credit risk.
Insurance and underwriting risks
The Company prices its products based on estimated benefit payments reflecting assumptions with respect to mortality, longevity, persistency, interest rates and other factors. If actual policy experience emerges that is significantly and adversely different from assumptions used in product pricing, the effect could be material to the profitability of the Company. The Company reinsures certain life insurance policies to mitigate the impact of its underwriting risk.
Investment and interest rate risks
The fair value, cash flows and earnings of investments can be influenced by a variety of factors including changes in interest rates, credit spreads, equity markets, portfolio asset allocation and general economic conditions. The Company employs a rigorous asset/liability management process to help mitigate the economic impacts of various investment risks, in particular interest rate risk. By effectively matching the market sensitivity of assets with the liabilities they support, the impact of interest rate changes is addressed, on an economic basis, as the change in the value of the asset is offset by a corresponding change in the value of the supported liability.
The levels of U.S. interest rates are influenced by U.S. monetary policies and by the relative attractiveness of U.S. markets to investors versus other global markets. As interest rates increase, certain debt securities may experience amortization or prepayment speeds that are slower than those assumed at purchase, impacting the expected maturity of these securities and the ability to reinvest the proceeds at the higher yields. Rising interest rates may also result in a decrease in the fair value of the investment portfolio. As interest rates decline, certain debt securities may experience accelerated amortization and prepayment speeds than what was assumed at purchase. During such periods, the Company is at risk of lower net investment income as it may not be able to reinvest the proceeds at comparable yields. Declining interest rates may also increase the fair value of the investment portfolio.
35 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
Interest rates also have an impact on the Company’s products with guaranteed minimum payouts and on interest credited to account holders. As interest rates decrease, investment spreads may contract as crediting rates approach minimum guarantees, resulting in an increased liability.
In periods of increasing interest rates, policy loans, surrenders and withdrawals may increase as policyholders seek investments with higher perceived returns. This could result in cash outflows requiring the Company to sell invested assets at a time when the prices of those assets are adversely affected by the increase in market interest rates, which could cause the Company to realize investment losses.
Credit and other market risks
The Company manages its investments to limit credit and other market risks by diversifying its portfolio among various security types and industry sectors as well as purchasing credit default swaps to transfer some of the risk.
Stressed conditions, volatility and disruptions in capital markets or financial asset classes can have an adverse effect on the Company, in part because the Company has a large investment portfolio and assets supporting the Company’s insurance liabilities are sensitive to changing market factors. Market factors, including interest rates, credit spread, equity prices, consumer spending, business investment, government spending, the volatility and strength of the capital markets, deflation and inflation, all affect the business and economic environment and, ultimately, the profitability of the Company’s business. Disruptions in one market or asset class can also spread to other markets or asset classes. Upheavals in the financial markets can also affect the Company’s business through their effects on general levels of economic activity, employment and customer behavior.
The CMBS, RMBS and leveraged loan sectors are sensitive to evolving conditions that can impair the cash flows realized by investors and is subject to uncertainty. Management’s judgment regarding OTTI and estimated fair value depends upon the evolving investment sector and economic conditions. It can also be affected by the market liquidity, a lack of which can make it difficult to obtain accurate market prices for RMBS and other investments, including CMBS and leveraged loans. Any deterioration in economic fundamentals, especially related to the housing sector could affect management’s judgment regarding OTTI.
The Company has investments in structured products exposed primarily to the credit risk of corporate bank loans, corporate bonds or credit default swap contracts referencing corporate credit risk. Most of these structured investments are backed by corporate loans and are commonly known as collateralized loan obligations that are classified as CDO. The portfolios backing these investments are actively managed and diversified by industry and individual issuer concentrations. Due to the complex nature of CDO and the reduced level of transparency to the underlying collateral pools for many market participants, the recovery in CDO valuations generally lags the overall recovery in the underlying assets. Management believes its scenario analysis approach, based primarily on actual collateral data and forward looking assumptions, does capture the credit and most other risks in each pool. However, in a rapidly changing economic environment, the credit and other risks in each collateral pool will be more volatile and actual credit performance of CDO may differ from the Company’s assumptions.
The Company continuously monitors its investments and assesses their liquidity and financial viability; however, the existence of the factors described above, as well as other market factors, could negatively impact the market value of the Company’s investments. If the Company sells its investments prior to maturity or market recovery, these investments may yield a return that is less than the Company otherwise would have been able to realize.
Asset-based fees calculated as a percentage of the separate account assets are a source of revenue to the Company. Gains and losses in the investment markets may result in corresponding increases and decreases in the Company’s separate account assets and related revenue.
The spread of the coronavirus, causing increased cases of COVID-19, has caused significant volatility in U.S. and international markets. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies. At this time, the Company is not able to
36 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
reliably estimate the length and severity of the COVID-19 public health crises and, as such, cannot quantify its impact on the financial results, liquidity and capital resources and its operations in future periods.
Political Uncertainties
Political events, domestically or internationally, may directly or indirectly trigger or exacerbate risks related to product offerings, profitability, or any of the risk factors described above. Whether those underlying risk factors are driven by politics or not, the Company’s dynamic approach to managing risks enables management to identify risks, internally and externally, develop mitigation plans, and respond to risks in an attempt to proactively reduce the potential impact of each underlying risk factor on the Company.
b. Guaranty funds
The Company is subject to state insurance guaranty fund laws. These laws assess insurance companies’ amounts to be used to pay benefits to policyholders and policy 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 impact its financial position, results of operations or liquidity.
c. Litigation and regulatory matters
In the normal course of business, the Company is involved in disputes, litigation and governmental or regulatory inquiries, administrative proceedings, examinations and investigations, both pending and threatened. These matters, if resolved adversely against the Company or settled, may result in monetary damages, fines and penalties or require changes in the Company’s business practices. The resolution or settlement of these matters is inherently difficult to predict. Based upon the Company’s assessment of these pending matters, the Company does not believe that the amount of any judgment, settlement or other action arising from any pending matter is likely to have a material adverse effect on the statement of financial position. However, an adverse outcome in certain matters could have a material adverse effect on the results of operations for the period in which such matter is resolved, or an accrual is determined to be required, on the financial statement financial position, or on our reputation.
The Company evaluates the need for accruals of loss contingencies for each matter. When a liability for a matter is probable and can be estimated, the Company accrues an estimate of the loss offset by related insurance recoveries or other contributions, if any. An accrual may be subject to subsequent adjustment as a result of additional information and other developments. The resolution of matters are inherently difficult to predict, especially in the early stages of matter. Even if a loss is probable, due to many complex factors, such as speed of discovery and the timing of court decisions or rulings, a loss or range of loss may not be reasonably estimated until the later stages of the matter. For matters where a loss is material and it is either probable or reasonably possible then it is disclosed. For matters where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimated, no accrual is established, but the matter, if material, is disclosed.
37 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
14. Related party transactions
Pursuant to a management agreement, MassMutual, for a fee, furnishes the Company, as required, operating facilities, human resources, computer software development and managerial services. Investment and administrative services are also provided to the Company pursuant to a management services agreement with MassMutual. While management believes that these fees are calculated on a reasonable basis, these fees may not necessarily be indicative of the costs that would have been incurred on a stand-alone basis.
The following table summarizes the transactions between the Company and the related parties:
Years Ended December 31, | |||||||||
2021 | 2020 | 2019 | |||||||
(In Millions) | |||||||||
Fee income: | |||||||||
Recordkeeping and other services | $ | 1 | $ | 1 | $ | 1 | |||
Investment advisory income | 2 | 2 | 2 | ||||||
Fee expense: | |||||||||
Management and service contracts and cost-sharing arrangements | 9 | 10 | 11 | ||||||
Investment advisory services | 1 | - | - |
The Company reported less than $1 million as amounts due from affiliates as of December 31, 2021 and 2020. The Company reported $4 million as amounts due to affiliates as of December 31, 2021 and $2 million as of December 31, 2020. Terms generally require settlement of these amounts within 30 to 90 days.
In 2021, the Company declared and paid $27 million in dividends to C.M. Life. In 2020, the Company declared and paid $29 million in dividends to C.M. Life.
The Company has a Modco quota-share reinsurance agreement with MassMutual where the Company cedes 100% of the premium on certain bank-owned life insurance policies. In return, MassMutual pays the Company a stipulated expense allowance, death and surrender benefits. The Company retains the assets and related reserves for payment of future benefits on the ceded policies. The Modco adjustment is the mechanism by which MassMutual funds the reserve on the reinsured portion of the risk. It is needed to adjust for the financial effect of the Company holding the reserves on the ceded coverage rather than MassMutual.
The Company also has a stop-loss agreement with MassMutual under which the Company cedes claims which, in aggregate, exceed 1.63% of the covered volume for any year, with maximum coverage of $25 million above the aggregate limit. The aggregate limit was $34 million in 2021 and $33 million in 2020 and $26 million in 2019, and it was not exceeded in any of the years.
The Company has a quota-share reinsurance agreement with MassMutual in which MassMutual assumes specific plans of insurance on a yearly renewable term basis.
As of December 31, 2021, the net amounts due from MassMutual for the various reinsurance agreements were $40 million and as of December 31, 2020, the net amounts due from MassMutual were $39 million. These outstanding balances are due and payable with terms ranging from monthly to annually, depending on the agreement in effect.
38 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
The following summarizes the related party reinsurance transactions between the Company and MassMutual:
Years Ended December 31, | |||||||||
2021 | 2020 | 2019 | |||||||
(In Millions) | |||||||||
Premium expense ceded, related to: | |||||||||
Quota-share reinsurance agreements | $ | (5 | ) | $ | (6 | ) | $ | (5 | ) |
Modco adjustments ceded, included in fees and other income | (11 | ) | (11 | ) | (9 | ) | |||
Expenses allowances on reinsurance ceded, included in fees and other income, related to: | |||||||||
Modco agreements | 6 | 6 | 6 | ||||||
Policyholders’ benefits ceded, related to: | |||||||||
Modco agreements | 14 | 11 | 8 | ||||||
Quota-share reinsurance agreements | 2 | 3 | 2 | ||||||
Experience refunds (paid) received, related to: | |||||||||
Modco agreements | - | (1 | ) | - |
15. Subsidiaries and affiliated companies
A summary of ownership and relationship of MassMutual and its subsidiaries and affiliated companies as of December 31, 2021 is illustrated below. Subsidiaries are wholly owned, except as noted.
Subsidiaries of MassMutual
C.M. Life
Berkshire Way LLC
MML Special Situations Investor LLC
Timberland Forest Holding LLC – 37% (remaining 63% owned by MassMutual Trad Private Equity LLC)
MSP – SC, LLC
Insurance Road LLC
MM Copper Hill Road LLC
Jefferies Finance LLC– 50% (remaining 50% owned by Jefferies Group, Inc.)
MML Distributors LLC – 99% (remaining 1% owned by MassMutual Holding LLC)
MML Investment Advisers, LLC
Pioneers Gate LLC
MML Strategic Distributors, LLC
The MassMutual Trust Company, FSB
MassMutual Mortgage Lending LLC
MML Private Placement Investment Company I, LLC
MML Private Equity Fund Investor LLC
MM Private Equity Intercontinental LLC
MassMutual Holding LLC
MassMutual Investment Holding, LLC
MassMutual International, LLC
MML Mezzanine Investor II, LLC
MML Mezzanine Investor III, LLC
MassMutual External Benefits Group LLC
EM Opportunities LLC
MassMutual MCAM Insurance Company, Inc.
MassMutual Global Business Services India LLP
39 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
CML Global Capabilities
MassMutual Private Equity Funds LLC
MM Global Capabilities I LLC
MM Global Capabilities II LLC
MM Global Capabilities III LLC
MML CM LLC
Glidepath Holdings Inc
ITPS Holding LLC
MM/Barings Mutifamily TEBS 2020 LLC
MM Direct Private Investments Holding LLC
Subsidiaries of C.M. Life Insurance Company
MML Bay State Life Insurance Company
CML Mezzanine Investor III, LLC
CML Special Situations Investor LLC
Subsidiaries of MML Bay State Life Insurance Company
(No subsidiaries)
Management of the Company has evaluated subsequent events through February 25, 2022, the date the financial statements were available to be issued to state regulators and subsequently on the Company’s website. No events have occurred subsequent to the date of the Statements of Financial Position.
40 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
17. Impairment listing for loan-backed and structured securities
The following are the total cumulative adjustments and impairments for loan-backed and structured securities since July 1, 2009:
Period Ended | Amortized
Cost before Cumulative Adjustment |
Cumulative Adjustment | Amortized
Cost before OTTI |
Projected Cash Flow | Recognized
OTTI |
Amortized
Cost after OTTI |
Fair Value | |||||||
December 31, 2021 | $ | 85,732 | $ | - | $ | 85,732 | $ | 81,911 | $ | (3,820) | $ | 81,912 | $ | 76,952 |
June 30, 2021 | 152,001 | - | 152,001 | 147,872 | (4,129) | 147,872 | 151,665 | |||||||
March 31, 2021 | 93,988 | - | 93,988 | 90,012 | (3,976) | 90,012 | 80,737 | |||||||
December 31, 2020 | 95,926 | - | 95,926 | 94,337 | (1,589) | 94,337 | 85,603 | |||||||
March 31, 2019 | 21,072 | - | 21,072 | 19,523 | (1,549) | 19,523 | 572 | |||||||
December 31, 2018 | 18,632 | - | 18,632 | 1,599 | (17,033) | 1,599 | 1,903 | |||||||
June 30, 2017 | 342 | - | 342 | 267 | (76) | 267 | 2,967 | |||||||
March 31, 2017 | 94,424 | - | 94,424 | 53,149 | (41,274) | 53,149 | 89,279 | |||||||
December 31, 2016 | 110,964 | - | 110,964 | 109,147 | (1,816) | 109,147 | 104,908 | |||||||
September 30, 2016 | 118,384 | - | 118,384 | 117,539 | (845) | 117,539 | 112,771 | |||||||
June 30, 2016 | 76,837 | - | 76,837 | 70,385 | (6,452) | 70,385 | 72,517 | |||||||
September 30, 2015 | 79,533 | - | 79,533 | 77,197 | (2,337) | 77,197 | 76,961 | |||||||
December 31, 2014 | 7,387 | - | 7,387 | 5,752 | (1,635) | 5,752 | 24,010 | |||||||
March 31, 2014 | 11,682 | - | 11,686 | 11,342 | (340) | 11,342 | 13,573 | |||||||
December 31, 2013 | 8,955 | - | 8,955 | 7,967 | (989) | 7,967 | 11,477 | |||||||
September 30, 2013 | 5,947 | - | 5,947 | 5,842 | (104) | 5,842 | 5,478 | |||||||
June 30, 2013 | 456,120 | - | 456,120 | 445,397 | (10,723) | 445,397 | 340,977 | |||||||
December 31, 2012 | 1,242,596 | - | 1,242,596 | 1,144,981 | (97,615) | 1,144,981 | 1,195,405 | |||||||
September 30, 2012 | 2,265,156 | - | 2,265,156 | 2,103,073 | (162,083) | 2,103,073 | 2,115,759 | |||||||
June 30, 2012 | 1,884,018 | - | 1,884,018 | 1,845,692 | (38,325) | 1,845,692 | 1,521,643 | |||||||
March 31, 2012 | 3,900,635 | - | 3,900,635 | 3,788,244 | (112,391) | 3,788,244 | 3,066,813 | |||||||
December 31, 2011 | 3,900,658 | - | 3,900,658 | 3,740,566 | (160,092) | 3,740,566 | 3,217,415 | |||||||
September 30, 2011 | 2,070,737 | - | 2,070,737 | 2,014,121 | (56,616) | 2,014,121 | 1,664,099 | |||||||
June 30, 2011 | 4,933,708 | - | 4,933,708 | 4,626,546 | (307,162) | 4,626,546 | 3,860,445 | |||||||
March 31, 2011 | 3,031,095 | - | 3,031,095 | 2,949,182 | (81,913) | 2,949,182 | 2,370,633 | |||||||
December 31, 2010 | 2,843,613 | - | 2,843,613 | 2,795,486 | (48,127) | 2,795,486 | 2,189,661 | |||||||
September 30, 2010 | 3,666,523 | - | 3,666,523 | 3,544,040 | (122,482) | 3,544,040 | 2,935,440 | |||||||
June 30,2010 | 2,331,449 | - | 2,331,449 | 2,200,016 | (131,433) | 2,200,016 | 1,658,548 | |||||||
March 31, 2010 | 3,606,733 | - | 3,606,733 | 3,269,444 | (337,290) | 3,269,444 | 2,259,717 | |||||||
December 31, 2009 | 4,888,306 | - | 4,888,306 | 4,101,773 | (786,533) | 4,101,773 | 2,994,613 | |||||||
September 30, 2009 | 10,338,099 | 207,960 | 10,546,059 | 9,768,287 | (777,772) | 9,768,287 | 6,661,983 | |||||||
Totals | $ | 207,960 | $ | (3,318,521) |
The following is the impairment listing for loan-backed and structured securities for the three months ended December 31, 2021:
CUSIP | Amortized
Cost before Cumulative Adjustment |
Cumulative Adjustment | Amortized
Cost before OTTI |
Projected Cash Flow | Recognized
OTTI |
Amortized
Cost after OTTI |
Fair Value | |||||||
61750FAE0 | $ | 85,732 | $ | - | $ | 85,732 | $ | 81,912 | $ | (3,820) | $ | 81,912 | $ | 76,952 |
The following is the impairment listing for loan-backed and structured securities for the three months ended June 30, 2021:
CUSIP | Amortized
Cost before Cumulative Adjustment |
Cumulative Adjustment | Amortized
Cost before OTTI |
Projected Cash Flow | Recognized
OTTI |
Amortized
Cost after OTTI |
Fair Value | |||||||
40431KAE0 | $ | 62,425 | $ | - | $ | 62,425 | $ | 61,595 | $ | (830) | $ | 61,595 | $ | 72,006 |
61750FAE0 | 89,576 | - | 89,576 | 86,277 | (3,299) | 86,277 | 79,659 | |||||||
Totals | $ | 152,001 | $ | - | $ | 152,001 | $ | 147,872 | $ | (4,129) | $ | 147,872 | $ | 151,665 |
41 |
MML BAY STATE LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS, continued
The following is the impairment listing for loan-backed and structured securities for the three months ended March 31, 2021:
CUSIP | Amortized
Cost before Cumulative Adjustment |
Cumulative Adjustment | Amortized
Cost before OTTI |
Projected Cash Flow | Recognized
OTTI |
Amortized
Cost after OTTI |
Fair Value | |||||||
61750FAE0 | $ | 93,988 | $ | - | $ | 93,988 | $ | 90,012 | $ | (3,976) | $ | 90,012 | $ | 80,737 |
The following is the impairment listing for loan-backed and structured securities for the three months ended December 31, 2020:
CUSIP | Amortized
Cost before Cumulative Adjustment |
Cumulative Adjustment | Amortized
Cost before OTTI |
Projected Cash Flow | Recognized
OTTI |
Amortized
Cost after OTTI |
Fair Value | |||||||
61750FAE0 | $ | 95,926 | $ | - | $ | 95,926 | $ | 94,337 | $ | (1,589) | $ | 94,337 | $ | 85,603 |
There were no impairments on loan-backed or structured securities for the three months ended September 30, 2020.
There were no impairments on loan-backed or structured securities for the three months ended June 30, 2020.
There were no impairments on loan-backed or structured securities for the three months ended March 31, 2020.
There were no impairments on loan-backed or structured securities for the three months ended December 31, 2019.
There were no impairments on loan-backed or structured securities for the three months ended September 30, 2019.
There were no impairments on loan-backed or structured securities for the three months ended June 30, 2019.
The following is the impairment listing for loan-backed and structured securities for the three months ended March 31, 2019:
CUSIP | Amortized
Cost before Cumulative Adjustment |
Cumulative Adjustment | Amortized
Cost before OTTI |
Projected Cash Flow | Recognized
OTTI |
Amortized
Cost after OTTI |
Fair Value | |||||||
65106FAG7 | $ | 21,072 | $ | - | $ | 21,072 | $ | 19,523 | $ | (1,549) | $ | 19,523 | $ | 572 |
The following is the impairment listing for loan-backed and structured securities for the three months ended December 31, 2018:
CUSIP | Amortized
Cost before Cumulative Adjustment |
Cumulative Adjustment | Amortized
Cost before OTTI |
Projected Cash Flow | Recognized
OTTI |
Amortized
Cost after OTTI |
Fair Value | |||||||
65106FAG7 | $ | 18,632 | $ | - | $ | 18,632 | $ | 1,599 | $ | (17,033) | $ | 1,599 | $ | 1,903 |
There were no impairments on loan-backed or structured securities for the three months ended September 30, 2018.
There were no impairments on loan-backed or structured securities for the three months ended June 30, 2018.
There were no impairments on loan-backed or structured securities for the three months ended March 31, 2018.
42 |
PART C
OTHER INFORMATION
1. | Participation Agreement dated April 30, 2004 (AIM Variable Insurance Funds, Inc., A I M Distributors, Inc. and C.M. Life Insurance Company) – Incorporated by reference to Initial Registration Statement to Registration Statement No. 333-259818 filed September 27, 2021 | ||||
i. | Amendment No. 1 dated and effective April 30, 2010 – Incorporated by reference to Initial Registration Statement to Registration Statement No. 333-259818 filed September 27, 2021 | ||||
ii. | Amendment No. 2 effective May 24, 2019 (MML Bay State Life Insurance Company becomes a party) – Incorporated by reference to Post-Effective Amendment No. 35 to Registration Statement File No. 333-49457 filed April 28, 2021 | ||||
iii. | Amendment dated May 3, 2021 regarding Rules 30e-3 and 498A - Incorporated by reference to Post-Effective Amendment No. 1 to Registration Statement File No. 333-259818 filed on or about April 28, 2022 |
Exhibit (i) | Not Applicable | ||||
Exhibit (j) | Not Applicable | ||||
Exhibit (k) | Opinion and Consent of Counsel as to the legality of the securities being registered * | ||||
Exhibit (l) | Not Applicable | ||||
Exhibit (m) | Not Applicable | ||||
Exhibit (n) | i. | Auditor Consents: | |||
• | Company Financial Statements * | ||||
• | Separate Account Financial Statements * | ||||
ii. | Powers of Attorney for: | ||||
• | Roger W. Crandall | ||||
• | Michael R. Fanning | ||||
• | Michael J. O’Connor | ||||
• | Elizabeth A. Ward | ||||
– Incorporated by reference to Post-Effective Amendment No. 21 to Registration Statement File No. 333-49457 filed April 26, 2017 | |||||
iii. | Power of Attorney for: | ||||
• | Sean Newth | ||||
– Incorporated by reference to Post-Effective Amendment No. 26 to Registration Statement File No. 033-82060 filed November 21, 2017 | |||||
Exhibit (o) | Not Applicable | ||||
Exhibit (p) | Not Applicable | ||||
Exhibit (q) | SEC Procedures Memorandum dated April 1, 2022, describing Massachusetts Mutual Life Insurance Company issuance, transfer, and redemption procedures for the Policy – Incorporated by reference to Post-Effective Amendment 5 to Registration Statement File No. 333-229670 filed on or about April 27, 2022 |
* filed herewith
Item 31. Directors and Officers of the Depositor
Directors of MML Bay State Life Insurance Company
Roger W. Crandall, Director (Chairman), President, and Chief Executive Officer | Michael R. Fanning, Director and Executive Vice President | |
1295 State Street B101 | 1295 State Street | |
Springfield, MA 01111 | Springfield, MA 01111 | |
Michael J. OConnor, Director, Senior Vice President, and General Counsel | Elizabeth A. Ward, Director, Executive Vice President, and Chief Financial Officer | |
1295 State Street | 1295 State Street | |
Springfield, MA 01111 | Springfield, MA 01111 | |
Principal Officers of MML Bay State Life Insurance Company (other than those who are also Directors, as referenced above): | ||
Sean Newth, Senior Vice President and Corporate Controller | Julieta Sinisgalli, Treasurer | |
1295 State Street | 1295 State Street | |
Springfield, MA 01111 | Springfield, MA 01111 | |
Akintokunbo Akinbajo, Corporate Secretary | Timothy Corbett, Executive Vice President | |
1295 State Street | 1295 State Street | |
Springfield, MA 01111 | Springfield, MA 01111 |
Item 32. Persons Controlled by or Under Common Control with the Depositor or the Registrant
– Incorporated by reference to Item 30 on Form N-6 in Post-Effective Amendment No. 1 to Registration Statement No. 333-259818 filed on or about April 27, 2022
Item 33. Indemnification
MML Bay State directors and officers are indemnified under Article V of the By-laws of MML Bay State, as set forth below.
ARTICLE V of the By-laws of MML Bay State provide for indemnification of directors and officers as follows:
“ARTICLE V
INDEMNIFICATION
The corporation shall, to the fullest extent and under the circumstances permitted by Connecticut law, as amended from time to time, indemnify any person serving or who has served (a) as a director, officer, employee or agent of the corporation or (b) at the corporation’s request, as a director, trustee, officer, partner, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against all liabilities and expenses incurred by him in connection with the defense or disposition of any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal, while serving or thereafter, by reason of his having been such a director, trustee, officer, partner, employee or agent, except (unless otherwise permitted by Connecticut law) (c) in connection with a proceeding by or in the right of the corporation in which he was adjudged liable to the corporation or (d) in connection with any other proceeding charging improper personal benefit to him in which he was adjudged liable on the basis that personal benefit was improperly received by him.
Expenses, including counsel fees, reasonably incurred by any such director, trustee, officer, partner, employee or agent who is a party to a proceeding may be paid by the corporation in advance of the final disposition thereof upon receipt of a written affirmation of the person’s good faith belief that he has met the standard of conduct permitting indemnification and a written undertaking to repay the advance upon a determination that he did not meet the standard of conduct; provided, however, that a determination is also made that on the basis of the facts then known indemnification would not be precluded.
The right of indemnification hereby provided shall not be exclusive of or affect any other right to which any such director, trustee, officer, partner, employee or agent may be entitled. Nothing contained in this Article shall affect any other right to indemnification to which such persons may be entitled by contract or otherwise under law.”
To provide certainty and more clarification regarding the indemnification provisions of the Bylaws set forth above, MassMutual has entered into indemnification agreements with certain officers who serve as a director of a subsidiary of MassMutual (a “Subsidiary Director”). Pursuant to the Agreements, MassMutual agrees to indemnify a Subsidiary Director, to the extent legally permissible, against (a) all expenses, judgments, fines and settlements (“Costs”), liabilities, and penalties paid in connection with a proceeding involving the Subsidiary Director because he or she is a director of a subsidiary of MassMutual if the Subsidiary Director (i) acted in good faith, (ii) reasonably believed the conduct was in the subsidiary’s best interests; (iii) had no reasonable cause to believe the conduct was unlawful (in a criminal proceeding); and, (iv) engaged in conduct for which the Subsidiary Director shall not be liable under MassMutual’s Charter or By-Laws. MassMutual further agrees to indemnify a Subsidiary Director, to the extent permitted by law, against all Costs paid in connection with any proceeding (i) unless the Subsidiary Director breached a duty of loyalty, (ii) except for liability for acts or omissions not in good faith, involving intentional misconduct or a knowing violation of law, (iii) except for liability under Section 6.40 of Chapter 156D of Massachusetts Business Corporation Act (“MBCA”), or (iv) except for liability related to any transaction from which the Subsidiary Director derived an improper benefit. MassMutual will also indemnify a Subsidiary Director, to the fullest extent authorized by the MBCA, against all expenses to the extent the Subsidiary Director has been successful on the merits or in defense of any proceeding. If any court determines that despite an adjudication of liability to the relevant subsidiary that the Subsidiary Director is entitled to indemnification, MassMutual will indemnify the Subsidiary Director to the extent permitted by law. Subject to the Subsidiary Director’s obligation to pay MassMutual in the event that the Subsidiary Director is not entitled to indemnification, MassMutual will pay the expenses of the Subsidiary Director prior to a final determination as to whether the Subsidiary Director is entitled to indemnification.
Item 34. Principal Underwriters
(a) MML Investors Services, LLC (“MMLIS”) acts as principal underwriter of the contracts/policies/certificates sold by its registered representatives and MML Strategic Distributors, LLC (“MSD”) serves as principal underwriter of the contracts/policies/certificates sold by registered representatives of other broker-dealers who have entered into distribution agreements with MSD.
MMLIS and MSD either jointly or individually act as principal underwriters for:
Massachusetts Mutual Variable Life Separate Account I, Massachusetts Mutual Variable Annuity Separate Account 1, Massachusetts Mutual Variable Annuity Separate Account 2, Massachusetts Mutual Variable Annuity Separate Account 3, Massachusetts Mutual Variable Annuity Separate Account 4, Panorama Separate Account, Connecticut Mutual Variable Life Separate Account I, MML Bay State Variable Life Separate Account I, MML Bay State Variable Annuity Separate Account 1, Panorama Plus Separate Account, C.M. Multi-Account A, C.M. Life Variable Life Separate Account I, Massachusetts Mutual Variable Life Separate Account II.
(b) MMLIS and MSD are the principal underwriters for this policy. The following people are officers and directors of MMLIS and officers and directors of MSD:
DIRECTORS AND OFFICERS OF MML INVESTORS SERVICES, LLC
Name | Positions and Offices | Principal Business Address | ||
Wendy Benson | Director and President | * | ||
Geoffrey Craddock | Director | 470 Atlantic Avenue Boston, MA 02110 | ||
Michael Fanning | Director | * | ||
Sean Newth | Director | * | ||
John Vaccaro | Director, Chief Executive Officer and Chairman of the Board | * | ||
William F. Monroe, Jr. | Vice President and Chief Product & Services Officer | * | ||
David Mink | Vice President and Chief Operations Officer | 11215 North Community House Rd. Charlotte, NC 28277 | ||
Nathan Hall | Chief Financial Officer and Treasurer | * | ||
Robert Rosenthal | Chief Legal Officer, Vice President and Secretary | * | ||
Courtney Reid | Chief Compliance Officer | * | ||
James P. Puhala | Deputy Chief Compliance Officer | * | ||
Michael Gilliland | Deputy Chief Compliance Officer | * | ||
Thomas Bauer | Chief Technology Officer | * | ||
Anthony Frogameni | Chief Privacy Officer | * | ||
Vaughn Bowman | Vice President | * | ||
Brian Foley | Vice President | * | ||
Daken Vanderburg | Vice President | * | ||
Mary B. Wilkinson | Vice President | 11215 North Community House Rd. Charlotte, NC 28277 | ||
Joseph Sparacio | Agency Field Force Supervisor | 11215 North Community House Rd. Charlotte, NC 28277 | ||
David Holtzer | Field Risk Officer | 11215 North Community House Rd. Charlotte, NC 28277 | ||
Edward K. Duch, III | Assistant Secretary | * | ||
Amy Francella | Assistant Secretary | * | ||
Alyssa O’Connor | Assistant Secretary | * | ||
Pablo Cabrera | Assistant Treasurer | * | ||
Jeffrey Sajdak | Assistant Treasurer | * | ||
Julieta Sinisgalli | Assistant Treasurer | * | ||
Kevin Lacomb | Assistant Treasurer | * | ||
Mary Helmlinger | Continuing Education Officer | * | ||
Mario Morton | Registration Manager | * | ||
Kelly Pirrotta | AML Compliance Officer | * | ||
John Rogan | Regional Vice President | * | ||
Michelle Pedigo | Regional Vice President | * | ||
Lee Zuber | Regional Vice President | * |
* | 1295 State Street, Springfield, MA 01111-0001 |
OFFICERS AND DIRECTORS OF MML STRATEGIC DISTRIBUTORS, LLC
Name | Positions and Offices | Principal Business Address | ||
Dominic Blue | Director and Chairman of the Board | * | ||
Geoffrey Craddock | Director | 470 Atlantic Avenue Boston, MA 02110 | ||
Matthew DiGangi | Director and Chief Executive Officer and President | * | ||
Sean Newth | Director | * | ||
Nathan Hall | Chief Financial Officer and Treasurer | * | ||
Robert S. Rosenthal | Chief Legal Officer, Secretary and Vice President | * | ||
James P. Puhala | Vice President and Chief Compliance Officer | * | ||
Vincent Baggetta | Chief Risk Officer | * | ||
Paul LaPiana | Vice President | * | ||
Lisa Todd | Vice President | * | ||
Edward K. Duch, III | Assistant Secretary | * | ||
Alyssa O’Connor | Assistant Secretary | * | ||
Pablo Cabrera | Assistant Treasurer | * | ||
Jeffrey Sajdak | Assistant Treasurer | * | ||
Julieta Sinisgalli | Assistant Treasurer | * | ||
Mario Morton | Registration Manager | * | ||
Kelly Pirrotta | AML Compliance Officer | * |
* 1295 State Street, Springfield, MA 01111-0001
(c) Compensation From the Registrant
For information about all commissions and other compensation received by each principal underwriter, directly or indirectly, from the Registrant during the Registrant’s last fiscal year, refer to the “Underwriters” section of the Statement of Additional Information.
Item 35. Location of Accounts and Records
All accounts, books, or other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the rules promulgated thereunder are maintained by the Registrant through Massachusetts Mutual Life Insurance Company, 1295 State Street, Springfield, Massachusetts 01111.
Item 36. Management Services
Not Applicable
Item 37. Fee Representation
REPRESENTATION UNDER SECTION 26(f)(2)(A) OF
THE INVESTMENT COMPANY ACT OF 1940
MML Bay State Life Insurance Company hereby represents that the fees and charges deducted under the Variable Life Select (“VLS”) policy 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 MML Bay State Life Insurance Company.
SIGNATURES
Pursuant to the requirements of Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this registration statement under Rule 485(b) under the Securities Act and has duly caused this registration statement to be signed on its behalf by the undersigned, duly authorized, in the City of Springfield, and the Commonwealth of Massachusetts on this 22nd day of April, 2022.
MML BAY STATE VARIABLE LIFE SEPARATE ACCOUNT I
(Registrant)
MML BAY STATE LIFE INSURANCE COMPANY
(Depositor)
By |
ROGER W. CRANDALL* |
|
|
Roger W. Crandall |
|
|
President and Chief Executive Officer |
|
|
MML Bay State Life Insurance Company |
|
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature | Title | Date | ||
ROGER W. CRANDALL * | Director, President and Chief Executive Officer | April 22, 2022 | ||
Roger W. Crandall | (principal executive officer) | |||
ELIZABETH A. WARD * | Chief Financial Officer | April 22, 2022 | ||
Elizabeth A. Ward | (principal financial officer) | |||
SEAN NEWTH * | Corporate Controller | April 22, 2022 | ||
Sean Newth | (principal accounting officer) | |||
MICHAEL J. O’CONNOR * | Director | April 22, 2022 | ||
Michael J. O’Connor | ||||
MICHAEL R. FANNING * | Director | April 22, 2022 | ||
Michael R. Fanning | ||||
/s/ JOHN E. DEITELBAUM | ||||
* John E. Deitelbaum | ||||
Attorney-in-Fact pursuant to Powers of Attorney |
INDEX TO EXHIBITS
Item 30. Exhibit (a)
RESOLUTION OF BOARD OF DIRECTORS OF MML BAY STATE ESTABLISHING THE SEPARATE ACCOUNT WRITTEN CONSENT TO ACTION TAKEN WITHOUT AND IN LIEU OF A MEETING OF THE EXECUTIVE COMMITTEE The undersigned, being all the members of the Executive Committee of MML Bay State Life Insurance Company (the "Company"), pursuant to Section 351.340 (2) of the Revised Statutes of Missouri, hereby consent to the following actions: VOTED: That the Company establish a separate investment account, to be known as - ----- "MML Bay State Variable Life Separate Account I" or such other name as shall be determined by the President (referred to herein as "Separate Account I"), in accordance with the provisions of Section 376.309 of Chapter 376 of the Missouri Statutes for the purpose of investing payments to be received under variable life insurance contracts to be issued by the Company (the "Contracts"); that the assets of Separate Account I be invested in shares of MML Equity Investment Company, Inc., MML Money Market Investment Company, Inc., and MML Managed Bond Investment Company, Inc. or, in lieu thereof or in addition thereto, in the shares of any other investment company registered under the Investment Company Act of 1940, at the net asset value of such shares; and that all necessary steps be taken to comply with applicable federal and state laws in order that the Contracts may be sold in all jurisdictions in which the Company is authorized to do a variable life insurance business. VOTED: That Separate Account I be organized as a unit investment trust, that it - ----- be registered, if necessary or appropriate, with the United States Securities and Exchange Commission under the Investment Company Act of 1940, and that the Contracts be registered under the Securities Act of 1933; and that for that purpose the Chairman, the President, any Vice President and the Secretary of the Company be and they are, and each of them singly is, hereby authorized to execute and file or cause to be filed with the Securities and Exchange Commission, in the name of and on behalf of the Company and Separate Account I, a Notification of Registration of Form N-8A, a Registration Statement on Form N-8B-2 and a Registration Statement on Form S-6, or on any other forms which the rules of said Commission may permit, and to execute and file or cause to be filed, in the name of and on behalf of the Company and Separate Account I, such application or applications for, or notification of claim of, exemptions (including Form N-6EI-1 and such other forms which the rules of the Commission may permit or require) from provisions of the Investment Company Act of 1940 and the rules thereunder and such other documents and such amendments (including post-effective amendments) and to take such other action as the officer or officers so acting may consider necessary or desirable.
Item 30. Exhibit (c) i.
UNDERWRITING AND
SERVICING AGREEMENT
This UNDERWRITING AND SERVICING AGREEMENT is made this 16th day of December, 2014, by and between MML Investors Services, LLC ("MMLIS) and MML Bay State Life Insurance Company ("MML Bay State "), on its own behalf and on behalf of MML Bay State variable annuity and variable life separate accounts included on Exhibit A (the "Separate Accounts"), as follows:
WHEREAS, the Separate Accounts were each established under authority of resolutions of the Board of Directors of MML Bay State in order to set aside and invest assets attributable to certain variable annuity and variable life contracts (the "Contracts") issued by MML Bay State; and
WHEREAS, MML Bay State has registered the Separate Accounts under the Investment Company Act of 1940, as amended, (the "1940 Act") and has registered the Contracts under the Securities Act of 1933, as amended, (the "1933 Act"); and
WHEREAS, MML Bay State will continue the effectiveness of the registrations of the Separate Accounts under the 1940 Act and the Contracts under the 1933 Act; and
WHEREAS, MML Bay State intends for the Contracts to be sold by agents and brokers who are required to be registered representatives of a broker-dealer that is registered with the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934 ("1934 Act") and a member of the Financial Industry Regulatory Authority, Inc. ( "FINRA"); and
WHEREAS, MML Bay State desires to engage MMLIS, a broker-dealer registered with the SEC under the 1934 Act and a member of FINRA, to act as the principal underwriter ("Underwriter") of the Contracts, and to otherwise perform certain duties and functions that are necessary and proper for the distribution of the Contracts as required under applicable federal and state securities laws and FINRA regulations, and MMLIS desires to act as Underwriter for the sale of the Contracts and to assume such responsibilities;
NOW, THEREFORE, the parties hereto agree as follows:
1. Underwriter. MML Bay State hereby appoints MMLIS as, and MMLIS agrees to serve as, Underwriter of the Contracts during the term of this Agreement for purposes of federal and state securities laws. MML Bay State reserves the right, however, to refuse at any time or times to sell any Contracts hereunder for any reason, and MML Bay State maintains ultimate responsibility for the sales of the Contracts.
MMLIS shall use reasonable efforts to sell the Contracts but does not agree hereby to sell any specific number of Contracts and shall be free to act as underwriter of other securities.
MMLIS agrees to offer the Contracts for sale in accordance with the prospectus then in effect for the Contracts.
2. Services. MMLIS agrees, on behalf of MML Bay State and the Separate Accounts, and in its capacity as Underwriter, to undertake at its own expense except as otherwise provided herein, to provide certain sales, administrative and supervisory services relative to the Contracts as described below, and otherwise to perform all duties that are necessary and proper for the distribution of the Contracts as required under applicable federal and state securities laws and FINRA regulations.
MMLIS will assist MML Bay State in promoting the Contracts. Such assistance will include: consulting with and answering questions from registered representatives and their support staff, providing competitive information regarding competing carriers, reviewing requests for proposals, assisting in the development of responses to such requests, reviewing promotional material, traveling to registered representatives' offices, and performing other such duties as MML Bay State and MMLIS may mutually agree.
3. Selling Group. MMLIS may enter into sales agreements for the sale of the Contracts with independent broker-dealer firms ("Independent Brokers") whose registered representatives have been or shall be licensed and appointed as life insurance agents of MML Bay State. All such agreements shall be in a form agreed to by MML Bay State. All such agreements shall provide that the Independent Brokers must assume full responsibility for continued compliance by itself and its associated persons with FINRA rules (the "Rules") and all applicable federal and state securities and insurance laws. All associated persons of such Independent Brokers soliciting applications for the Contracts shall be duly and appropriately licensed and appointed for the sale of the Contracts under the Rules and applicable federal and state securities and insurance laws.
4. Compliance and Supervision. All persons who are engaged directly or indirectly in the operations of MMLIS and MML Bay State in connection with the offer or sale of the Contracts shall be considered a "person associated" with MMLIS as defined in Section 3(a)(18) of the 1934 Act. MMLIS shall have full responsibility for the securities activities of each such person as contemplated by Section 15 of the 1934 Act.
MMLIS shall be fully responsible for carrying out all compliance, supervisory and other obligations hereunder with respect to the activities of its registered representatives as required by the Rules and applicable federal and state securities laws. Without limiting the generality of the foregoing, MMLIS agrees that it shall be fully responsible for:
(a) ensuring that no representative of MMLIS shall offer or sell the Contracts until such person is appropriately licensed, registered, or otherwise qualified to offer and sell such Contracts under the federal securities laws and any applicable securities laws of each state or other jurisdiction in which such Contracts may be lawfully sold, in which MML Bay State is licensed to sell the Contracts, and in which such person shall offer or sell the Contracts; and
(b) training and supervising MML Bay State's agents and brokers who are also registered
2
representatives of MMLIS for purposes of complying on a continuous basis with the Rules and with federal and state securities laws applicable in connection with the offering and sale of the Contracts. In this connection, MMLIS shall:
(i) jointly conduct with MML Bay State such training (including the preparation and utilization of training materials) as in the opinion of MMLIS and MML Bay State is necessary to accomplish the purposes of this Agreement;
(ii) establish and implement reasonable written procedures for supervision of sales practices of registered representatives of MMLIS who sell the Contracts;
(iii) provide a sufficient number of registered principals and an adequately staffed compliance department to carry out the responsibilities as set forth herein;
(iv) take reasonable steps to ensure that MML Bay State agents and brokers who are also registered representatives of MMLIS recommend the purchase of the Contracts only upon reasonable grounds to believe that the purchase of the Contracts is suitable for such applicant; and
(v) impose disciplinary measures on agents of MML Bay State who are also registered representatives of MMLIS as required.
The parties hereto recognize that any registered representative of MMLIS or Independent Broker selling the Contracts as contemplated by this Agreement shall also be acting as an insurance agent of MML Bay State or as an insurance broker, and that the rights of MMLIS and Independent Broker to supervise such persons shall be limited to the extent specifically described herein or required under applicable federal or state securities laws or FINRA regulations.
5. Registration and Qualification of Contracts. MML Bay State has prepared or caused to be prepared registration statements describing the Contracts, together with exhibits thereto (hereinafter referred to as the "Registration Statements"). The Registration Statements include prospectuses (the "Prospectuses") for the Contracts.
MML Bay State agrees to execute such papers and to do such acts and things as shall from time-to-time be reasonably requested by MMLIS for the purpose of qualifying and maintaining qualification of the Contracts for sale under applicable state law and for maintaining the registration of the Separate Accounts and interests therein under the 1933 Act and the 1940 Act, to the end that there will be available for sale from time-to-time such amounts of the Contracts as MMLIS may reasonably request. MML Bay State shall advise MMLIS promptly of any action of the SEC or any authorities of any state or territory, of which it is aware, affecting registration or qualification of the Separate Accounts, or rights to offer the Contracts for sale.
If any event shall occur as a result of which it is necessary to amend or supplement the Registration Statements in order to make the statements therein, in light of the circumstances under which they were or are made, true, complete or not misleading, MML Bay State will forthwith prepare and furnish to MMLIS, without charge, amendments or supplements to the
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Registration Statements sufficient to make the statements made in the Registration Statements as so amended or supplemented true, complete and not misleading in light of the circumstances under which they were made.
6. Representations of MML Bay State. MML Bay State represents and warrants to MMLIS and to the Independent Brokers as follows:
(a) MML Bay State is an insurance company duly organized under the laws of the State of Connecticut and is in good standing and is authorized to conduct business under the laws of each state in which the Contracts are sold, that the Separate Accounts were legally and validly established as segregated asset accounts under the Insurance Code of Connecticut, and that the Separate Accounts have been properly registered as unit investment trusts in accordance with the provisions of the 1940 Act to serve as segregated investment accounts for the Contracts.
(b) All persons that will be engaging in the offer or sale of the Contracts will be authorized insurance agents of MML Bay State.
(c) The Registration Statements do not and will not contain any misstatements of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were or are made, not materially misleading.
(d) MML Bay State shall make available to MMLIS copies of all financial statements that MMLIS reasonably requests for use in connection with the offer and sale of the Contracts.
(e) No federal or state agency or bureau has issued an order preventing or suspending the offer of the Contracts or the use of the Registration Statements, or of any part thereof, with respect to the sale of the Contracts.
(f) The offer and sale of the Contracts is not subject to registration, or if necessary, is registered, under the Blue Sky laws of the states in which the Contracts will be offered and sold.
(g) The Contracts are qualified for offer and sale under the applicable state insurance laws in those states in which the Contracts shall be offered for sale. In each state where such qualification is effected, MML Bay State shall file and make such statements or reports as are or may be required by the laws of such state.
(h) This Agreement has been duly authorized, executed and delivered by MML Bay State and constitutes the valid and legally binding obligation of MML Bay State. Neither the execution and delivery of this Agreement by MML Bay State nor the consummation of the transactions contemplated herein will result in a breach or violation of any provision of the
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state insurance laws applicable to MML Bay State, any judicial or administrative orders in which it is named or any material agreement or instrument to which it is a party or by which it is bound.
7. Representations of MMLIS. MMLIS represents and warrants to MML Bay State as follows:
(a) MMLIS is duly registered as a broker-dealer under the 1934 Act and is a member in good standing of FINRA and, to the extent necessary to perform the activities contemplated hereunder, is duly registered, or otherwise qualified, under the applicable securities laws of every state or other jurisdiction in which the Contracts are available for sale.
(b) This Agreement has been duly authorized, executed and delivered by MMLIS and constitutes the valid and legally binding obligation of MMLIS. Neither the execution and delivery of this Agreement by MMLIS nor the consummation of the transactions contemplated herein will result in a breach or violation of any provision of the federal or state securities laws or the Rules, applicable to MMLIS, or any judicial or administrative orders in which it is named or any material agreement or instrument to which it is a party or by which it is bound.
(c) MMLIS shall comply with the Rules and the securities laws of any jurisdiction in which it sells, directly or indirectly, any Contracts.
8. Expenses. MMLIS shall be responsible for all expenses incurred in connection with its provision of services and the performance of its obligations hereunder, except as otherwise provided herein.
MML Bay State shall be responsible for all expenses of printing and distributing the Prospectuses, and all other expenses of preparing, printing and distributing all other sales literature or material for use in connection with offering the Contracts for sale.
9. Sales Literature and Advertising. MMLIS will use and distributes only the Prospectus, statements of additional information, or other applicable and authorized sales literature then in effect in selling the Contracts. MMLIS is not authorized to give any information or to make any representations concerning the Contracts other than those contained in the current Registration Statements filed with the SEC or in such sales literature as may be authorized by MML Bay State.
MMLIS agrees to make timely filings with the SEC, FINRA, and such other regulatory authorities as may be required of any sales literature or advertising materials relating to the Contracts and intended for distribution to prospective investors. MML Bay State shall review and approve all advertising and sales literature concerning the Contracts utilized by MMLIS. MMLIS also agrees to furnish to MML Bay State copies of all agreements and plans it intends to use in connection with any sales of the Contracts.
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10. Applications. All applications for Contracts shall be made on application forms supplied by MML Bay State, and shall be remitted by MMLIS or Independent Brokers promptly, together with such forms and any other required documentation, directly to MML Bay State at the address indicated on such application or to such other address as MML Bay State may, from time to time, designate in writing. All applications are subject to acceptance or rejection by MML Bay State at its sole discretion.
11. Payments. All money payable in connection with any of the Contracts, whether as premiums, purchase payments or otherwise, and whether paid by, or on behalf of any applicant or Contract owner, is the property of MML Bay State and shall be transmitted immediately in accordance with the administrative procedures of MML Bay State without any deduction or offset for any reason, including by example but not limitation, any deduction or offset for compensation claimed by MMLIS. Checks or money orders as payment on any Contract shall be drawn to the order of "Massachusetts Mutual Life Insurance Company." No cash payments shall be accepted by MMILS in connection with the Contracts. Unless otherwise agreed to by MML Bay State in writing, neither MMLIS nor any of MML Bay State's agents nor any broker shall have an interest in any surrender charges, deductions or other fees payable to MML Bay State as set forth herein.
12. Insurance Licenses. MML Bay State shall apply for and maintain the proper insurance licenses and appointments for each of the agents and brokers selling the Contracts in all states or jurisdictions in which the Contracts are offered for sale by such person. MML Bay State reserves the right to refuse to appoint any proposed agent or broker, and to terminate an agent or broker once appointed. MML Bay State agrees to be responsible for all licensing or other fees required under pertinent state insurance laws to properly authorize agents or brokers for the sale of the Contracts; however, the foregoing shall not limit MML Bay State's right to collect such amount from any person or entity other than MMLIS.
13. Agent/Broker Compensation. Commissions or other fees due all brokers and agents in connection with the sale of Contracts shall be paid by MML Bay State, on behalf of MMLIS, to the persons entitled thereto in accordance with the applicable agreement between each such broker or agent and MML Bay State or a general agent thereof. MMLIS shall assist MML Bay State in the payment of such amounts as MML Bay State shall reasonably request, provided that MMLIS shall not be required to perform any acts that would subject it to registration under the insurance laws of any state. The responsibility of MMLIS shall include the performance of all activities by MMLIS necessary in order that the payment of such amounts fully complies with all applicable federal and state securities laws. Unless applicable federal or state securities law shall require, MML Bay State retains the ultimate right to determine the commission rate paid to its agents.
14. MMLIS's Compensation. As payment for its services hereunder, MMLIS shall receive an annual fee ("Fee") The Fee shall be equal to a portion of MMLIS's operating costs that are attributable to the services provided by MMLIS hereunder. During the fourth quarter of each year, MMLIS shall present to MML Bay State: (1) a description of those
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operating expenses that it believes are attributable to the services provided by MMLIS hereunder ("MML Bay State Variable Annuity and Variable Life Separate Accounts Related Expenses"), (2) the percentage of the MML Bay State Variable Annuity and Variable Life Separate Accounts Related Expenses for which it believes MML Bay State is responsible ("MML Bay State Percent"), and (3) an estimated Fee ("Budgeted Fee") for the following calendar year. If MML Bay State objects to the MML Bay State Variable Annuity and Variable Life Separate Accounts Related Expenses, the MML Bay State Percent or the amount of the Budgeted Fee, the parties shall negotiate the matters. The last agreed-to MML Bay State Variable Annuity and Variable Life Separate Accounts Related Expenses, MML Bay State Percent and Budgeted Fee, however, shall remain in effect until the parties agree that any of these items should be changed, or the Agreement is terminated as provided herein.
MML Bay State shall, for each month, pay a portion of the Fee to MMLIS within 30 days after the end of each month. For the first nine months, the amount of the total monthly payments shall be 75% of the Budgeted Fee. The monthly payment for the months during the fourth quarter shall be the difference between the amount of the actual Fee (as determined above) based on the final calendar year results and the amount of the Budgeted Fee paid in the first nine months. Unless otherwise specifically agreed to, any indebtedness between MML Bay State and MMLIS which is not evidenced by written instrument requiring payment of interest, shall bear interest specified in section 1.482(a)(2) of the treasury regulations. Any Fee payments owed after the thirtieth day following the receipt of the bill shall be treated as indebtedness and shall accrue interest on a daily basis at the rate provided in the previous sentence.
15. Books and Records. MMLIS and MML Bay State shall each cause to be maintained and preserved for the period prescribed such accounts, books, and other documents as are required of it by the 1934 Act and any other applicable laws and regulations. In particular, without limiting the foregoing, MMLIS shall cause all the books and records in connection with the offer and sale of the Contracts by its registered representatives to be maintained and preserved in conformity with the requirements of Rules 17a-3 and 17a-4 under the 1934 Act, to the extent that such requirements are applicable to the Contracts. The books, accounts, and records of MMLIS and MML Bay State as to all transactions hereunder shall be maintained so as to disclose clearly and accurately the nature and details of the transactions. The payment of premiums, purchase payments, commissions and other fees and payments in connection with the Contracts by its registered representatives shall be reflected on the books and records of MMLIS as required under applicable FINRA regulations and federal and state securities laws requirements.
MMLIS and MML Bay State, from time to time during the term of this Agreement, shall divide the administrative responsibility for maintaining and preserving the books, records and accounts kept in connection with the Contracts; provided, however, in the case of books, records and accounts kept pursuant to a requirement of applicable law or regulation, the ultimate and legal responsibility for maintaining and preserving such books, records and accounts shall be that of the party which is required to maintain or preserve such books, records and accounts under the
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applicable law or regulation, and such books, records and accounts shall be maintained and preserved under the supervision of that party. MMLIS and MML Bay State shall each cause the other to be furnished with such reports as it may reasonably request for the purpose of meeting its reporting and recordkeeping requirements under such regulations and laws, and under the insurance laws of the Commonwealth of Massachusetts and any other applicable states or jurisdictions.
MMLIS and MML Bay State each agree and understand that all documents, reports, records, books, files and other materials required under applicable Rules and federal and state securities laws shall be the property of MMLIS, unless such documents, reports, records, books, files and other materials are required by applicable regulation or law to be also maintained by MML Bay State, in which case such material shall be the joint property of MMLIS and MML Bay State. All other documents, reports, records, books, files and other materials maintained relative to this Agreement shall be the property of MML Bay State. Upon termination of this Agreement, all said material shall be returned to the applicable party.
MMLIS and MML Bay State shall establish and maintain facilities and procedures for the safekeeping of all books, accounts, records, files, and other materials related to this Agreement. Such books, accounts, records, files, and other materials shall remain confidential and shall not be voluntarily disclosed to any other person or entity except as described below in section 16.
16. Availability of Records. MMLIS and MassMutual shall each submit to all regulatory and administrative bodies having jurisdiction over the sales of the Contracts, present or future, any information, reports, or other material that any such body by reason of this Agreement may request or require pursuant to applicable laws or regulations. In particular, without limiting the foregoing, MML Bay State agrees that any books and records it maintains pursuant to paragraph 15 of this Agreement which are required to be maintained under Rule 17a-3 or 17a-4 of the 1934 Act shall be subject to inspection by the SEC in accordance with Section 17(a) of the 1934 Act and Sections 30 and 31 of the 1940 Act.
17. Confirmations. MML Bay State agrees to prepare and mail a confirmation for each transaction in connection with the Contracts at or before the completion thereof as required by the 1934 Act and applicable interpretations thereof, including Rule l0b-10 thereunder. Each such confirmation shall reflect the facts of the transaction, and the form thereof will show that it is being sent on behalf of MMLIS or Independent Broker acting in the capacity of agent for MML Bay State.
18. Indemnification. MML Bay State shall indemnify MMLIS, Independent Brokers, their registered representatives, officers, directors, employees, agents and controlling persons and hold such persons harmless, from and against any and all losses, damages, liabilities, claims, demands, judgments, settlements, costs and expenses of any nature whatsoever (including reasonable attorneys' fees and disbursements) resulting or arising out of or based upon an allegation or finding that: (i) the Registration Statements or any application or other document or written information provided by or on behalf of MML Bay State includes any untrue statement of a
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material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they are made, not misleading, unless such statement or omission was made in reliance upon, and in conformity with, written information furnished to MML Bay State by MMLIS, Independent Brokers, or their registered representatives specifically for use in the preparation thereof, or (ii) there is a misrepresentation, breach of warranty or failure to fulfill any covenant or warranty made or undertaken by MML Bay State hereunder.
MMLIS will indemnify MML Bay State, its officers, directors, employees, agents and controlling persons and hold such persons harmless, from and against any and all losses, damages, liabilities, claims, demands, judgments, settlements, costs and expenses of any nature whatsoever (including reasonable attorneys' fees and disbursements) resulting or arising out of or based upon an allegation or finding that: (i) MMLIS or its registered representatives offered or sold or engaged in any activity relating to the offer and sale of the Contracts which was in violation of any provision of the federal securities laws or, (ii) there is a material misrepresentation, material breach of warranty or material failure to fulfill any covenant or warranty made or undertaken by MMLIS hereunder.
Promptly after receipt by an indemnified party under this paragraph 18 of notice of the
commencement of any action by a third party, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this paragraph 18, notify the indemnifying party of the commencement thereof; but the omission to notify the indemnifying party will not relieve the indemnifying party from liability which the indemnifying party may have to any indemnified party otherwise than under this paragraph. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, to assume the defense thereof, with counsel satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this paragraph for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation.
19. Independent Contractor. MMLIS shall be an independent contractor. MMLIS is responsible for its own conduct and the employment, control and conduct of its agents and employees and for injury to such agents or employees or to others through its agents or employees. MMLIS assumes full responsibility for its agents and employees under applicable statutes and agrees to pay all employer taxes thereunder.
20. Termination. Subject to termination as hereinafter provided, this Agreement shall remain in full force and effect for the initial term of the Agreement, which shall be for a two year period commencing on the date first above written, and this Agreement shall continue in full force and effect from year to year thereafter, until terminated as herein provided.
This Agreement may be terminated by either party hereto upon 30 days written notice to the
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other party, or at any time upon the mutual written consent of the parties hereto. This Agreement shall automatically be terminated in the event of its assignment. Subject to MML Bay State's approval, however, MMLIS may delegate any duty or function assigned to it in this Agreement provided that such delegation is permissible under applicable law. Upon termination of this Agreement, all authorizations, rights and obligations shall cease except the obligations to settle accounts hereunder, including the settlement of monies due in connection with the Contracts in effect at the time of termination or issued pursuant to applications received by MML Bay State prior to termination.
21. Interpretation. This Agreement shall be subject to the provisions of the 1934 Act and the rules, regulations, and rulings thereunder and of FINRA, from time to time in effect, and the terms hereof shall be interpreted and construed in accordance therewith. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule, or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be interpreted in accordance with the laws of the Commonwealth of Massachusetts.
22. Non-exclusivity. The services of MMLIS and MML Bay State to the Separate Accounts hereunder are not to be deemed exclusive and MMLIS and MML Bay State shall be free to render similar services to others so long as their services hereunder are not impaired or interfered with hereby.
23. Amendment. This Agreement constitutes the entire Agreement between the parties hereto and may not be modified except in a written instrument executed by all parties hereto.
24. Interests in and of MMLIS. It is understood that any of the policyholders, directors, officers, employees and agents of MML Bay State may be a shareholder, director, officer, employee, or agent of, or be otherwise interested in, MMLIS, any affiliated person of MMLIS, any organization in which MMLIS may have an interest, or any organization which may have an interest in MMLIS; that MMLIS, any such affiliated person or any such organization may have an interest in MML Bay State; and that the existence of any such dual interest shall not affect the validity hereof or of any transaction hereunder except as otherwise provided in the Charter, Articles of incorporation, Limited Liability Company Agreement or By-Laws of MML Bay State and MMLIS, respectively, or by specific provision of applicable law.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective officials thereunto duly authorized, as of the day and year first above written.
MML BAY STATE LIFE INSURANCE COMPANY, on its behalf and on behalf of the MML BAY STATE VARIABLE ANNUITY and VARIABLE LIFE SEPARATE ACCOUNTS LISTED ON EXHIBIT A. | ||
By: | /s/ Michael R. Fanning | |
Michael R. Fanning | ||
Executive Vice President |
MML INVESTORS SERIVCES, LLC | ||
By: | /s/ William F. Monroe, Jr. | |
William F. Monroe, Jr. | ||
Chief Operating Officer and Vice President |
Exhibit A to the
Underwriting and Servicing Agreement
Between MMLIS and MML Bay State for the following Separate Accounts:
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
Item 30. Exhibit (c) ii.
UNDERWRITING AND
SERVICING AGREEMENT
This UNDERWRITING AND SERVICING AGREEMENT is made this 1st day of April, 2014, by and between MML Strategic Distributors, LLC (“MSD”) and MMLBay State Life Insurance Company (“MML Bay State ”), on its own behalf and on behalf of MML Bay State variable annuity and variable life separate accounts included on Exhibit A (the “Separate Accounts”), as follows:
WHEREAS, the Separate Accounts were each established under authority of resolutions of the Board of Directors of MML Bay State in order to set aside and invest assets attributable to certain variable annuity contracts (the “Contracts”) issued by MML Bay State; and
WHEREAS, MML Bay State has registered the Separate Accounts under the Investment Company Act of 1940, as amended, (the “1940 Act”) and has registered the Contracts under the Securities Act of 1933, as amended, (the “1933 Act”); and
WHEREAS, MML Bay State will continue the effectiveness of the registrations of the Separate Accounts under the 1940 Act and the Contracts under the 1933 Act; and
WHEREAS, MML Bay State intends for the Contracts to be sold by agents and brokers who are required to be registered representatives of a broker-dealer that is registered with the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934 (“1934 Act”) and a member of the Financial Industry Regulatory Authority, Inc. ( “FINRA”); and
WHEREAS, MML Bay State desires to engage MSD, a broker-dealer registered with the SEC under the 1934 Act and a member of FINRA, to act as the principal underwriter (“Underwriter”) of the Contracts, and to otherwise perform certain duties and functions that are necessary and proper for the distribution of the Contracts as required under applicable federal and state securities laws and FINRA regulations, and MSD desires to act as Underwriter for the sale of the Contracts and to assume such responsibilities;
NOW, THEREFORE, the parties hereto agree as follows:
1. Underwriter. MML Bay State hereby appoints MSD as, and MSD agrees to serve as, Underwriter of the Contracts during the term of this Agreement for purposes of federal and state securities laws. MML Bay State reserves the right, however, to refuse at any time or times to sell any Contracts hereunder for any reason, and MML Bay State maintains ultimate responsibility for the sales of the Contracts.
MSD shall use reasonable efforts to sell the Contracts but does not agree hereby to sell any specific number of Contracts and shall be free to act as underwriter of other securities.
MSD agrees to offer the Contracts for sale in accordance with the prospectus then in effect for the Contracts.
2. Services. MSD agrees, on behalf of MML Bay State and the Separate Accounts, and in its capacity as Underwriter, to undertake at its own expense except as otherwise provided herein, to provide certain sales, administrative and supervisory services relative to the Contracts as described below, and otherwise to perform all duties that are necessary and proper for the distribution of the Contracts as required under applicable federal and state securities laws and FINRA regulations.
MSD will assist MML Bay State in promoting the Contracts. Such assistance will include: consulting with and answering questions from registered representatives and their support staff, providing competitive information regarding competing carriers, reviewing requests for proposals, assisting in the development of responses to such requests, reviewing promotional material, traveling to registered representatives’ offices, and performing other such duties as MML Bay State and MSD may mutually agree.
3. Selling Group. MSD may enter into sales agreements for the sale of the Contracts with independent broker-dealer firms (“Independent Brokers”) whose registered representatives have been or shall be licensed and appointed as life insurance agents of MML Bay State. All such agreements shall be in a form agreed to by MML Bay State. All such agreements shall provide that the Independent Brokers must assume full responsibility for continued compliance by itself and its associated persons with FINRA rules (the “Rules”) and all applicable federal and state securities and insurance laws. All associated persons of such Independent Brokers soliciting applications for the Contracts shall be duly and appropriately licensed and appointed for the sale of the Contracts under the Rules and applicable federal and state securities and insurance laws.
4. Compliance and Supervision. All persons who are engaged directly or indirectly in the operations of MSD and MML Bay State in connection with the offer or sale of the Contracts shall be considered a “person associated” with MSD as defined in Section 3(a)(18) of the 1934 Act. MSD shall have full responsibility for the securities activities of each such person as contemplated by Section 15 of the 1934 Act.
MSD shall be fully responsible for carrying out all compliance, supervisory and other obligations hereunder with respect to the activities of its registered representatives as required by the Rules and applicable federal and state securities laws. Without limiting the generality of the foregoing, MSD agrees that it shall be fully responsible for:
(a) ensuring that no representative of MSD shall offer or sell the Contracts until such person is appropriately licensed, registered, or otherwise qualified to offer and sell such Contracts under the federal securities laws and any applicable securities laws of each state or other jurisdiction in which such Contracts may be lawfully sold, in which MML Bay State is licensed to sell the Contracts, and in which such person shall offer or sell the Contracts; and
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(b) training and supervising MML Bay State’s agents and brokers who are also registered representatives of MSD for purposes of complying on a continuous basis with the Rules and with federal and state securities laws applicable in connection with the offering and sale of the Contracts. In this connection, MSD shall:
(i) jointly conduct with MML Bay State such training (including the preparation and utilization of training materials) as in the opinion of MSD and MML Bay State is necessary to accomplish the purposes of this Agreement;
(ii) establish and implement reasonable written procedures for supervision of sales practices of registered representatives of MSD who sell the Contracts;
(iii) provide a sufficient number of registered principals and an adequately staffed compliance department to carry out the responsibilities as set forth herein;
(iv) take reasonable steps to ensure that MML Bay State agents and brokers who are also registered representatives of MSD recommend the purchase of the Contracts only upon reasonable grounds to believe that the purchase of the Contracts is suitable for such applicant; and
(v) impose disciplinary measures on agents of MML Bay State who are also registered representatives of MSD as required.
The parties hereto recognize that any registered representative of MSD or Independent Broker selling the Contracts as contemplated by this Agreement shall also be acting as an insurance agent of MML Bay State or as an insurance broker, and that the rights of MSD and Independent Broker to supervise such persons shall be limited to the extent specifically described herein or required under applicable federal or state securities laws or FINRA regulations.
5. Registration and Qualification of Contracts. MML Bay State has prepared or caused to be prepared registration statements describing the Contracts, together with exhibits thereto (hereinafter referred to as the “Registration Statements”). The Registration Statements include prospectuses (the “Prospectuses”) for the Contracts.
MML Bay State agrees to execute such papers and to do such acts and things as shall from time-to-time be reasonably requested by MSD for the purpose of qualifying and maintaining qualification of the Contracts for sale under applicable state law and for maintaining the registration of the Separate Accounts and interests therein under the 1933 Act and the 1940 Act, to the end that there will be available for sale from time-to-time such amounts of the Contracts as MSD may reasonably request. MML Bay State shall advise MSD promptly of any action of the SEC or any authorities of any state or territory, of which it is aware, affecting registration or qualification of the Separate Account, or rights to offer the Contracts for sale.
If any event shall occur as a result of which it is necessary to amend or supplement the Registration Statements in order to make the statements therein, in light of the circumstances under which they were or are made, true, complete or not misleading, MML Bay State will forthwith prepare and furnish to MSD, without charge, amendments or supplements to the
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Registration Statements sufficient to make the statements made in the Registration Statements as so amended or supplemented true, complete and not misleading in light of the circumstances under which they were made.
6. Representations of MML Bay State. MML Bay State represents and warrants to MSD and to the Independent Brokers as follows:
(a) MML Bay State is an insurance company duly organized under the laws of the Commonwealth of Massachusetts and is in good standing and is authorized to conduct business under the laws of each state in which the Contracts are sold, that the Separate Accounts were legally and validly established as segregated asset accounts under the Insurance Code of Massachusetts, and that the Separate Accounts have been properly registered as unit investment trusts in accordance with the provisions of the 1940 Act to serve as segregated investment accounts for the Contracts.
(b) All persons that will be engaging in the offer or sale of the Contracts will be authorized insurance agents of MML Bay State.
(c) The Registration Statements do not and will not contain any misstatements of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were or are made, not materially misleading.
(d) MML Bay State shall make available to MSD copies of all financial statements that MSD reasonably requests for use in connection with the offer and sale of the Contracts.
(e) No federal or state agency or bureau has issued an order preventing or suspending the offer of the Contracts or the use of the Registration Statements, or of any part thereof, with respect to the sale of the Contracts.
(f) The offer and sale of the Contracts is not subject to registration, or if necessary, is registered, under the Blue Sky laws of the states in which the Contracts will be offered and sold.
(g) The Contracts are qualified for offer and sale under the applicable state insurance laws in those states in which the Contracts shall be offered for sale. In each state where such qualification is effected, MML Bay State shall file and make such statements or reports as are or may be required by the laws of such state.
(h) This Agreement has been duly authorized, executed and delivered by MML Bay State and constitutes the valid and legally binding obligation of MML Bay State. Neither the execution and delivery of this Agreement by MML Bay State nor the consummation of the transactions contemplated herein will result in a breach or violation of any provision of the state insurance laws applicable to MML Bay State, any judicial or administrative orders in which it is named or any material agreement or instrument to which it is a party or by which it is bound.
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7. Representations of MSD. MSD represents and warrants to MML Bay State as follows:
(a) MSD is duly registered as a broker-dealer under the 1934 Act and is a member in good standing of FINRA and, to the extent necessary to perform the activities contemplated hereunder, is duly registered, or otherwise qualified, under the applicable securities laws of every state or other jurisdiction in which the Contracts are available for sale.
(b) This Agreement has been duly authorized, executed and delivered by MSD and constitutes the valid and legally binding obligation of MSD. Neither the execution and delivery of this Agreement by MSD nor the consummation of the transactions contemplated herein will result in a breach or violation of any provision of the federal or state securities laws or the Rules, applicable to MSD, or any judicial or administrative orders in which it is named or any material agreement or instrument to which it is a party or by which it is bound.
(c) MSD shall comply with the Rules and the securities laws of any jurisdiction in which it sells, directly or indirectly, any Contracts.
8. Expenses. MSD shall be responsible for all expenses incurred in connection with its provision of services and the performance of its obligations hereunder, except as otherwise provided herein.
MML Bay State shall be responsible for all expenses of printing and distributing the Prospectuses, and all other expenses of preparing, printing and distributing all other sales literature or material for use in connection with offering the Contracts for sale.
9. Sales Literature and Advertising. MSD will use and distributes only the Prospectus, statements of additional information, or other applicable and authorized sales literature then in effect in selling the Contracts. MSD is not authorized to give any information or to make any representations concerning the Contracts other than those contained in the current Registration Statements filed with the SEC or in such sales literature as may be authorized by MML Bay State.
MSD agrees to make timely filings with the SEC, FINRA, and such other regulatory authorities as may be required of any sales literature or advertising materials relating to the Contracts and intended for distribution to prospective investors. MML Bay State shall review and approve all advertising and sales literature concerning the Contracts utilized by MSD. MSD also agrees to furnish to MML Bay State copies of all agreements and plans it intends to use in connection with any sales of the Contracts.
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10. Applications. All applications for Contracts shall be made on application forms supplied by MML Bay State, and shall be remitted by MSD or Independent Brokers promptly, together with such forms and any other required documentation, directly to MML Bay State at the address indicated on such application or to such other address as MML Bay State may, from time to time, designate in writing. All applications are subject to acceptance or rejection by MML Bay State at its sole discretion.
11. Payments. All money payable in connection with any of the Contracts, whether as premiums, purchase payments or otherwise, and whether paid by, or on behalf of any applicant or Contract owner, is the property of MML Bay State and shall be transmitted immediately in accordance with the administrative procedures of MML Bay State without any deduction or offset for any reason, including by example but not limitation, any deduction or offset for compensation claimed by MSD. Checks or money orders as payment on any Contract shall be drawn to the order of “Massachusetts Mutual Life Insurance Company.” No cash payments shall be accepted by MSD in connection with the Contracts. Unless otherwise agreed to by MML Bay State in writing, neither MSD nor any of MML Bay State’s agents nor any broker shall have an interest in any surrender charges, deductions or other fees payable to MML Bay State as set forth herein.
12. Insurance Licenses. MML Bay State shall apply for and maintain the proper insurance licenses and appointments for each of the agents and brokers selling the Contracts in all states or jurisdictions in which the Contracts are offered for sale by such person. MML Bay State reserves the right to refuse to appoint any proposed agent or broker, and to terminate an agent or broker once appointed. MML Bay State agrees to be responsible for all licensing or other fees required under pertinent state insurance laws to properly authorize agents or brokers for the sale of the Contracts; however, the foregoing shall not limit MML Bay State’s right to collect such amount from any person or entity other than MSD.
13. Agent/Broker Compensation. Commissions or other fees due all brokers and agents in connection with the sale of Contracts shall be paid by MML Bay State, on behalf of MS D, to the persons entitled thereto in accordance with the applicable agreement between each such broker or agent and MML Bay State or a general agent thereof. MSD shall assist MML Bay State in the payment of such amounts as MML Bay State shall reasonably request, provided that MSD shall not be required to perform any acts that would subject it to registration under the insurance laws of any state. The responsibility of MSD shall include the performance of all activities by MSD necessary in order that the payment of such amounts fully complies with all applicable federal and state securities laws. Unless applicable federal or state securities law shall require, MML Bay State retains the ultimate right to determine the commission rate paid to its agents.
14. MSD’s Compensation. As payment for its services hereunder, MSD shall receive an annual fee (“Fee”) The Fee shall be equal to a portion of MSD’s operating costs that are attributable to the services provided by MSD hereunder. During the fourth quarter of each year, MSD shall present to MML Bay State: (1) a description of those operating expenses that it believes are attributable to the services provided by MSD hereunder (“MML Bay
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State Variable Annuity and Variable Life Separate Accounts Related Expenses”), (2) the percentage of the MML Bay State Variable Annuity and Variable Life Separate Accounts Related Expenses for which it believes MML Bay State is responsible (“MML Bay State Percent”), and (3) an estimated Fee (“Budgeted Fee”) for the following calendar year. If MML Bay State objects to the MML Bay State Variable Annuity and Variable Life Separate Accounts Related Expenses, the MML Bay State Percent or the amount of the Budgeted Fee, the parties shall negotiate the matters. The last agreed-to MML Bay State Variable Annuity and Variable Life Separate Accounts Related Expenses, MML Bay State Percent and Budgeted Fee, however, shall remain in effect until the parties agree that any of these items should be changed, or the Agreement is terminated as provided herein.
MML Bay State shall, for each month, pay a portion of the Fee to MSD within 30 days after the end of each month. For the first nine months, the amount of the total monthly payments shall be 75% of the Budgeted Fee. The monthly payment for the months during the fourth quarter shall be the difference between the amount of the actual Fee (as determined above) based on the final calendar year results and the amount of the Budgeted Fee paid in the first nine months. Unless otherwise specifically agreed to, any indebtedness between MML Bay State and MSD which is not evidenced by written instrument requiring payment of interest, shall bear interest specified in section 1.482(a)(2) of the treasury regulations. Any Fee payments owed after the thirtieth day following the receipt of the bill shall be treated as indebtedness and shall accrue interest on a daily basis at the rate provided in the previous sentence.
MSD shall provide a status report on the calculation of the Fee to MML Bay State no later than 45 days after the end of the second quarter, and shall indicate whether actual year-to-date results used to calculate the Fee are within 10% for the year-to-date pro-rated Budgeted Fee.
15. Books and Records. MSD and MML Bay State shall each cause to be maintained and preserved for the period prescribed such accounts, books, and other documents as are required of it by the 1934 Act and any other applicable laws and regulations. In particular, without limiting the foregoing, MSD shall cause all the books and records in connection with the offer and sale of the Contracts by its registered representatives to be maintained and preserved in conformity with the requirements of Rules 17a-3 and 17a-4 under the 1934 Act, to the extent that such requirements are applicable to the Contracts. The books, accounts, and records of MSD and MML Bay State as to all transactions hereunder shall be maintained so as to disclose clearly and accurately the nature and details of the transactions. The payment of premiums, purchase payments, commissions and other fees and payments in connection with the Contracts by its registered representatives shall be reflected on the books and records of MSD as required under applicable FINRA regulations and federal and state securities laws requirements.
MSD and MML Bay State, from time to time during the term of this Agreement, shall divide the administrative responsibility for maintaining and preserving the books, records and accounts kept in connection with the Contracts; provided, however, in the case of books, records and accounts kept pursuant to a requirement of applicable law or regulation, the ultimate and
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legal responsibility for maintaining and preserving such books, records and accounts shall be that of the party which is required to maintain or preserve such books, records and accounts under the applicable law or regulation, and such books, records and accounts shall be maintained and preserved under the supervision of that party. MSD and MML Bay State shall each cause the other to be furnished with such reports as it may reasonably request for the purpose of meeting its reporting and recordkeeping requirements under such regulations and laws, and under the insurance laws of the Commonwealth of Massachusetts and any other applicable states or jurisdictions.
MSD and MML Bay State each agree and understand that all documents, reports, records, books, files and other materials required under applicable Rules and federal and state securities laws shall be the property of MSD, unless such documents, reports, records, books, files and other materials are required by applicable regulation or law to be also maintained by MML Bay State, in which case such material shall be the joint property of MS D and MML Bay State. All other documents, reports, records, books, files and other materials maintained relative to this Agreement shall be the property of MML Bay State. Upon termination of this Agreement, all said material shall be returned to the applicable party.
MSD and MML Bay State shall establish and maintain facilities and procedures for the safekeeping of all books, accounts, records, files, and other materials related to this Agreement. Such books, accounts, records, files, and other materials shall remain confidential and shall not be voluntarily disclosed to any other person or entity except as described below in section 16.
16. Availability of Records. MSD and MassMutual shall each submit to all regulatory and administrative bodies having jurisdiction over the sales of the Contracts, present or future, any information, reports, or other material that any such body by reason of this Agreement may request or require pursuant to applicable laws or regulations. In particular, without limiting the foregoing, MML Bay State agrees that any books and records it maintains pursuant to paragraph 15 of this Agreement which are required to be maintained under Rule 17a-3 or 17a-4 of the 1934 Act shall be subject to inspection by the SEC in accordance with Section 17(a) of the 1934 Act and Sections 30 and 31 of the 1940 Act.
17. Confirmations. MML Bay State agrees to prepare and mail a confirmation for each transaction in connection with the Contracts at or before the completion thereof as required by the 1934 Act and applicable interpretations thereof, including Rule l0b-10 thereunder. Each such confirmation shall reflect the facts of the transaction, and the form thereof will show that it is being sent on behalf of MSD or Independent Broker acting in the capacity of agent for MML Bay State.
18. Indemnification. MML Bay State shall indemnify MSD, Independent Brokers, their registered representatives, officers, directors, employees, agents and controlling persons and hold such persons harmless, from and against any and all losses, damages, liabilities, claims, demands, judgments, settlements, costs and expenses of any nature whatsoever (including reasonable attorneys’ fees and disbursements) resulting or arising out of or based upon an allegation or
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finding that: (i) the Registration Statements or any application or other document or written information provided by or on behalf of MML Bay State includes any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they are made, not misleading, unless such statement or omission was made in reliance upon, and in conformity with, written information furnished to MML Bay State by MSD, Independent Brokers, or their registered representatives specifically for use in the preparation thereof, or (ii) there is a misrepresentation, breach of warranty or failure to fulfill any covenant or warranty made or undertaken by MML Bay State hereunder.
MSD will indemnify MML Bay State, its officers, directors, employees, agents and controlling persons and hold such persons harmless, from and against any and all losses, damages, liabilities, claims, demands, judgments, settlements, costs and expenses of any nature whatsoever (including reasonable attorneys’ fees and disbursements) resulting or arising out of or based upon an allegation or finding that: (i) MSD or its registered representatives offered or sold or engaged in any activity relating to the offer and sale of the Contracts which was in violation of any provision of the federal securities laws or, (ii) there is a material misrepresentation, material breach of warranty or material failure to fulfill any covenant or warranty made or undertaken by MSD hereunder.
Promptly after receipt by an indemnified party under this paragraph 18 of notice of the commencement of any action by a third party, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this paragraph 18, notify the indemnifying party of the commencement thereof; but the omission to notify the indemnifying party will not relieve the indemnifying party from liability which the indemnifying party may have to any indemnified party otherwise than under this paragraph. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, to assume the defense thereof, with counsel satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this paragraph for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation.
19. Independent Contractor. MSD shall be an independent contractor. MS D is responsible for its own conduct and the employment, control and conduct of its agents and employees and for injury to such agents or employees or to others through its agents or employees. MSD assumes full responsibility for its agents and employees under applicable statutes and agrees to pay all employer taxes thereunder.
20. Termination. Subject to termination as hereinafter provided, this Agreement shall remain in full force and effect for the initial term of the Agreement, which shall be for a two year period commencing on the date first above written, and this Agreement shall continue in full force and effect from year to year thereafter, until terminated as herein provided.
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This Agreement may be terminated by either party hereto upon 30 days written notice to the other party, or at any time upon the mutual written consent of the parties hereto. This Agreement shall automatically be terminated in the event of its assignment. Subject to MML Bay State’s approval, however, MSD may delegate any duty or function assigned to it in this agreement provided that such delegation is permissible under applicable law. Upon termination of this Agreement, all authorizations, rights and obligations shall cease except the obligations to settle accounts hereunder, including the settlement of monies due in connection with the Contracts in effect at the time of termination or issued pursuant to applications received by MML Bay State prior to termination.
21. Interpretation. This Agreement shall be subject to the provisions of the 1934 Act and the rules, regulations, and rulings thereunder and of FINRA, from time to time in effect, and the terms hereof shall be interpreted and construed in accordance therewith. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule, or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be interpreted in accordance with the laws of the Commonwealth of Massachusetts.
22. Non-exclusivity. The services of MSD and MML Bay State to the Separate Accounts hereunder are not to be deemed exclusive and MSD and MML Bay State shall be free to render similar services to others so long as their services hereunder are not impaired or interfered with hereby.
23. Amendment. This Agreement constitutes the entire Agreement between the parties hereto and may not be modified except in a written instrument executed by all parties hereto.
24. Interests in and of MSD. It is understood that any of the policyholders, directors, officers, employees and agents of MML Bay State may be a shareholder, director, officer, employee, or agent of, or be otherwise interested in, MSD, any affiliated person of MSD, any organization in which MSD may have an interest, or any organization which may have an interest in MSD; that MSD, any such affiliated person or any such organization may have an interest in MML Bay State; and that the existence of any such dual interest shall not affect the validity hereof or of any transaction hereunder except as otherwise provided in the Charter, Articles of incorporation, Limited Liability Company Agreement or By-Laws of MML Bay State and MSD, respectively, or by specific provision of applicable law.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective officials thereunto duly authorized and seals to be affixed, as of the day and year first above written.
MML BAY STATE LIFE INSURANCE COMPANY, on its behalf and on behalf of the MML BAY STATE VARIABLE ANNUITY and VARIABLE LIFE SEPARATE ACCOUNTS LISTED ON EXHIBIT A. | ||
By: | /s/ Michael Fanning | |
Michael Fanning Executive Vice President | ||
MML STRATEGIC DISTRIBUTORS, LLC | ||
By: | /s/ Wendy Benson | |
Wendy Benson President |
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Exhibit A to the
Underwriting and Services Agreement
Between MSD and MML Bay State for the following Separate Accounts:
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
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Item 30. Exhibit (c) iii.
INSURANCE PRODUCTS DISTRIBUTION AGREEMENT
The parties to this Insurance Products Distribution Agreement (“Agreement”) are:
Product Manufacturer: Massachusetts Mutual Life Insurance Company (“MassMutual”);
Principal Underwriter: MML Strategic Distributors, LLC (“MSD”), principal underwriter for the purpose of contracting with duly licensed and registered broker-dealers to distribute variable life insurance and variable annuities; and
Insurance Authorized Distributor(s): (“Retail Firm”), an entity that is duly authorized under the insurance laws of one or more states or other jurisdictions to solicit, sell, negotiate and service insurance products, and any and all insurance agencies that are similarly authorized and that have signed this Agreement below (individually, an “Agency”; collectively, the “Agencies”);
Broker-Dealer (Applicable only if registered securities products are to be distributed pursuant to this Agreement and Retail Firm is not registered as a broker-dealer): (“Broker-Dealer”), an entity that is affiliated with Retail Firm, is registered as a broker-dealer under the Securities Exchange Act of 1934, is a member of the Financial Industry Regulatory Authority (“FINRA”) and has the authority from FINRA to sell and service variable insurance products.
WHEREAS, MassMutual manufactures and issues financial products including, but not limited to, life insurance policies, individual and fixed annuities, disability income insurance policies, and long term care insurance policies (the “Fixed Products”); and
WHEREAS, MassMutual also manufactures and issues variable life insurance policies and variable annuity products registered as securities under the Securities Act of 1933 (the “Variable Products”, and with the Fixed Products, collectively, the “Products”); and
WHEREAS, MSD is a broker-dealer registered under the Securities Exchange Act of 1934 and is a member of FINRA and has been appointed by MassMutual to act as principal underwriter for the purpose of entering into selling agreements with duly licensed and registered broker dealers to distribute the Variable Products; and
WHEREAS, Retail Firm, Agencies and (if applicable) Broker-Dealer (collectively, the “Producers”) desire to sell some or all of the Products.
NOW THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:
AUTHORIZATIONS
1. | To Sell Fixed Products. Subject to the terms and conditions of this Agreement, MassMutual appoints and authorizes Retail Firm and Agencies to solicit sales of and provide service with respect to any Fixed Product described in Schedule A hereto. |
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2. | To Sell Variable Products. Subject to the terms and conditions of this Agreement and pursuant to the principal underwriting agreement entered into between MSD and MassMutual, MassMutual and MSD appoint and authorize Producers to solicit sales of and provide service with respect to any Variable Product described in Schedule A hereto. |
3. | Other Authority. Producers are also authorized to deliver or arrange for delivery of any contracts or policies issued by MassMutual and to collect initial premiums on those contracts or policies. In connection with the offer and sale of the Products authorized for sale under this Agreement, Producers are authorized to use any sales materials and prospectuses relating to the Products that have been provided or authorized by MassMutual or MSD. |
4. | Limitations on Authority. The authority granted to Producers and those individuals who are affiliated with Producers and who are authorized by Producers to solicit sales of Products by MassMutual and (if applicable) MSD (such individuals referred to herein as “Sales Representatives”) is expressly limited to the states and jurisdictions where Producers and Sales Representatives are properly licensed and/or registered (and appointed, where applicable) to conduct business. Producers and Sales Representatives are not authorized and are expressly forbidden on behalf of MassMutual to make, alter, modify, waive or change any of the terms, rates or conditions of any MassMutual forms, Products, contracts or sales materials. Producers are not authorized to discharge any provision(s) of the Products, waive any forfeitures, grant, permit, or extend the time of making any payments, guarantee earnings, dividends or rates, incur indebtedness on behalf of MassMutual or MSD, or enter into any proceeding in a court of law or before a regulatory agency in the name of or on behalf of MassMutual or MSD. Producers and Sales Representatives are not authorized and are expressly forbidden on behalf of MassMutual to estimate future dividends or policy performance except, as permitted by applicable law and regulation (including any self-regulatory organization), through the use of authorized projections or illustrations provided by MSD or MassMutual. |
5. | Acceptance of Authority. Producers accept such appointments on a non-exclusive basis and agree to use their best efforts to find purchasers for the Products acceptable to MassMutual. |
6. | Independent Contractors. Producers and Sales Representatives are independent contractors with respect to MassMutual and (if applicable) MSD, and do not have the right to hold themselves out as employees, partners, or joint venturers of MassMutual or MSD in connection with the solicitation of the Products or otherwise. Subject to this Agreement, Producers shall exercise their own judgment as to the time, place and manner and performance of their services. |
REPRESENTATIONS AND RESPONSIBILITIES
OF MASSMUTUAL AND MSD
7. | Authority. MassMutual and MSD represent that this Agreement has been duly authorized, executed and delivered by them, constitutes a valid and legally binding obligation, and that neither the execution and delivery of this Agreement by them nor the consummation of the transactions contemplated herein shall result in a breach or violation of any applicable provision of law or FINRA Rules (FINRA Rules or any successor conduct rules are hereinafter referred to as |
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the “FINRA Rules”), or any judicial or administrative orders in which they are named or any material agreement or instrument to which they are a party or by which they are bound. |
8. | Product Availability. MassMutual has obtained authorization to offer and sell the Products under the applicable insurance and securities laws of various states and other jurisdictions. Producers shall, upon request, be provided with a list of those states and jurisdictions in which the Products have been authorized for sale. MassMutual shall file and make all statements or reports as are or may be required by the laws of such state or jurisdiction to maintain these qualifications in effect. |
9. | Prospectuses and Supplements. MassMutual has caused registration statements to be prepared describing the material aspects of the Variable Products. MassMutual represents and warrants for the effective period of this Agreement that the prospectuses contained in the registration statements for the Variable Products (the “Prospectuses”) do not and shall not contain any untrue statements of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were or are made, not materially misleading. MSD shall furnish Producers, at no cost to Producers, a reasonable number of copies of the Prospectuses, upon request. |
If any event does occur as a result of which it is necessary to amend or supplement the Prospectus for any Variable Product in order to make the statements therein, in light of the circumstances under which they were or are made, true, complete or not misleading, MSD shall promptly furnish or make available to Producers upon request, without charge, any supplements to the Prospectuses prepared by MassMutual and supplied to MSD sufficient to make the statements made in the Prospectus as supplemented true, complete and not misleading. |
10. | Insurance Appointments. MassMutual shall process all requests for insurance appointments submitted by or on behalf of Producers for them or their Sales Representatives in accordance with MassMutual’s standard procedures, and may, in their sole discretion, refuse, terminate or discontinue any such appointment without cause. |
11. | Sales Materials. MSD and MassMutual shall not use Producers’ names, trademarks, service marks or logos in any way or manner unless authorized in writing by Producers prior to such use. Nothing in this provision, however, shall be deemed as requiring such authorization in connection with the use of Producers’ name in connection with any valid regulatory request or court order. |
REPRESENTATIONS AND RESPONSIBILITIES OF PRODUCERS
12. | Authority. Producers represent that this Agreement has been duly authorized, executed and delivered by Producers, constitutes a valid and legally binding obligation, and that neither the execution and delivery of this Agreement by Producers nor the consummation of the transactions contemplated herein shall result in a breach or violation of any applicable provision of law or FINRA Rules, or any judicial or administrative orders in which Producers are named or any material agreement or instrument to which they are a party or by which they are bound. |
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13. | Insurance Licenses and Appointments for Agencies. Retail Firm hereby represents that it is, and (as necessary) Agencies are, properly licensed as insurance agencies, properly authorized under applicable state law to receive insurance commissions generated from sales of the Products, and otherwise in compliance with all applicable licensing requirements in the states and jurisdictions where Retail Firm’s and/or Agencies’ Sales Representatives shall be offering or selling the Products. Retail Firm shall immediately notify MassMutual if it or an Agency ceases to be so licensed or authorized. |
Retail Firm and (as necessary) Agencies shall apply for all necessary appointments with MassMutual in the states where Products shall be offered under this Agreement. |
14. | Securities Licenses for Retail Firm and Broker-Dealers. If Variable Products are available under this Agreement, Retail Firm or (if applicable) Broker-Dealer represents that it is properly licensed and registered as a broker-dealer under applicable state and federal law and is a member in good standing of FINRA. Retail Firm or (if applicable) Broker-Dealer shall: |
a. | maintain its broker-dealer registration under the Securities Exchange Act of 1934 and, where required, in all states and jurisdictions where its Sales Representatives shall be offering and selling the Variable Products, |
b. | remain a member in good standing of FINRA at all times while this Agreement is effective, and |
c. | notify MSD immediately if it ceases to be so registered or licensed or a member in good standing of FINRA, or in the event of any disciplinary sanction that would materially impair Broker-Dealer’s ability to perform its obligations hereunder. |
15. | Licenses, Registrations and Appointments for Sales Representatives. Producers shall ensure that all of their Sales Representatives are properly insurance-licensed for the sale of the Products in the jurisdictions where such Sales Representatives shall be offering or selling the Products and in any jurisdiction where the Product owner or insured under a Product resides if so required by applicable law or regulation. A Retail Firm that is a Broker-Dealer shall ensure that all of its Sales Representatives who shall be soliciting and servicing any Variable Products are duly registered with FINRA as registered representatives and, where required, are licensed or registered with applicable state securities authorities. Producers shall also ensure that Sales Representatives are appointed by MassMutual in accordance with applicable legal requirements. |
If any Sales Representative fails to maintain the licenses, registrations or appointments required to offer or sell the Products, Producers shall immediately notify MassMutual and (if applicable) |
MSD and shall immediately advise such Sales Representative that he or she is no longer authorized to offer or sell the Products. Producers shall take all additional action necessary to terminate the sales activities of any such Sales Representatives relating to the Products. |
16. | Unlicensed or Unregistered Personnel. Producers shall ensure that their personnel who are not appropriately licensed or registered under insurance and/or securities laws: |
a. | are not involved in effecting transactions in Products or recommending Products for which such licenses or registrations are required, |
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b. | direct all non-clerical Variable Product -related questions to registered representatives of Retail Firm or (if applicable) Broker-Dealer, and |
c. | do not receive any commissions or other Product-related compensation for the sales of Products for which they are not licensed or registered. |
17. | Background Investigations of Sales Representatives. Producers shall investigate Sales Representatives relative to their work experience, background, business reputation and competency (“Background Investigation”) to sell the Products prior to appointment by MassMutual. Producers understand and acknowledge that MassMutual shall rely on the Background Investigation to appoint Sales Representatives. |
Producers represent and warrant that neither they nor Sales Representatives or other personnel to be appointed by MassMutual are disqualified under the Violent Crime Control and Law Enforcement Act of 1994, or any other similar state or federal law or regulation, and shall be fully responsible for any and all losses and expenses incurred by MassMutual or MSD as a result of their failure to satisfy this obligation. Upon request by MassMutual or MSD, Producers shall furnish such records as are necessary to establish that they have investigated the background of such persons to ensure compliance with this requirement.
18. | Training and Supervision of Sales Representatives. Producers shall train and supervise its Sales Representatives to ensure that Sales Representatives (1) are fully informed as to the provisions and benefits of the Products, (2) represent the Products adequately and fairly to customers and prospective customers, (3) have sufficient training on the Products and compliance issues related to the Products and (4) comply with all applicable laws, rules and regulations. |
Producers shall ensure that all of their Sales Representatives who sell fixed and variable annuities are trained in compliance with the National Association of Insurance Commissioners’ Suitability in Annuity Transactions Model Regulation (March 2010 version; hereinafter referred to as the “Model Regulation”) in all jurisdictions that have adopted the Model Regulation. Producers shall also ensure that Sales Representatives who sell annuity Products receive Product-specific training in those jurisdictions that have not adopted the Model Regulation. Upon request by MassMutual, Producers shall furnish such records as are necessary to establish that all Sales Representatives are properly trained. For annuity transactions subject to the Model Regulation, MassMutual shall not approve any application until it has made such verification.
Any Product-specific training materials developed by Producers to meet the requirements of the Model Regulation shall be submitted by Producers to MassMutual for review prior to use. Producers shall modify any such Product-specific training materials which MassMutual expresses in writing contains material misstatements or omissions, or misleading information, about the MassMutual and/or the Products. In lieu of developing Producers’ own Product-specific training materials, Producers may utilize MassMutual’s Product-specific training materials.
19. | Suitability. Producers shall ensure that recommendations of Products by Sales Representatives are made in accordance with applicable regulatory requirements including, as applicable, suitability requirements. Producers shall ensure that neither they nor their Sales |
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Representatives make any misrepresentations or incomplete comparison of insurance or annuities products for the purpose of inducing a current or potential owner to lapse, forfeit, surrender or borrow against a current contract for the purpose of purchasing a Product. Producers acknowledge that MassMutual shall rely on Producers’ suitability analysis, and utilize Producers’ records of its suitability analysis, for purposes of complying with the Model Regulation or similar regulatory requirements governing the supervision of contractual performance. Producers’ supervisory system shall comply with any applicable state insurance laws and regulations taking into account any variations that may be implemented by the states adopting the Model Regulation. Producers grant MassMutual the right to examine Producers’ compliance with the terms and conditions set forth in this Agreement. Upon request by MassMutual, Producers shall furnish to MassMutual appropriate records or documents to provide evidence of compliance with this provision. Producers shall, upon request, provide MassMutual with a certification regarding Producers’ compliance with this provision in such form the Company shall determine. |
20. | Delivery of Prospectuses and Supplements. Producers shall, in compliance with applicable federal and state securities laws, distribute a current Prospectus and applicable supplement for the Variable Product and its underlying investment choices to each person to whom a Variable Product is offered or sold. |
Producers must deliver or mail the supplement or the current Prospectus (whichever is applicable) for the Variable Product to the customer promptly following the receipt of the MassMutual’s notification of the availability of a new Prospectus or supplement, as applicable, for the Variable Product. |
21. | Sales Materials. Producers shall not, and shall ensure that Sales Representatives shall not: |
a. | print, publish, distribute or utilize (whether through an electronic or non-electronic medium) any advertising material, prospectuses, circulars, letters, pamphlets, schedules, stationery, broadcasting or sales material of any kind relating to the Products, MSD or MassMutual unless these materials have been provided by MSD or MassMutual and authorized thereby for distribution to the public, or unless prior written approval of MSD or MassMutual is obtained; or |
b. | orally communicate any information or make representations other than such information and representations contained in the Prospectuses, the contracts for the Products, or in any written materials provided or authorized by MSD or MassMutual. |
Producers shall not use MSD’s or MassMutual’s names, trademarks, service marks, or logos in any way or manner unless authorized in writing by MSD or MassMutual prior to use. Nothing in this provision shall be deemed as requiring authorization in connection with the use of MSD’s or MassMutual’s name(s) in connection with any valid regulatory request or court order.
Upon termination of this Agreement, all prospectuses, sales promotion materials, advertising, circulars, and documents relating to the Products (including, but not limited to, blank policy forms and applications) must be promptly returned to MassMutual or destroyed and proof of destruction provided to MassMutual upon its request.
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22. | Solicitation. Producers shall ensure that neither they nor Sales Representatives solicit applications for the Products in jurisdictions where the Products are not authorized for sale. |
23. | Payments by Customers. All money payable in connection with the Products, whether as premium or otherwise, and whether paid by or on behalf of the owner of any Product or anyone else having an interest in the Products, is the exclusive property of MassMutual and shall be drawn payable to Massachusetts Mutual Life Insurance Company. Producers are not authorized to collect or receive any premium or installment of premium except the initial premium on a Product. Initial premium payments must be promptly transmitted to MassMutual. Unless authorized in writing by MassMutual, Producers are not authorized to deduct commissions, service fees, allowances or any other offset for compensation claimed by Producers from initial premium payments. Producers are not authorized to accept any cash payments or deliver any cash payments to MassMutual in connection with the Products. |
24. | Submission of Applications. Producers shall follow the administrative procedures established by MassMutual and communicated to Producers with regard to the processing and submission of applications and related documents for the Products. Until a policy or contract is delivered, Producers shall provide MassMutual all information, whether favorable or unfavorable, which comes into Producers’ possession concerning the underwriting of any risks under a Product. Producers shall forward all applications and related documents received by Producers in connection with the Products to MassMutual’s designated office promptly after receipt. All applications and related documents must be on forms supplied by MassMutual and are subject to acceptance or rejection by MassMutual in its sole discretion. Producers have no right of action against any MassMutual or MSD based on the refusal of MassMutual, for any reason, to issue or amend a policy. |
In addition to adhering to MassMutual’s administrative requirements, Producers shall handle and transmit customer applications and funds for Variable Products in accordance with applicable SEC and FINRA requirements.
25. | Delivery of Contracts and Policies. If MassMutual sends to Producers a contract or policy for delivery to the purchaser, then Producers shall ensure that the contract or policy is delivered to the purchaser no later than 30 days from the date the contract or policy is issued, and Producers must maintain appropriate evidence of such delivery. Producers shall forward delivery receipts to MassMutual in accordance with the MassMutual’s procedures or guidelines. |
Notwithstanding the above paragraph, Producers shall not deliver, nor authorize anyone else to deliver, any contract or policy issued by MassMutual except upon the payment of the initial premium to MassMutual and, in the case of insurance, except during the lifetime of the person proposed for such insurance and while such person continues to be acceptable for such insurance under the underwriting practices of MassMutual. In addition, Producers shall not deliver, nor shall they authorize anyone else to deliver, any contract or policy issued by MassMutual, in contravention of applicable state laws and regulations concerning delivery or authorization to transact insurance business and sales activities. Upon request of MassMutual, Producers shall return any undelivered contract or policy.
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Producers are required to comply with buyer’s guide and disclosure document delivery requirements of the NAIC Annuity Disclosure Model Regulation or any model regulation that updates or replaces the NAIC Annuity Disclosure Model Regulation (“Disclosure Model”) in the jurisdictions that have adopted the Disclosure Model or any variation of it.
26. | Books and Records. Producers shall maintain all books and records required by applicable laws and regulations in connection with the offer and sale of the Products. Such books and records regarding the Products must be made available for inspection by MassMutual, MSD (with respect to Variable Products), any regulator, or a third party acting on behalf of MassMutual or MSD. |
27. | Fidelity Bond. If Variable Products are sold pursuant to this Agreement, Retail Firm or (if applicable) Broker-Dealer represents that all of its directors, officers, employees and registered representatives are and shall continuously be covered by a blanket fidelity bond, including coverage for larceny and embezzlement, issued by a reputable bonding company. Such bond shall meet all FINRA requirements as to form, type and minimum amount. MSD and MassMutual may require satisfactory evidence that such coverage is in force. Retail Firm or (if applicable) Broker-Dealer shall give prompt written notice to MSD and MassMutual of any cancellation of coverage. |
Retail Firm or (if applicable) Broker-Dealer hereby assigns any proceeds received from the fidelity bonding company to MassMutual and/or MSD (to the extent of MassMutual’s and/or MSD’ loss that is indemnified due to activities covered under the bond). If there is any deficiency amount, whether due to a deductible or otherwise, Retail Firm or (if applicable) Broker-Dealer shall promptly pay MassMutual or MSD such amount on demand.
28. | Compliance with Law. Producers shall, and shall ensure that Sales Representatives, comply with all statutory and regulatory requirements, including the requirements of any self-regulatory authority (including, but not limited to, FINRA), applicable to the solicitation, sale and service of the Products. |
29. | Anti-Money Laundering Compliance. Producers represent and warrant that it has developed and implemented a written anti-money laundering program (“AML Program”) reasonably designed to prevent and detect money laundering and terrorist financing and to comply with the Bank Secrecy Act, as amended by the USA Patriot Act, and its implementing regulations, the regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control, and other applicable anti money-laundering laws, rules and regulations. |
Producers acknowledge that MassMutual has also established an AML Program. Producers further acknowledges that, as permitted by applicable regulations, MassMutual shall rely on Producers to (1) verify and identify each customer’s identity and the source(s) of funds with respect to the purchase of Products; (2) provide appropriate anti-money laundering training to Sales Representatives involved in the solicitation, sale, and/or servicing of Products; and (3) report any suspicious or unusual activities, including but not limited to, anti-money laundering “red-flags” arising out of or in connection with the sale, solicitation or servicing of Products by Sales Representatives.
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COMPENSATION
30. | Commissions and Allowances. Commissions and allowances (including, for Variable Products, 12b-1 fees) to be paid for the sale of the Fixed Products (“Fixed Products Compensation”) and/or the Variable Products (“Variable Products Compensation” and with Fixed Products Compensation, collectively “Compensation”) are set forth in Schedule A hereto. MassMutual shall pay Compensation for the sale of the Products by Producers’ Sales Representatives in accordance with applicable regulatory requirements. To receive transaction-based compensation, the entity being paid must be properly licensed (or be otherwise qualified) under insurance and, as applicable, securities laws. Producers waive its right to Variable Products Compensation to be paid under the Agreement until such time as MSD is in receipt of such compensation. Payments shall be made as follows to: |
Retail Firm - for sales of the Fixed Products occurring in states or jurisdictions where Retail Firm is insurance licensed, for sales of the Variable Products in such states if Retail Firm is also registered as a broker-dealer, and for sales of the Variable Products in such states if Retail Firm is not registered as a broker-dealer, subject to the provisions of Section 31 below.
Broker-Dealer – (if payments are not otherwise made to Retail Firm above) for sales of the Variable Products occurring in states or jurisdictions where Broker-Dealer is insurance licensed.
Agency or Agencies - for sales of the Fixed Products occurring in states or jurisdictions where Retail Firm is not insurance licensed, and subject to the provisions of Section 31 below, for sales of the Variable Products occurring in states or jurisdictions where Retail Firm or Broker-Dealer is not insurance licensed. The appropriate Agency is the Agency that is properly insurance-licensed in the state or jurisdiction where the sale is made and for which Compensation is being paid.
31. | Payment of Variable Product Compensation to Retail Firm and/or Agencies that are not Broker-Dealers. If Variable Product Compensation is to be paid to Retail Firm which is not a registered broker-dealer and/or an Agency, Producers represent and warrant that they shall only accept such Variable Product Compensation to the extent that they reasonably believe such Retail Firms reasonably rely on an applicable SEC ruling or interpretation that permits such Retail Firms to conduct their business without registering as a broker-dealer. Producers agree to provide MSD and MassMutual, upon request, evidence that Retail Firm’s or an Agency’s receipt of Variable Product Compensation is permissible under the federal securities laws and FINRA Rules. |
32. | Payments to Sales Representatives. Producers are solely responsible for the payment of any commissions, fees, credits, allowances, bonuses, or other compensation of any kind whatsoever to Sales Representatives in connection with the sale of the Products, and for ensuring that any such payments are made in accordance with applicable legal requirements, particularly those requirements pertaining to the licensing, registration and appointment of Sales Representatives. Such Sales Representatives have no recourse against MassMutual or MSD in the event Producers fail to pay them compensation. |
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33. | Compensation Conditions. Except as provided below, Compensation shall be paid only on premiums paid to and retained by MassMutual on either applications that were submitted by Producers under this Agreement, or Products for which Producers have been designated the servicing agents by a Product purchaser and MassMutual unless such Compensation has been vested with another firm, in which case Compensation shall be paid only on new premium deposits after such vesting period expires. |
Producers’ rights to such Compensation shall terminate if a Product owner requests in writing that someone other than Producers service his/her Product, or upon the termination of this Agreement.
MassMutual may provide that Compensation shall be paid to Producers after this Agreement has been terminated by specifying a vesting provision in the Schedule A for a particular Product. No Compensation shall be due and payable for any surrendered, lapsed or canceled Products that are subsequently reinstated or rewritten through efforts of persons not affiliated with Producers.
Producers shall comply with all applicable regulatory requirements related to the disclosure of contingent or non-standard compensation.
34. | Changes to Compensation. MassMutual reserves the unconditional right, upon 30 days’ notice, to change the Compensation payable for Products issued, renewed, converted, exchanged or otherwise modified on or after the effective date of such change, as set forth in the aforesaid notice of change. |
35. | Return of Compensation, Chargebacks. If MassMutual rejects an application or payment and Producers have received Compensation based on the rejected payment or application, Producers shall promptly return such Compensation to MassMutual. All Variable Product Compensation shall be returned to MassMutual if the contract or policy for a Variable Product is tendered for redemption within seven business days after receipt of the application. In addition, all Compensation shall be subject to chargeback in accordance with the terms and conditions, if any, set forth on Schedule A or any attachment thereto. |
36. | Right of Offset. MassMutual and MSD may deduct from Compensation due under this Agreement any debt, whether arising under this Agreement or otherwise, of Producers to MassMutual or MSD or any of their affiliates or subsidiaries. This right of offset is in addition to all other rights MassMutual and MSD may have at law or in equity regarding the collection of debts generally. |
PRIVACY OF CONSUMER AND CUSTOMER INFORMATION
37. | Definition of Personal Information. As used in Sections 38 through 40 below, “Personal Information” means personally identifiable information pertaining to customers or consumers of MassMutual generated by or disclosed to Producers in connection with Producers’ offer, sale and or servicing of Products. Personal information includes (1) personally identifiable financial information and any list, description or other grouping of customers (and publicly available information about them) that is derived using any personally identifiable financial information that is not publicly available and (2) nonpublic personal medical information which includes any |
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health information that identifies an individual who is the subject of the information; or with respect to which there is a reasonable basis to believe that the information could be used to identify an individual. Personal information also includes, without limitation, any information (x) a customer or consumer provides to obtain a financial product or service, (y) about a customer or consumer resulting from any transaction involving a financial product or service, or (z) otherwise obtained about a customer or consumer in connection with providing a financial product or service.
38. | Use of Personal Information. Producers must ensure that Personal Information is used only for the purposes for which it was disclosed. Producers must not disclose Personal Information to any person other than MassMutual unless the disclosure of such information is: |
a. | authorized in advance by MassMutual, |
b. | authorized specifically on a case-by-case basis by the customer or prospective customer, or |
c. | made pursuant to valid legal process. |
MassMutual agrees to limit the use and disclosure of Personal Information it obtains pursuant to this Agreement in accordance with applicable privacy laws.
39. | Safeguarding of Personal Information. Producers must establish and maintain a comprehensive written information security program to protect Personal Information that includes administrative, technical and physical safeguards to (1) ensure the security, confidentiality and integrity of Personal Information, whether such information is maintained in written or electronic form, (2) protect against any anticipated threats or hazards to the security, confidentiality or integrity of Personal Information, and (3) protect against any unauthorized access to or use of Personal Information that could result in harm or inconvenience to any individual associated with the Personal Information or MassMutual. Such comprehensive information security program must contain safeguards consistent with applicable legal and regulatory requirements, information security best practices and must be evaluated and adjusted, as appropriate, in light of any changes in technology, the sensitivity of Personal Information, internal or external threats to the Personal Information and changes to information systems. Upon reasonable request from MassMutual, Producers will permit MassMutual to review documentation related to Producers information security program. Producers shall train their personnel with regard to such safeguarding policies and procedures. MassMutual agrees to establish safeguards for Personal Information in accordance with applicable privacy laws. |
40. | Loss or Unauthorized Access to Personal Information. In the event Producers become aware of any Breach of Security of Personal Information (“Breach of Security”) Producers must immediately notify MassMutual. For purposes of this Agreement, Breach of Security means any actual, attempted, suspected, threatened, or reasonably foreseeable circumstance or circumstances that may compromise the security, confidentiality or integrity of Personal Information, including without limitation, any unauthorized access, acquisition, use, disclosure, loss or theft of Personal Information. |
41. | Information Collected Independently. The provisions in Sections 38 through 40 are not intended to restrict Producers’ practices with respect to information collected independently of Producers’ relationship with MassMutual. |
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GENERAL PROVISIONS
42. | Investigations and Customer Complaints. The parties to this Agreement agree to cooperate fully in any regulatory investigation, inquiry, inspection or proceeding or in any judicial proceeding arising in connection with the Products sold or attempted to be sold by Producers and/or Sales Representatives. Producers shall permit federal, state, and self-regulatory authorities, MassMutual and MSD to audit their records and shall furnish them with any information that they may request in order to ascertain whether Producers are complying with applicable laws and regulations with respect to the sale of the Products. Producers agree to cooperate with MassMutual and MSD in resolving all customer complaints and internal investigations involving Producers and/or Sales Representatives with respect to the Products. |
Without limiting the foregoing:
a. | MassMutual or MSD shall promptly notify Producers of any customer complaint or notice of any regulatory inspection, inquiry, investigation or proceeding or judicial proceeding received by MassMutual or MSD and directly relating to the Producers or Sales Representatives sales activities in respect of the Products, unless requested by the initiating regulator, self-regulatory authority or judicial authority not to so notify, and |
b. | Producers shall promptly notify MassMutual or MSD of any customer complaint or notice of any regulatory inspection, inquiry, investigation or proceeding or judicial proceeding received by Producers with respect to MassMutual, MSD, Producers, or Producers’ Sales Representatives concerning the Products, unless requested by the initiating regulator, self-regulatory authority or judicial authority not to so notify. |
43. | Indemnification. MassMutual and, with respect to Variable Products MSD, shall indemnify and hold harmless Producers and each of their officers, directors, employees, registered representatives or other Sales Representatives who sold the Products (collectively, “Indemnified Parties”), from and against actual damages (not including punitive damages or penalties), losses, liabilities, judgments, settlements, costs and expenses, including reasonable attorneys’ fees and court costs (collectively, “Producer Losses”) for which Indemnified Parties become liable, under any applicable insurance or securities law, rule or regulation only when such Producer Losses result directly from, solely arise out of, or are based solely upon (i) an allegation or finding of MassMutual’s or MSD’s material breach of this Agreement, or (ii) any untrue statement contained in, or material omission from, a prospectus, policy, or contract issued by MassMutual. |
Producers shall indemnify and hold harmless MassMutual and, with respect to Variable Products MSD, and each of their officers, directors, employees, and controlling persons, from and against any damages, losses, liabilities, judgments, settlements, costs and expenses, including reasonable attorneys’ fees and court costs, or causes of action (collectively, “MassMutual Losses”) to which MassMutual and, with respect to Variable Products, MSD, or any of their officers, directors, employees and controlling persons become subject, insofar as such MassMutual Losses result from or arise out of or are based upon an allegation or finding of:
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a. | any act or omission of Producers, their employees, registered representatives or other Sales Representatives, associated persons or agents in connection with the offer or sale of the Products, or |
b. | any misrepresentation, breach of warranty, or failure to fulfill any covenant, warranty, or obligation made or undertaken by Producers hereunder. |
After receipt by an indemnified party of notice of the commencement of any action with respect to which a claim may be made against an indemnifying party, such indemnified party shall notify the indemnifying party promptly in writing of the commencement of the action. The failure to so notify the indemnifying party shall not relieve the indemnifying party from any liability that it may otherwise have to any indemnified party except and to the extent the indemnifying party is prejudiced thereby. In any such action where the indemnified party has given the notice described in this paragraph, the indemnifying party shall be entitled to participate in the defense of the action.
44. | Dispute Resolution Process. Each party to this Agreement shall attempt in good faith to resolve any dispute or claim (1) between the parties to this Agreement and that (2) that arise out of or relate to this Agreement or breach thereof, promptly by negotiations between representatives of the parties at a mutually agreed upon time and place. |
The parties to this Agreement acknowledge that Massachusetts Mutual Life Insurance Company is not a member of FINRA and is not an associated person of a FINRA member. The parties further acknowledge, therefore, that FINRA does not have jurisdiction over any disputes against Massachusetts Mutual Life Insurance Company or any affiliates of Massachusetts Mutual Life Insurance Company who are not FINRA members.
Dispute Procedures: The parties to this Agreement agree that any dispute in which MSD is a party shall be resolved by binding arbitration before FINRA as the dispute relates to MSD. This shall in no way limit MassMutual’s or MSD’s ability to commence litigation with regard to any breach of this Agreement. Any party may initiate arbitration as the dispute relates to MSD by filing a Statement of Claim with FINRA. The arbitration shall be conducted before a panel of three arbitrators (unless the parties agree in writing to some other number) in accordance with the applicable arbitration body’s practice. Except with respect to the interpretation and enforcement of these Dispute Procedures set forth in paragraph 44 (which shall be governed by the Federal Arbitration Act), the arbitrator(s) shall apply the laws of the Commonwealth of Massachusetts (without giving effect to its choice of law principles). The arbitrator(s) shall have no authority to award punitive, exemplary or other damages not based on a party’s actual damages (and the parties expressly waive their right to receive such damages). The arbitration shall be conducted in Massachusetts, unless the parties mutually agree to another location. The parties consent to jurisdiction and venue in the Commonwealth of Massachusetts and the United States District Court for the District of Massachusetts, which will be the sole and exclusive jurisdiction and venue for enforcing any arbitration award against one of the parties to this Agreement
Any costs, fees or taxes incurred in enforcing an award shall be fully assessed against the party resisting enforcement.
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The following shall be applicable to protect the parties’ rights:
a. | The procedures specified in this clause shall be the sole and exclusive procedures for the resolution of disputes between the parties arising out of or relating to this Agreement; provided, that a party may seek a preliminary injunction or other preliminary judicial relief if in its judgment such action is necessary to avoid irreparable damage or to preserve the status quo. Despite such action the parties shall continue to participate in good faith in the procedures specified in this clause. |
b. | All applicable statutes of limitations and defenses based upon the passage of time shall be tolled, upon the express written request of a party to this Agreement, while the procedures specified in this clause are satisfied. The parties shall take such action, if any, required to effectuate such tolling. |
c. | All negotiations pursuant to this clause are confidential and shall be treated as compromise and settlement negotiations for purposes of the Federal Rules of Evidence and state rules of evidence and/or state rules governing mediations. |
d. | The parties shall bear their own costs in both the mediation and the arbitration; however, the parties shall share the fees and expenses of both the mediators and arbitrators equally. |
45. | Notices. All notices or communications to MassMutual shall be sent to: |
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Attn: Entity Contracting Unit, C250
All notices or communications to MSD shall be sent to:
MML Strategic MSD, LLC
1295 State Street
Springfield, Massachusetts 01111
Attn: Chief Legal Officer
All notices or communications to Retail Firm and/or an Agency shall be sent to the individual executing this Agreement on behalf of Retail Firm at the address shown on the signature page of this Agreement. All notices or communications to Broker-Dealer shall be sent to the individual executing this Agreement on behalf of Broker-Dealer at the address shown on the signature page of this Agreement.
46. | Term of Agreement. This Agreement shall be effective as of the latest date appearing on the signature page hereof and shall continue until terminated. |
Any party may terminate this Agreement at any time, without cause, upon written notice to the other parties.
This Agreement and any amendments to this Agreement shall be terminated automatically if:
a. | any party hereto materially breaches this Agreement; |
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b. | Retail Firm or (if applicable) Broker-Dealer ceases to be registered as a broker-dealer under the Exchange Act or be a member in good standing of FINRA; |
c. | Retail Firm’s or Agency’s insurance license is suspended, revoked or not renewed; |
d. | Retail Firm or Broker-Dealer is dissolved or liquidated; or |
e. | Retail Firm or Broker-Dealer is adjudged bankrupt, insolvent or is placed under the control of a trustee appointed under the Securities Investors Protection Act. |
Upon termination of this Agreement, all authorizations, rights and obligations shall cease except those described in Sections 21, 23 (with respect only to MassMutual’s ownership of premiums), 24 (with respect only to Producers’ obligation to provide underwriting information), 26, and 35 through 54 of this Agreement.
Notwithstanding the foregoing, after termination of this Agreement, Producers shall be entitled to receive Compensation relating to Product applications received by MassMutual prior to termination (less any applicable offset). The payment of any such Compensation is subject to all applicable laws, regulations, and FINRA Rules.
47. | Amendments. MassMutual and MSD reserve the unconditional right to modify the Products, to amend this Agreement and the schedules hereto, and to suspend the sale of any of the Products at any time. The submission of an application by Producers after notice of any such change has been sent to Producers shall constitute Producers’ agreement to the change. |
48. | Binding Agreement, Assignments. This Agreement shall be binding on and shall inure to the benefit of the parties hereto and their respective heirs, administrators, executors, estates, successors and assigns. MassMutual and MSD may assign, upon notice to Producers, this Agreement to an affiliated entity. The submission of an application by Producers or their Sales Representatives after such notice has been sent shall constitute Producers’ agreement to the assignment. Any assignment shall be subject to the prior rights of the non-assigning party or parties and any applicable law, regulation and FINRA Rules. This Agreement shall supersede and replace all previous agreements or contracts between MassMutual and (if applicable) MSD and Producers. |
49. | Captions. The captions and headings in this Agreement are for convenience only and shall not be deemed part of this Agreement or affect its meaning or interpretation. |
50. | Governing Law, Entire Agreement. This Agreement shall be governed by the laws of the Commonwealth of Massachusetts and constitutes the entire agreement and understanding among the parties with respect to the matters contained herein. To the extent any other selling agreement exists among any of the Parties to this Agreement, such selling agreement shall have no effect on the terms and conditions hereof, including without limitation those related to the recommendation or sale of such Products as are covered by the terms of this Agreement and listed on the Product Schedule attached as Schedule A, and the terms and conditions set forth in this Agreement shall supersede those of any other such selling agreement. |
51. | Forbearance Not a Waiver. Failure of any party to insist upon strict compliance with any of the conditions of this Agreement shall not be construed as a waiver of such conditions and no |
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waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions.
52. | Force Majeure. No party to this Agreement shall be responsible to another party for delays or errors in its performance or other breach under this Agreement occurring solely by reason of circumstances beyond its control, including but not limited to acts of civil or military authority, national emergency, fire, major mechanical or technological breakdown, labor disputes, flood or catastrophe, acts of God, insurrection, war, riot, terrorism, delays of supplier, or failure of transportation, communication or power supply. |
53. | Severability. In the event that a court of competent jurisdiction declares any provision of this Agreement invalid, such a determination shall have no effect on its remaining provisions. |
54. | Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed in all respects an original. |
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed.
MASSACHUSETTS MUTUAL | MML STRATEGIC DISTRIBUTORS, LLC | ||||
LIFE INSURANCE COMPANY | |||||
By: | By: | ||||
Title: | Title: | ||||
Date: | Date: |
RETAIL FIRM | BROKER-DEALER | |||||
(name of retail firm: ) | (name of broker-dealer: ) | |||||
Address: | Address: | |||||
By: | By: | ||||
Title: | Title: | ||||
Date: | Date: | ||||
INSURANCE AGENCY | INSURANCE AGENCY | ||||
(name of agency: ) | (name of agency: ) | ||||
By: | By: | ||||
Title: | Title: | ||||
Date: | Date: |
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SCHEDULE A
PRODUCT SCHEDULE
This Schedule A is incorporated into and made a part of the Insurance Products Distribution Agreement dated , 20 , between Massachusetts Mutual Life Insurance Company and (as applicable) MML Strategic Distributors, LLC (together, “MassMutual”); and , and named insurance agencies (together, “Producers”). In accordance with said agreement, MassMutual authorizes Producers to distribute the following products: (a commission schedule for each checked product is attached).
Individual Products (where applicable, identify specific products by name)
|
Variable Life Insurance (excluding group VL) | Disability Income Insurance | ||||
all products | all products | |||||
| ||||||
| ||||||
| ||||||
|
Whole Life Insurance |
|
Long Term Care Insurance | |||
all products | all products | |||||
| ||||||
| ||||||
| ||||||
|
Universal Life Insurance | |||||
all products | ||||||
|
Term Life Insurance | |||||
all products | ||||||
|
Variable Annuities (excluding group VA) | |||||
all products | ||||||
|
Fixed Annuities | |||||
all products | ||||||
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Item 30. Exhibit (d) i.
[LETTERHEAD OF MML BAY STATE LIFE INSURANCE COMPANY APPEARS HERE] Flexible Premium Variable Whole Life Insurance Policy - -------------------------------------------------------------------------------- Policy Number Insured Selected Face Amount - -------------------------------------------------------------------------------- Dear Policy Owner: READ YOUR POLICY CAREFULLY. We have used examples to explain some of its provisions. These examples do not reflect the actual amounts or status of this policy. As you read through the policy, remember the words "we," "us," and "our" refer to MML Bay State Life Insurance Company. We will, subject to the terms of this policy, pay the death benefit to the Beneficiary when due proof of the Insured's death is received at our Principal Administrative Office. The terms of this policy are contained on this and the following pages. For service or information on this policy, contact the agent who sold the policy, any of our agency offices, or our Principal Administrative Office. YOU HAVE A RIGHT TO RETURN THIS POLICY. If you decide not to keep this policy, return it within 10 days after you receive it, or within 10 days after you receive the notice of right to withdraw, or within 45 days after the date of the Part 1 of the application for this policy, whichever is latest. It may be returned by delivering or mailing it to our Principal Administrative Office, to any of our agency offices, or to the agent who sold the policy. Then, the policy will be as though it had never been issued. We will promptly refund (a) any premium paid for this policy, plus (b) interest credited to this policy under the Guaranteed Principal Account, plus or minus (c) an amount that reflects the investment experience of the investment divisions of the Separate Account under this policy to the date the policy is received by us, minus (d) any amounts withdrawn and any policy debt. Signed for MML Bay State Life Insurance Company. Sincerely yours, /s/ Isadore Jermeyn /s/ Thomas J. Finnegan, Jr. President Secretary This Policy provides that: Insurance is payable when the Insured dies. Within specified limits, flexible premiums may be paid during the Insured's lifetime. No dividends will be paid. The amount of death benefit and the duration of insurance coverage may be fixed or variable as described in Parts 3 and 5. The variable account value of the policy may increase or decrease in accordance with the experience of the Separate Account. There are no minimum guarantees as to the variable account value. The fixed account value of the policy earns interest at a rate not less than the minimum described in the Interest On Fixed Account Value provision. B960-9400Policy Summary This Summary briefly describes some of the major policy provisions. Since it does not go into detail, the actual provisions will control. See those provisions for full information and any limits that may apply. The "Where To Find It" on the inside of the back cover shows where these provisions may be found. This is a variable whole life insurance policy. We will pay a death benefit if the Insured dies while the policy is in force. "In force" means that the insurance has not terminated. "Variable" means that all values that depend on the investment performance of the Separate Account shown on the Schedule Page are not guaranteed as to dollar amount. Premiums for this policy are flexible. After the first premium has been paid, there is no requirement that any specific amount of premium be paid on any date. Instead, within the limits stated in the policy, any amount may be paid on any date before the death of the Insured. Premiums are applied to increase the value of this policy. Monthly charges are deducted from the value of this policy each month. If the monthly charges for a month exceed the value, the policy will terminate at the end of 61 days. There is, however, a right to reinstate the policy. Other rights are available while the Insured is living. These include the rights to: . Assign this policy; . Change the Owner or any Beneficiary; . Surrender this policy; . Make withdrawals; . Make loans; . Change the Selected Face Amount; . Change the Death Benefit Option; . Allocate net premiums among the Guaranteed Principal Account and the divisions of the Separate Account; and . Transfer values between the Guaranteed Principal Account and the divisions of the Separate Account. This policy also includes a number of Payment Options. These provide alternate ways to pay the death benefit or the amount payable upon surrender of the policy. B960-9400 THE SCHEDULE PAGE This page shows specific information about this policy and is referred to throughout the policy. POLICY NUMBER 0 000 000 INSURED JOHN A. DOE SELECTED FACE AMOUNT $ 100,000 Issue Date Jan 01 1995 Policy Date Jan 01 1995 Insured's Age on Policy Date 35 Male - ------------------------------------------------------------------------------------------------------------------ BASIC POLICY INFORMATION - ------------------------ Selected Minimum Death Plan Face Amount Face Amount Benefit Option - ---- ----------- ----------- -------------- Flexible Premium $100,000 See Minimum Face 1 (See Part 5) Variable Whole Amount provision Life - ------------------------------------------------------------------------------------------------------------------ PREMIUM INFORMATION As of Jan 01 1995 - ------------------- First Premium $ 1,200.00 Planned Annual Premium $1,200.00 Planned Premium on other frequencies is as follows: Semiannual Quarterly Monthly ---------- --------- ------- $600.00 $300.00 $100.00 The maximum limit for premiums in any Policy Year is the greatest of: $1,310.00; the amount of premiums paid in the preceding Policy Year; and the highest amount that would not increase the amount of insurance that requires a charge. For each Policy Year, Net Premium will not be less than 96.0% of premium paid in that Policy Year. - -------------------------------------------------------------------------------- SEPARATE ACCOUNT INFORMATION (See The Separate Account provision in Part 3) - ---------------------------- The Separate Account referred to in this policy is MML Bay State Variable Life Separate Account 1. Policy No. 0 000 000 - -1- B960-9400 The divisions of the Separate Account are: MML Equity Oppenheimer Capital Appreciation MML Money Market Oppenheimer Growth MML Managed Bond Oppenheimer Global Securities MML Blend Oppenheimer Strategic Bond The types of investments and the objectives for each division are given in the Prospectus. - -------------------------------------------------------------------------------- LIMITATIONS ON TRANSFERS Transfers may only be in whole-number percentages or dollar-and-cent amounts. Transfers of values from the Guaranteed Principal Account to the Separate Account are limited to one each Policy Year. Any transfer from the Guaranteed Principal Account cannot be more than 25% of the fixed account value of this policy on the date the transfer is made. We reserve the right to limit transfers such that no transfers may be made for at least 90 days after the preceding transfer. Any such limitation would not apply to a transfer of all funds in the Separate Account to the Guaranteed Principal Account and to automated transfers in connection with any program the Company has in place. - -------------------------------------------------------------------------------- OTHER INFORMATION Owner and Beneficiary - See application attached to this policy. Loan Interest Rate - See application attached to this policy. BASIS OF COMPUTATION - The Minimum Annual Interest Rate For The Guaranteed Principal Account is 3%. 'The Mortality Table is shown in the Table(s) Of Maximum Monthly Mortality Charges. Policy No. 0 000 000 - -1- continued B960-9400 TABLE OF MAXIMUM MONTHLY CHARGES These Maximum Monthly Mortality charges are for each $1,000 of insurance that requires a charge. These charges apply to the original selected face amount of $100, 000, issued on Jan 01 1995. POLICY YEAR MAXIMUM MONTHLY POLICY YEAR MAXIMUM MONTHLY BEGINNING MORTALITY CHARGE BEGINNING MORTALITY CHARGE - --------- ---------------- --------- ---------------- Jan 01 1995 0.14096 Jan 01 2030 2.94130 Jan 01 1996 0.14764 Jan 01 2031 3.31274 Jan 01 1997 0.15683 Jan 01 2032 3.63093 Jan 01 1998 0.16685 Jan 01 2033 4.05839 Jan 01 1999 0.17854 Jan 01 2034 4.54126 Jan 01 2000 0.19107 Jan 01 2035 5.06274 Jan 01 2001 0.20611 Jan 01 2036 5.62182 Jan 01 2002 0.22115 Jan 01 2037 6.21387 Jan 01 2003 0.23870 Jan 01 2038 6.83324 Jan 01 2004 0.25626 Jan 01 2039 7.49616 Jan 01 2005 0.27717 Jan 01 2040 8.22966 Jan 01 2006 0.29975 Jan 01 2041 9.05445 Jan 01 2007 0.32401 Jan 01 2042 9.99708 Jan 01 2008 0.34996 Jan 01 2043 11.07332 Jan 01 2009 0.37927 Jan 01 2044 12.26712 Jan 01 2010 0.41026 Jan 01 2045 13.55591 Jan 01 2011 0.44713 Jan 01 2046 14.91787 Jan 01 2012 0.48989 Jan 01 2047 16.34412 Jan 01 2013 0.53771 Jan 01 2048 17.80841 Jan 01 2014 0.59311 Jan 01 2049 19.33267 Jan 01 2015 0.65444 Jan 01 2050 20.94168 Jan 01 2016 0.72255 Jan 01 2051 22.66794 Jan 01 2017 0.79493 Jan 01 2052 24.57677 Jan 01 2018 0.87327 Jan 01 2053 26.76407 Jan 01 2019 0.96182 Jan 01 2054 29.63735 Jan 01 2020 1.06061 Jan 01 2055 33.93112 Jan 01 2021 1.17052 Jan 01 2056 41.27938 Jan 01 2022 1.29585 Jan 01 2057 56.04155 Jan 01 2023 1.43921 Jan 01 2058 AND LATER 83.33333 Jan 01 2024 1.60155 Jan 01 2025 1.78129 Jan 01 2026 1.97513 Jan 01 2027 2.18574 Jan 01 2028 2.41241 Jan 01 2029 2.66044 Nonsmoker Class. Commissioner's 1980 CSO Standard Ordinary Mortality Table -Male POLICY NO. 0 000 000 - -2- B960-9400 TABLE OF MINIMUM FACE AMOUNT PERCENTAGES The minimum face amount on any date is a percentage of the account value on that date. The percentages that apply are shown below. POLICY YEAR MINIMUM FACE POLICY YEAR MINIMUM FACE BEGINNING AMOUNT PERCENTAGE BEGINNING AMOUNT PERCENTAGE --------- ----------------- --------- ----------------- Jan 01 1995 438% Jan 01 2030 155% Jan 01 1996 424% Jan 01 2031 152% Jan 01 1997 410% Jan 01 2032 148% Jan 01 1998 396% Jan 01 2033 145% Jan 01 1999 383% Jan 01 2034 143% Jan 01 2000 370%. Jan 01 2035 140% Jan 01 2001 358% Jan 01 2036 138% Jan 01 2002 347% Jan 01 2037 135% Jan 01 2003 335% Jan 01 2038 133% Jan 01 2004 324% Jan 01 2039 131% Jan 01 2005 314% Jan 01 2040 129% Jan 01 2006 304% Jan 01 2041 127% Jan 01 2007 294% Jan 01 2042 126% Jan 01 2008 285% Jan 01 2043 124% Jan 01 2009 276% Jan 01 2044 123% Jan 01 2010 268% Jan 01 2045 121% Jan 01 2011 259% Jan 01 2046 120% Jan 01 2012 251% Jan 01 2047 119% Jan 01 2013 244% Jan 01 2048 118% Jan 01 2014 236% Jan 01 2049 117% Jan 01 2015 229% Jan 01 2050 116% Jan 01 2016 223% Jan 01 2051 115% Jan 01 2017 216% Jan 01 2052 114% Jan 01 2018 210%. Jan 01 2053 112% Jan 01 2019 204% Jan 01 2054 111% Jan 01 2020 199% Jan 01 2055 110% Jan 01 2021 193% Jan 01 2056 109% Jan 01 2022 188% Jan 01 2057 107% Jan 01 2023 183% Jan 01 2058 106% Jan 01 2024 179% Jan 01 2059 104% Jan 01 2025 174% Jan 01 2060 and later 100% Jan 01 2026 170% Jan 01 2027 166% Jan 01 2028 162% Jan 01 2029 158% Nonsmoker Class. POLICY NO. 0 000 000 - -3- B960-9400 TABLE OF SURRENDER CHARGES The following charges apply to the original Selected Face Amount of $100, 000 issued on Jan 1, 1995. The charges are the sum of A and (B multiplied by C). Date A ( B x C ) ---- - - --- Jan 01 1995 $500.00 B 1 Jan 01 1996 500.00 B 1 Jan 01 1997 500.00 B 1 Jan 01 1998 500.00 B 1 Jan 01 1999 500.00 B 1 Jan 01 2000 400.00 B 1 Jan 01 2001 300.00 B 1 Jan 01 2002 200.00 B 1 Jan 01 2003 100.00 B 1 Jan 01 2004 0 B 1 Jan 01 2005 0 B 1 Jan 01 2006 0 B .90 Jan 01 2007 0 B .75 Jan 01 2008 0 B .55 Jan 01 2009 0 B .30 Jan 01 2010 0 B 0 Factors A and C grade uniformly each month between the dates shown. Factor B equals: 26% of total premiums paid from 0 through $1,012.00; plus 4% of total premiums paid from $1,012.01 through $3,036.00. Policy No. 0 000 000 - -4- B960-9400 Part 1. The Basics Of This Policy In this Part we discuss some insurance concepts that are necessary to understand this policy. The Parties Involved - Owner, Insured, Beneficiary, Irrevocable Beneficiary The Owner is the person who owns this policy, as shown on our records. The Insured is the person whose life this policy insures. The Insured may be the Owner of this policy, or someone else may be the Owner. Example: You buy a policy that insures your own life and name yourself as Owner. In this case, you are both the Insured and Owner. If you buy a policy that insures your son and name yourself as Owner, then the Insured and Owner are different people. A Beneficiary is any person named on our records to receive insurance proceeds after the Insured dies. There may be different classes of Beneficiaries, such as primary and secondary. These classes set the order of payment. There may be more than one Beneficiary in a class. Example: Debbie is named as primary (first) Beneficiary. Anne and Scott are named as Beneficiaries in the secondary class. If Debbie is alive when the Insured dies, she receives the death benefit. But if Debbie is dead and Anne and Scott are alive when the Insured dies, Anne and Scott receive the death benefit. Any Beneficiary may be named an Irrevocable Beneficiary. An Irrevocable Beneficiary is one whose consent is needed to change that Beneficiary. Also, this Beneficiary must consent to the exercise of certain other rights. Dates - Policy Date, Policy Anniversary Date, Policy Year, Issue Date, Monthly Calculation Date, Valuation Date, Valuation Period, Valuation Time, Register Date The Policy Date is shown on the Schedule Page. It is the starting point for determining Policy Anniversary Dates and Policy Years. The first Policy Anniversary Date is one year after the Policy Date. The period from the Policy Date to the first Policy Anniversary Date, or from one Policy Anniversary Date to the next, is called a Policy Year. Example:The Policy Date is June 10, 19X6. The first Policy Anniversary Date is June 10, 19X7. The period from June 10, 19X6, through June 9, 19X7, is a Policy Year. The Issue Date is also shown on the Schedule Page. The Issue Date is used to determine the start of the suicide and contestability periods. We discuss contestability below. See Part 5 for a discussion of the suicide exclusion. The Monthly Calculation Date is the monthly date on which we deduct monthly charges for this policy. The first Monthly Calculation Date is the Policy Date. Subsequent Monthly Calculation Dates are the same day of each month thereafter. A Valuation Date is any date on which the New York Stock Exchange (or its successor) is open for trading. A Valuation Period is the period of time from the end of one Valuation Date to the end of the next Valuation Date. A Valuation Time is the time the New York Stock Exchange (or its successor) closes on a Valuation Date. All actions that are to be performed on a Valuation Date will be performed as of the Valuation Time. The Register Date is the date on which the first net premium payment for this policy is allocated to the Separate Account or the Guaranteed Principal Account. It is the Valuation Date that is on, or next follows, the latest of: . The Policy Date; . The date on which we receive a completed Part 1 of the application for this policy at our Principal Administrative Office; and B960-9400 -6- . The date on which we receive the first premium for this policy at our Principal Administrative Office. Policy A Legal Contract This policy is a legal contract between the Owner and us. The entire contract consists of the application and the policy, which includes any riders the policy has. We have issued this policy in return for the application and the payment of the first premium. Any changes or waiver of its terms must be in writing and signed by our Secretary or an Assistant Secretary to be effective. Policy Is Not This policy is "not participating," which means that Participating no dividends are payable on this policy. Representations And We rely on all statements made by or for the Insured Contestability in the application(s). Legally, those statements are considered to be representations and not warranties. We can bring legal action to contest the validity of this policy, or any increase in the Selected Face Amount, or any change in the Death Benefit Option applied for after the Issue Date, for any material misrepresentation of a fact. To do so, however, the misrepresentation must have been made in the application or in a supplemental application to increase the Selected Face Amount or change the Death Benefit Option, and a copy of the application must have been attached to this policy when issued or made a part of the policy when the increase or change became effective. Except for any increases in the Selected Face Amount and any change in Death Benefit Option 1 to Death Benefit Option 2 applied for after the Issue Date, we cannot, in the absence of fraud, contest the validity of this policy after it has been in force during the lifetime of the Insured for two years from its Issue Date. For any increase in the Selected Face Amount, we cannot, in the absence of fraud, contest the validity of that increase: . After it has been in effect for two years during the lifetime of the Insured, if the increase is not provided by any insurability protection type rider this policy has; and . After the policy has been in force during the lifetime of the Insured for two years after the Issue Date of any insurability protection type rider this policy has, if the increase is provided by that rider. For any change in Death Benefit Option 1 to Death Benefit Option 2, we cannot, in the absence of fraud, contest the validity of that change after it has been in effect for two years during the lifetime of the Insured. Misstatement Of Age Or If the Insured's sex or date of birth as given in the Sex application is not correct, an adjustment will be made. If the adjustment is made when the Insured dies, the death benefit will reflect the amount provided by the most recent monthly charge according to the correct age and sex. If the adjustment is made before the Insured dies, then future monthly charges will be based on the correct age and sex. Currency All payments made to us and by us will be in the lawful currency of the United States of America. All monetary amounts shown in this policy are in U.S. dollars. Meaning Of In Force "In force" means that the insurance provided by this policy has not terminated. This policy will be in force from its Issue Date or, if later, the date the first premium is paid. Principal Administrative Our Principal Administrative Office is in Springfield, Office Massachusetts. The address is MML Bay State Life Insurance Company, Springfield, Massachusetts 01111-0001. B960-9400 Part 2. Premium Payments Premiums are the payments that may be paid to us to increase the account value of this policy. The First Premium The first premium for this policy is shown on the Schedule Page. This premium is due on the Policy Date. This policy will not be in force until the first premium has been paid. Planned Premiums The planned annual premium for this policy is shown on the Schedule Page. Planned premiums on other frequencies are also shown on that page. The frequency of planned premiums for this policy is as elected in the application. This frequency may be changed by giving us advance written notice. We also provide a pre-authorized payment plan. This plan, and any other alternate premium plans we provide, are covered by the rules and rates we set. The payment of planned premiums on the frequency elected does not guarantee that this policy will continue in force. Premium Flexibility After the first premium has been paid, there is no And Premium Notices requirement that any amount of premium be paid on any date. Subject to the Right To Refund Premiums provision in this Part, while this policy is in force any amount of premium may be paid at any time before the death of the Insured. However, each premium paid must be at least $10 or, if greater, the amount needed to prevent termination, as discussed in the Grace Period And Termination provision in Part 3. We will send premium notices for the planned premium according to the amount and frequency in effect. We will stop sending notices for the planned premium if no premium has been paid for 18 consecutive months. However, if a premium is paid after that time, we will send notices for the planned premium again. We will also send notice of any premium needed to prevent termination of this policy. Premium notices will be sent only while this policy is in force. Where To Pay All premiums are payable to us at our Principal Premiums Administrative Office or at the place shown for payment on the premium notice. Upon request, a receipt signed by our Secretary or an Assistant Secretary will be given for any premium payment. Right To Refund We have the right to promptly refund any amount of Premiums premium paid if application of that premium to the account value would increase the amount of insurance that requires a charge. This right is limited to premiums paid in a Policy Year that exceed the maximum limit shown on the Schedule Page. Net Premium A net premium is a premium we receive for this policy less the charges we deduct at that time. Net premium, expressed as a percentage of a premium we receive, is shown on the Schedule Page. Allocation Of Net Each net premium we receive will be allocated among Premiums the Guaranteed Principal Account and the divisions of the Separate Account, according to the net premium allocation then in effect. We will allocate the first net premium payment as of the Register Date. The net premium allocation is specified in the application for this policy. This allocation will remain in effect until changed by any later election satisfactory to us and received at our Principal Administrative Office. The amount of each net premium we receive for this policy for allocation to a division of the Separate Account will be applied to purchase accumulation units for this policy in that division. See the Purchase And Sale Of Accumulation Units provision in Part 3. B960-9400 -7- -8- Part 3. Accounts, Values, And Charges This policy provides that certain values (referred to as the variable account values) are based on the investment performance of the Separate Account and are not guaranteed as to dollar amount. This policy also provides that other values (referred to as the fixed account values) are based on the interest credited to the Guaranteed Principal Account. The account value of this policy is the variable account value plus the fixed account value. This Part gives information about the Separate Account, the Guaranteed Principal Account, and the values and monthly charges connected with them. The Separate Account And The Guaranteed Principal Account The Separate Account The Separate Account shown on the Schedule Page is a separate investment account we have established under Missouri law. It is also subject to the laws of the state in which this policy was delivered. The Separate Account has a number of divisions. Each division invests in shares of an investment Fund. The divisions are shown on the Schedule Page. The values of the assets in the divisions are variable and are not guaranteed. They depend on the investment results of the Separate Account shown on the Schedule Page. We own the assets of the Separate Account. Those assets will only be used to support variable life insurance policies. That portion of the assets equal to the reserves and other liabilities of the Separate Account will not be charged with liabilities that arise from any other business we may conduct. However, we may transfer to our general account any assets exceeding the reserves and other liabilities of the Separate Account. The income and the realized and unrealized capital gains and losses from each division of the Separate Account are credited to or charged against that division without regard to any of our other income, capital gains, or capital losses. The assets of the Separate Account are protected from the claims of our creditors. Changes In The Separate We have the right to establish additional divisions of Account the Separate Account from time to time. Amounts credited to any additional divisions established would be invested in shares of other Funds. For any division, we have the right to substitute new Funds. Subject to applicable provisions of federal securities laws, we have the right to change the investment policy of any division of the Separate Account with the approval of the Missouri Insurance Commissioner. If required, evidence of the approval of a material change by the Missouri Insurance Commissioner will be filed with the insurance supervisory official of the state where this policy was delivered. We will notify the Owner if the Missouri Insurance Commissioner approves any material change. We have the right to operate the Separate Account as a unit investment trust under the Investment Company Act of 1940 or in any other form permitted by law. Accumulation Units Accumulation units are used to measure the variable account value of this policy. The value of a unit is determined as of the Valuation Time on each Valuation Date for valuation of the Separate Account. The value of any unit can vary from Valuation Date to Valuation Date. That value reflects the investment performance of the division of the Separate Account applicable to that unit. The value of accumulation units is discussed further in Part 7. Purchase And Sale Of Amounts are credited to and taken from divisions of Accumulation Units the Separate Account by purchasing and selling accumulation units. Accumulation units will be purchased and sold at the unit value as of the Valuation Time on the Valuation Date of purchase or sale. The number of units purchased or sold will be the amount of money for purchase or sale divided by that unit value. B960-9400 Example: The amount applied is $550. The date of purchase is June 10, 19X6. The accumulation unit value on that date is $10. The number of units purchased would be 55 ($550 divided by $10 = 55). If, instead, the unit value was $11, then the amount applied would purchase 50 units ($550 divided by $11 = 50). If we receive premium or a written request that causes us to purchase or sell accumulation units, and we receive that premium or request before the Valuation Time on a Valuation Date, accumulation units will be purchased or sold as of that Valuation Date. Otherwise, accumulation units will be purchased or sold as of the next following Valuation Date. At the Owner's request, we will purchase or sell accumulation units as of a later Valuation Date. In no case will accumulation units be purchased or sold before the Register Date. The Guaranteed The Guaranteed Principal Account is part of our Principal Account general account. It has no connection with, and does not depend on, the investment performance of the Separate Account. We have a right to establish additional guaranteed accounts from time to time. Values Of This Policy Account Value Of Policy The account value of this policy on any date is the variable account value of this policy plus the fixed account value of this policy, both determined as of that date. Variable Account Value The variable account value of this policy reflects: Of Policy . The net premiums for this policy allocated to the Separate Account; . Any amounts for this policy transferred into the Separate Account from the Guaranteed Principal Account; . Any amounts transferred or withdrawn from the Separate Account for this policy; . Any monthly charges for this policy deducted from the Separate Account; and . The net investment experience of the Separate Account. Net premiums, transfers, withdrawals, and monthly deductions are all reflected in the variable account value through the purchase or sale of accumulation units. The net investment experience is reflected in the value of the accumulation units. Net premiums are discussed in Part 2, and monthly deductions are discussed in this Part. Transfers and withdrawals are discussed in Part 4. The value of the accumulation units credited to this policy in a division of the Separate Account is equal to the accumulation unit value in that division on the date the value is determined, multiplied by the number of those units in that division. The variable account value of this policy on any date is the total of the values of the accumulation units credited to this policy in each division of the Separate Account. Fixed Account Value Of The fixed account value of this policy is the Policy accumulation at interest of: . The net premiums for this policy allocated to the Guaranteed Principal Account; plus . Any amounts for this policy transferred into the Guaranteed Principal Account from the Separate Account; less . Any amounts for this policy transferred or withdrawn from the Guaranteed Principal Account; and less . Any monthly charges for this policy deducted from the Guaranteed Principal Account. B960-9400 -9- -10- Interest On Fixed The fixed account value of this policy earns interest Account Value at an effective annual rate defined below. Interest is credited daily to and including the date the fixed account value is determined. For any fixed account value equal to the amount of any policy loan, the interest rate we use will be the daily equivalent of the greater of: . The annual loan interest rate in effect on the previous Monthly Calculation Date less not more than 2%; and . The minimum annual interest rate for the Guaranteed Principal Account shown in the Basis Of Computation section on the Schedule Page. For any fixed account value in excess of the amount of any policy loan, the interest rate we use will be the daily equivalent of the greater of: . The minimum annual interest rate for the Guaranteed Principal Account; and . An alternate annual rate established by us. Monthly Policy Charges Monthly Charges Charges will be deducted monthly from the account value of this policy. The charges are due on each Monthly Calculation Date. Monthly charges for this policy will be taken from the divisions of the Separate Account and from the Guaranteed Principal Account in proportion to the values of this policy in each of those divisions and in the Guaranteed Principal Account (excluding outstanding policy loans). Deductions will be made, and values will be determined, on the Valuation Date that is on, or next follows, the latest of: . The Register Date; . The date the deduction is due; and . The date we receive the amount of premium needed to prevent termination, as discussed in the Grace Period And Termination provision in this Part. We assess three types of monthly charges: an administrative charge, a mortality charge, and a rider charge; each is discussed below. Administrative Charge The amount of the monthly administrative charge will be determined by us. However, it will not be greater than $9.00 per month. Mortality Charge The maximum monthly mortality charges for each $1,000 of insurance that requires a charge are shown in the Table(s) Of Maximum Monthly Mortality Charges. Maximum charges for each amount of the Selected Face Amount issued in a distinct underwriting classification will be shown in a separate table. If there is more than one table, the table that applies to the most recent increase will be used up to the amount to which that table applies. If the amount of insurance that requires a charge is increased due to the Minimum Face Amount (see Part 5), the table that applies to the most recent increase will also be used for such increase. For any insurance in excess of the amount applicable to the most recent table, the next most recent table(s), up to the amount of each table, will be used. We have the right to charge less than the maximum charges shown in the table(s). Any change in these charges will apply to all individuals who are in the same class as the Insured. These charges may differ depending on whether or not this policy is in a tax-qualified pension or profit sharing plan. B960-9400 The amount of insurance that requires a charge is determined as follows. This computation is made as of the date the charge is due. All amounts are computed as of that date. (a) We compute the account value of this policy after all additions and deductions other than the deduction of the monthly charges. (b) We determine the amount of benefit under the Death Benefit Option in effect (as discussed in the Death Benefit Options provision in Part 5). The Minimum Face Amount used here is based on the account value computed in (a) above. (c) We divide the amount of benefit determined in (b) above by 1 plus the monthly equivalent (expressed as a decimal fraction) of the minimum annual interest rate for the Guaranteed Principal Account shown in the Basis Of Computation section on the Schedule Page. (d) We subtract the account value, as computed in (a) above, from the amount determined in (c) above. The result is the amount of insurance that requires a charge. Rider Charge The monthly charges for any rider are shown in a table of charges for that rider. Grace Period And If the account value less any policy debt is not Termination enough to cover the monthly charges due on a Monthly Calculation Date, we allow a grace period for payment of the amount of premium (not less than $10) needed to increase the account value so that the monthly deduction can be made. This grace period begins on the date the deduction is due. It ends 61 days after that date or, if later, 30 days after we have mailed a written notice to the Owner at the last known address shown on our records. This notice will state the amount needed to increase the account value to cover the charges. During the grace period, the policy will continue in force. The policy will terminate if we do not receive payment of the required amount by the end of the grace period. Part 4. Life Benefits A life insurance policy provides a death benefit if the Insured dies while the policy is in force. Rights and benefits are also available before the Insured dies. These "Life Benefits" are discussed in this Part. Policy Ownership Rights Of Owner While the Insured is living, the Owner may exercise all rights given by this policy or allowed by us. These rights include assigning this policy, changing Beneficiaries, changing ownership, enjoying all policy benefits, and exercising all policy options. The consent of any Irrevocable Beneficiary is needed to exercise any policy right except the rights to: . Change the frequency of planned premiums; . Change the premium payment plan; and . Reinstate this policy after termination. Assigning This Policy This policy may be assigned. But for any assignment to be binding on us, we must receive a signed copy of it at our Principal Administrative Office. We will not be responsible for the validity of any assignment. B960-9400 -11- -12- Once we receive a signed copy, the rights of the Owner and the interest of any Beneficiary or any other person will be subject to the assignment. An assignment is subject to any policy debt. See the Borrowing On This Policy section in this Part for a discussion of policy debt. Changing The Owner The Owner or any Beneficiary may be changed while the Or Beneficiary Insured is living. We do not limit the number of changes that may be made. To make a change, a written request, satisfactory to us, must be received at our Principal Administrative Office. The change will take effect as of the date the request is signed, even if the Insured dies before we receive it. Each change will be subject to any payment we made or other action we took before receiving the request. Transfers Of Values Transfers of values are subject to the limitations stated on the Schedule Page. Subject to those limitations, transfers of values may be made upon direction, satisfactory to us, received at our Principal Administrative Office. These transfers are: . Transfers of values between divisions of the Separate Account. These transfers will be made by selling all or part of the accumulation units in a division and applying the value of the sold units to purchase units in any other division. . Transfers of values from one or more divisions of the Separate Account to the Guaranteed Principal Account. These transfers will be made by selling all or part of the accumulation units in a division and applying the value of the sold units to the Guaranteed Principal Account. . Transfers of values from the Guaranteed Principal Account to one or more divisions of the Separate Account. These transfers will be made by applying all or part of the value in the Guaranteed Principal Account (excluding any outstanding policy loans) to purchase accumulation units in one or more divisions of the Separate Account. Transfers will be made as of the Valuation Date specified in the Purchase And Sale Of Accumulation Units provision in Part 3. All transfers made on one Valuation Date will be considered one transfer. Surrendering This Policy And Making Withdrawals Right To Surrender This policy may be surrendered for its cash surrender value at any time while the Insured is living. Surrender will be effective on the date we receive this policy and a written surrender request, satisfactory to us, at our Principal Administrative Office. A later effective date may be elected in the surrender request. Cash Surrender Value The cash surrender value is equal to the account value less any surrender charges that apply and less any policy debt. The surrender charge for this policy is the sum of the surrender charges for the original Selected Face Amount and all increases in Selected Face Amount. These charges are shown in the Table(s) Of Surrender Charges. There are separate tables of surrender charges for any increase(s) in the Selected Face Amount. Making Withdrawals After the first Policy Year, withdrawals may be made at any time while the Insured is living. The request for a withdrawal must be written and satisfactory to us. It must state the Account (or Accounts) from which the withdrawal will be made. For any withdrawal from the Separate Account, the request must also state the division (or divisions) from which the withdrawal will be made. The amount of a withdrawal includes the withdrawal charge that applies, as described below. A withdrawal from the Guaranteed Principal Account will be made by reducing the value in that Account to provide the amount of the withdrawal. A withdrawal from a division of the Separate Account will be made by selling a sufficient number of accumulation units to provide the amount of the withdrawal. B960-9400 The Selected Face Amount will be reduced by the amount of withdrawal if: . Death Benefit Option 1 as described in the Death Benefit Options provision in Part 5 is in effect; and . We have not received evidence of insurability satisfactory to us. If the Selected Face Amount is reduced due to a withdrawal, we will send an amended Schedule Page reflecting the change. We will also send any amended Tables pages that may be required. However, the surrender charges for this policy will not be reduced as a result of this reduction in the Selected Face Amount. We have the right to require that the policy be sent to us so that the changes can be made. Withdrawals will be subject to the limits set forth below. . The minimum amount of a withdrawal (including the withdrawal charge) is $100. . A withdrawal charge of 2% of the withdrawal, but not more than $25, will be deducted from the total amount of the withdrawal on any date. The charges shown in the Table Of Surrender Charges do not apply to any withdrawal. . The maximum amount of a withdrawal (including the withdrawal charge) on any date is 75% of the cash surrender value of this policy on that date. Example: Death Benefit Option 1 is in effect and you make a withdrawal without furnishing us satisfactory evidence of insurability. Prior to your withdrawal, your policy has a Selected Face Amount of $50,000 and an account value of $20,000. If you make a withdrawal of $5,000, the account value will be reduced to $15,000 and the Selected Face Amount will be reduced to $45,000. Of the $5,000 withdrawn, $25 is the withdrawal charge and $4,975 is paid to you. We reserve the right to prohibit withdrawals that would cause the Selected Face Amount to be reduced to an amount less than $25,000. How We Pay Any withdrawal made will be paid in one sum. However, if the entire policy is surrendered, the cash surrender value may be paid in one sum, or it may be applied under any payment option elected. See Part 6. We may delay paying any surrender or withdrawal value from the Guaranteed Principal Account for up to six months from the date the request is received at our Principal Administrative Office. We may delay paying any surrender or withdrawal value from the Separate Account during any period that: . The New York Stock Exchange (or its successor) is closed, except for normal weekend or holiday closings, or trading is restricted; or . The Securities and Exchange Commission (or its successor) determines that a state of emergency exists; or . The Securities and Exchange Commission (or its successor) permits us to delay payment for the protection of our policy owners. If payment is delayed for 30 days or more, interest will be added. The amount of interest will be the same as would be paid for the same period of time under Option D of the payment options. See Part 6 for a description of Option D. B960-9400 -13- -14- Borrowing On This Policy Right To Make Loans After the first Policy Year, loans can be made on this policy at any time while the Insured is living. However, the policy must be properly assigned to us before the loan is made. No other collateral is needed. We refer to all outstanding loans plus accrued interest as "policy debt." Effect Of Loan A loan is attributed to each division of the Separate Account and to the Guaranteed Principal Account in proportion to the values of this policy in each of those divisions and in the Guaranteed Principal Account (excluding any outstanding policy loans) at the time of the loan. The amount of the loan attributed to each division of the Separate Account will be transferred to the Guaranteed Principal Account. Any such transfer is made by selling accumulation units in the division and applying the value of those units to the Guaranteed Principal Account on the date the loan is made. Any interest added to the loan will be treated as a new loan under this provision. The amount equal to any outstanding policy loans will be held in the Guaranteed Principal Account, and will earn interest as described in the Interest On Fixed Account Value provision in Part 3. Maximum Loan The maximum amount that can be borrowed on any date is Available determined as follows. (1) We subtract from the account value any surrender charges that would apply if the policy were surrendered on that date. (2) We calculate 90% of the amount determined in (1) above. (3) We subtract any policy debt from the amount determined in (2) above. The result is the maximum amount that can be borrowed. Interest On Loans Interest is not due in advance. This interest accrues (builds up) each day and becomes part of the policy debt as it accrues. Interest is due on each Policy Anniversary Date. If interest is not paid when due, it will be added to the loan and will bear interest at the rate payable on the loan. Example: You have a loan of $1,000. The interest due on the Policy Anniversary Date is $60. If it is not paid on that date, we will add it to the existing loan. The loan will then be $1,060 and interest will be charged on this amount from then on. The type of interest rate on any loan is elected at the time of application for this policy and cannot be changed. The two types of interest rates available are: (1) A fixed loan rate of 6% per year; and (2) An adjustable loan rate. Such rate is an annual rate set by us. This rate may change from year to year. Each year we will set the rate that will apply for the next Policy Year. Each year there is a maximum limit on the interest rate we can set. That limit is based on a Published Monthly Average. That Average will be: B960-9400 . The Monthly Average Corporates yield shown in Moody's Corporate Bond Yield Averages, as published by Moody's Investors Service, Inc., or any successor to that service; or . If that Monthly Average is no longer published, a substantially similar average, established by regulation issued by the insurance supervisory official of the state where this policy was delivered. The maximum limit is the published Monthly Average for the calendar month ending two months before the Policy Year begins, or the interest rate used in computing the policy value for that year plus 1%, whichever is higher. Example: A Policy Year begins on June 10, 19X6. The calendar month ending two months before that date is March. The loan interest rate for the Policy Year beginning June 10, 19X6, will not be greater than the Published Monthly Average for March, 19X6. However, if the rate (plus 1%) used to compute the policy value for that Policy Year is higher than the Average, then the policy value rate (plus 1%) will be the maximum loan interest rate for that Policy Year. If the maximum limit for a Policy Year is at least 1/2% higher than the rate in effect for the previous year, we may increase the rate to no more than that limit. If the maximum limit for a Policy Year is at least 1/2% lower than the rate in effect for the previous year, we must decrease the rate to not more than that limit. Policy Debt Limit Policy debt (which includes accrued interest) may not equal or exceed the account value less any surrender charges that apply. If this limit is reached, we can terminate this policy. To terminate for this reason, we must mail written notice to the Owner and any assignee shown on our records at their last known addresses. This notice will state an amount that will bring the policy debt back within the limit. If we do not receive payment within 31 days after the date we mailed the notice, the account value will be reduced by any surrender charges that apply and this policy will terminate at the end of those 31 days. Repayment Of Policy All or part of any policy debt may be repaid at any Debt time while the Insured is living. However, policy debt can only be repaid while this policy is in force. Any repayment of policy debt will first be allocated to the Guaranteed Principal Account up to the amount of the policy loan that was attributed to the Guaranteed Principal Account. Any repayment in excess of that amount will be allocated among the Guaranteed Principal Account and the divisions of the Separate Account according to the net premium allocation then in effect. Other Borrowing Rules We may delay the granting of any loan attributable to the Guaranteed Principal Account for up to six months. We may delay the granting of any loan attributable to the Separate Account during any period that: . The New York Stock Exchange (or its successor) is closed, except for normal weekend or holiday closings, or trading is restricted; or . The Securities and Exchange Commission (or its successor) determines that a state of emergency exists; or . The Securities and Exchange Commission (or its successor) permits us to delay payment for the protection of our policy owners. B960-9400 -15- -16- Reinstating This Policy When Reinstatement After this policy has terminated, it may be Can Be Made reinstated - that is, put back in force. However, the policy cannot be reinstated if it has been surrendered for its cash surrender value. Reinstatement must be made within 5 years after the date of termination and during the Insured's lifetime. Requirements To Evidence of insurability satisfactory to us is Reinstate required to reinstate. A premium is also required as a cost to reinstate. That premium must be no less than the amount necessary to produce an account value equal to three times the monthly charges due on the Monthly Calculation Date that is on, or next follows, the date of reinstatement. Right To Change The Selected Face Amount Increases In The While this policy is in force, the Selected Face Selected Face Amount Amount may be increased upon written application. Except for any increase elected under an insurability protection type of rider, evidence of insurability, satisfactory to us, is required for each increase. Any increase must be for at least $15,000, unless we adopt rules that establish a lower minimum. When evidence of insurability is required for an increase, a charge of $75 is deducted from the account value of this policy as of the effective date of the increase; this charge is deducted from each division of the Separate Account and the Guaranteed Principal Account in proportion to the values of this policy in each of those divisions and in the Guaranteed Principal Account (excluding any outstanding policy loans) on that date. Any increase elected under any insurability protection type of rider will be effective as directed in that rider. Any other increase in the Selected Face Amount will be effective on the Monthly Calculation Date that is on, or next follows, the date we approve the application. Mortality charges for each increase elected are determined and deducted from the account value of this policy in accordance with the Monthly Charges provision. These charges will be deducted from the account value beginning on the effective date of the increase. Additional surrender charges will apply for each increase elected. The Owner has a "right to return" any increase in Selected Face Amount as set forth for a new policy on the cover of this policy. However, this right applies only to the increase and to any premiums paid on or after the date of the application for that increase. No increase in the Selected Face Amount can be elected after the Policy Anniversary Date nearest the Insured's 80th birthday. Decreases In The After the first Policy Year, the Selected Face Amount Selected Face Amount may be decreased by the Owner's written request. However, the decrease must not reduce the amount of death benefit provided by the Death Benefit Option in effect on the date of the decrease to an amount less than $50,000. Any decrease is effective on the Monthly Calculation Date on or next following the date we receive the written request. If a decrease follows one or more increases, the decrease is taken from the most recent increase(s). Any surrender charge due upon a decrease in the Selected Face Amount is deducted from the account value on the effective date of the decrease. The charge is deducted from each division of the Separate Account and the Guaranteed Principal Account in proportion to the values of this policy in each of those divisions and in the Guaranteed Principal Account (excluding any outstanding policy loans) on that date. Evidence Of Changes If the Selected Face Amount is changed, we will send an amended Schedule Page reflecting that change. We will also send any revised or additional Tables pages that may be required. If the Selected Face Amount is increased, we will also send a copy of the application for the increase. However, we have the right to require that the policy be sent to us so that the change can be made. B960-9400 Reports To Owner Annual Report Each year within 30 days after the Policy Anniversary Date, we will mail a report to the Owner. There will be no charge for this report. This report will show the account value at the beginning of the previous Policy Year and all premiums paid since that time. It will also show the additions to, and deductions from, the account value during that Year, and the account value, death benefit, cash surrender value, and policy debt as of the current Policy Anniversary Date. This report will also include any additional information required by applicable law or regulation. Illustrative Report In addition to the periodic reports, we will, upon request, send an illustrative report of projected values to the Owner. We will not charge a fee for providing an illustrative report on an annual basis. However, if the Owner requests illustrative reports more frequently, we may charge a reasonable fee, but only for those additional reports. Part 5. The Death Benefit The death benefit is the amount of money we will pay when we receive due proof at our Principal Administrative Office that the Insured died while the policy was in force. We discuss the death benefit in this Part. Amount Of Death Benefit If the Insured dies while this policy is in force, the death benefit will be the amount of benefit provided by the Death Benefit Option in effect on the date of death, reduced by any policy debt outstanding on the date of death and any unpaid monthly charges to the date of death. Death Benefit Options Two Death Benefit Options, described below, are available under this policy. The Death Benefit Option in effect for this policy is shown on the Schedule Page. The Minimum Face Amount is discussed in the next provision. Death Benefit Option 1 - Under this Option, the amount of benefit is the greater of: . The Selected Face Amount in effect on the date of death; and . Minimum Face Amount in effect on the date of death. Death Benefit Option 2 - Under this Option, the amount of benefit is the greater of: . The Selected Face Amount in effect on the date of death plus the account value on the date of death; and . The Minimum Face Amount in effect on the date of death. Minimum Face Amount In order to qualify as life insurance under the federal tax laws in effect on the Issue Date, this policy has a Minimum Face Amount. The Minimum Face Amount on any date is a percentage of the account value on that date. The percentage for each Policy Year is shown in the Table Of Minimum Face Amount Percentages in this policy. Example: The Minimum Face Amount is determined on June 10, 19X6. The account value on that date is $50,000. The last Policy Anniversary Date was May 2, 19X6. If the applicable Minimum Face Amount Percentage for the Policy Year beginning May 2, 19X6, is 260%, then the Minimum Face Amount is 260% of $50,000, or $130,000. B960-9400 -17- -18- Changes In The Death After the first Policy Year, the Death Benefit Option Benefit Option may be changed upon written request. A change in the Death Benefit Option will be effective on the Monthly Calculation Date that is on or next follows the date we approve the change. For a change from Death Benefit Option 1 to Death Benefit Option 2, the Selected Face Amount will be decreased by the amount of the account value on the effective date of the change. For a change from Death Benefit Option 2 to Death Benefit Option 1, the Selected Face Amount will be increased by the amount of the account value on the effective date of the change. No change in Death Benefit Option will be allowed if the Selected Face Amount after the change would be less than $50,000 or any lower limit published in our manuals or bulletins. Any change from Death Benefit Option 1 to Death Benefit Option 2 requires a written application and evidence of insurability satisfactory to us. In addition, a charge of $75.00 will be deducted from the account value on the effective date of the change. This charge will be taken from the divisions of the Separate Account and from the Guaranteed Principal Account in proportion to the values in each of those divisions and in the Guaranteed Principal Account (excluding outstanding policy loans) on that date. No change from Death Benefit Option 1 to Death Benefit Option 2 will be permitted after the Policy Anniversary Date nearest the Insured's 80th birthday. When We Pay The death benefit will be paid within seven days after the date we receive due proof of the Insured's death, and any other requirements necessary for us to make payment, at our Principal Administrative Office. However, we may delay payment of the death benefit during any period that: . The New York Stock Exchange (or its successor) is closed, except for normal weekend or holiday closings, or trading is restricted; or . The Securities and Exchange Commission (or its successor) determines that a state of emergency exists; or . The Securities and Exchange Commission (or its successor) permits us to delay payment for the protection of our policy owners. Interest On Death If the death benefit is paid in one sum, we will add Benefit interest from the date of death to the date of payment. The amount of interest will be the same as would be paid under Option D of the payment options for that period of time. See Part 6 for a description of Option D. If the death benefit is applied under a payment option, interest will be paid from the date of death to the effective date of that option. It will be paid in one sum to the Beneficiary living on that effective date. The amount of interest will be the same as would be paid under Option D for that period of time. Suicide Exclusion Except for any increases in the Selected Face Amount, we will pay a limited death benefit if the Insured commits suicide, while sane or insane, within two years from the Issue Date and while this policy is in force. The limited death benefit will be the amount of premiums paid for this policy, less any amounts withdrawn and any policy debt. For any increase in the Selected Face Amount, we will pay a limited death benefit if the Insured commits suicide, while sane or insane, within two years after the effective date of the increase and while it is in force. The limited death benefit will be the monthly deductions made for that increase. However, if the limited death benefit as described in the preceding paragraph is payable, there will be no death benefit for the increase. Any limited death benefit will be paid in one sum to the Beneficiary. B960-9400 Part 6. Payment Options These are Optional Methods Of Settlement. They provide alternate ways in which payment can be made. Availability Of Options All or part of the death benefit or cash surrender value may be applied under any payment option. If this policy is assigned, any amount due to the assignee will be paid in one sum. The balance, if any, may be applied under any payment option. Minimum Amounts If the amount to be applied under any option for any one person is less than $2,000, we may pay that amount in one sum instead. If the payments under any option come to less than $20 each, we have the right to make payments at less frequent intervals. Description Of Options Our payment options are described below. Any other payment option agreed to by us may be elected. The payment options are described in terms of monthly payments. Annual, semiannual, or quarterly payments may be requested instead. The amount of these payments will be determined in a way that is consistent with monthly payments and will be quoted on request. If the Schedule Page shows that this policy was issued on a unisex rate basis, the female rates shown in the Option C, E, and F Tables apply in all cases. The male rates in those tables do not apply to unisex rate policies. Option A Fixed Amount Payment Option. Each monthly payment will be for an agreed fixed amount. The amount of each payment may not be less than $10 for each $1,000 applied. Interest will be credited each month on the unpaid balance and added to it. This interest will be at a rate determined by us, but not less than the equivalent of 2.5% per year. Payments continue until the amount we hold runs out. The last payment will be for the balance only. B960-9400 -19- - 20 - Option B Fixed Time Payment Option. Equal monthly payments will be made for any period selected, up to 30 years. The amount of each payment depends on the total amount applied, the period selected, and the monthly payment rates we are using when the first payment is due. The rate of any payment will not be less than shown in the Option B Table. ----------------------------------------------------------------- Option B Table Minimum Monthly Payment Rates For Each $1,000 Applied Monthly Monthly Years Payment Years Payment 1 $84.28 16 $6.30 2 42.66 17 6.00 3 28.79 18 5.73 4 21.86 19 5.49 5 17.70 20 5.27 6 14.93 21 5.08 7 12.95 22 4.90 8 11.47 23 4.74 9 10.32 24 4.60 10 9.39 25 4.46 11 8.64 26 4.34 12 8.02 27 4.22 13 7.49 28 4.12 14 7.03 29 4.02 15 6.64 30 3.93 For quarterly payment, multiply by 2.994. For semiannual payment, multiply by 5.969. For annual payment, multiply by 11.865. ----------------------------------------------------------------- B960-9400 Option C Lifetime Payment Option. Equal monthly payments are based on the life of a named person. Payments will continue for the lifetime of that person. The three variations are: (1) Payments for life only. No specific number of payments is guaranteed. Payments stop when the named person dies. (2) Payments guaranteed for amount applied. Payments stop when they equal the amount applied or when the named person dies, whichever is later. (3) Payments guaranteed for 5, 10 or 20 years. Payments stop at the end of the selected guaranteed period or when the named person dies, whichever is later. The Option C Table shows the minimum monthly payment for each $1,000 applied. The actual payments will be based on the monthly payment rates we are using when the first payment is due. They will not be less than shown in the Table. ------------------------------------------------------------------ Option C Table Minimum Monthly Payment Rates For Each $1,000 Applied Payments Payments Guaranteed For Age* For Life Amount 5 10 20 Male Female Only Applied Years Years Years 35 40 $3.01 $2.95 $3.00 $2.99 $2.97 40 45 3.18 3.11 3.17 3.16 3.14 45 50 3.40 3.30 3.39 3.38 3.34 50 55 3.67 3.53 3.66 3.65 3.58 55 60 4.03 3.82 4.02 3.99 3.86 60 65 4.49 4.18 4.47 4.42 4.18 65 70 5.13 4.63 5.10 4.99 4.51 70 75 6.01 5.21 5.93 5.69 4.82 75 80 7.21 5.94 7.03 6.51 5.06 80 85 8.87 6.89 8.44 7.39 5.20 85 11.18 8.09 10.19 8.21 5.26 *Age on birthday nearest due date of the first payment. Monthly payment rates for ages not shown will be furnished on request. Monthly payment rates for ages over 85 are the same as those for 85. ------------------------------------------------------------------ B960-9400 - 21 - - 22 - Option D Interest Payment Option. We will hold any amount applied under this option. Interest on the unpaid balance will be paid each month at a rate determined by us. This rate will be not less than the equivalent of 2.5%% per year. Option E Joint Lifetime Payment Option. Equal monthly payments are based on the lives of two named persons. While both are living, one payment will be made each month. When one dies, the same payment will continue for the lifetime of the other. The two variations are: (1) Payments for two lives only. No specific number of payments is guaranteed. Payments stop when both named persons have died. (2) Payments guaranteed for 10 years. Payments stop at the end of 10 years, or when both named persons have died, whichever is later. The Option E Table shows the minimum monthly payment for each $1,000 applied. The actual payments will be based on the monthly payment rates we are using when the first payment is due. They will not be less than shown in the Table. ------------------------------------------------------------- Option E Table Minimum Monthly Payment Rates For Each $1,000 Applied Payments For Two Lives Only M50 M55 M60 M65 M70 M75 Age* F55 F60 F65 F70 F75 F80 M F 50 55 $3.25 $3.35 $3.45 $3.52 $3.57 $3.61 55 60 3.35 3.50 3.64 3.75 3.84 3.91 60 65 3.45 3.64 3.83 4.00 4.15 4.27 65 70 3.52 3.75 4.00 4.26 4.50 4.70 70 75 3.57 3.84 4.15 4.50 4.85 5.17 75 80 3.61 3.91 4.27 4.70 5.17 5.65 80 85 3.63 3.95 4.36 4.86 5.45 6.10 Payments Guaranteed For 10 Years M50 M55 M60 M65 M70 M75 Age* F55 F60 F65 F70 F75 F80 M F 50 55 $3.24 $3.34 $3.44 $3.51 $3.56 $3.60 55 60 3.34 3.49 3.63 3.74 3.83 3.90 60 65 3.44 3.63 3.82 3.99 4.14 4.26 65 70 3.51 3.74 3.99 4.25 4.48 4.67 70 75 3.56 3.83 4.14 4.48 4.82 5.12 75 80 3.60 3.90 4.26 4.67 5.12 5.56 80 85 3.62 3.94 4.33 4.82 5.36 5.94 * Age on birthday nearest the due date of the first payment. Monthly payment rates for ages not shown will be furnished on request. Monthly payment rates for ages over 85 are the same as those for 85. ------------------------------------------------------------- B960-9400 Option F Joint Lifetime Payment Option With Reduced Payments. Monthly payments are based on the lives of two named persons. Payments will continue while both are living. When one dies, payments are reduced by one-third and will continue for the lifetime of the other. Payments stop when both persons have died. The Option F Table shows the minimum monthly payment for each $1,000 applied. The actual payments will be based on the monthly payment rates we are using when the first payment is due. They will not be less than shown in the Table. --------------------------------------------------------------- Option F Table Minimum Monthly Payment Rates For Each $1,000 Applied M50 M55 M60 M65 M70 M75 Age* F55 F60 F65 F70 F75 F80 M F 50 55 $3.51 $3.66 $3.82 $3.99 $4.17 $4.35 55 60 3.66 3.83 4.02 4.22 4.44 4.66 60 65 3.82 4.02 4.24 4.49 4.76 5.04 65 70 3.99 4.22 4.49 4.80 5.14 5.49 70 75 4.17 4.44 4.76 5.14 5.57 6.02 75 80 4.35 4.66 5.04 5.49 6.02 6.60 80 85 4.54 4.88 5.31 5.84 6.48 7.22 * Age on birthday nearest the due date of the first payment. Monthly payment rates for ages not shown will be furnished on request. Monthly payment rates for ages over 85 are the same as those for 85. --------------------------------------------------------------- Electing A To elect any option, we require that a written request, satisfactory Payment to us, be received at our Principal Administrative Office. The Owner Option may elect an option during the Insured's lifetime. If the death benefit is payable in one sum when the Insured dies, the Beneficiary may elect an option with our consent. Options for any amount payable to an association, corporation, partnership, or fiduciary are available with our consent. However, a corporation or partnership may apply any amount payable to it under Option C, E, or F if the option payments are based on the life or lives of the Insured, the Insured's spouse, any child of the Insured, or any other person agreed to by us. Effective The effective date of an option is the date the amount is applied Date And under that option. For a death benefit, this is the date that due Payment proof of the Insured's death is received at our Principal Dates Administrative Office. For the cash surrender value, it is the effective date of surrender. The first payment is due on the effective date, except the first payment under Option D is due one month later. A later date for the first payment may be requested in the payment option election. All payment dates will fall on the same day of the month as the first one. No payment will become due until a payment date. No part payment will be made for any period shorter than the time between payment dates. Example: Monthly payments of $100 are being made to your son on the 1st of each month. He dies on the 10th. No part payment is due your son or his estate for the period between the 1st and the 10th. B960-9400 - 23 - - 24 - Withdrawals And If provided in the payment option election, all or part of the Changes unpaid balance under Options A or D may be withdrawn or applied under any other option. If the cash surrender value is applied under Option A or D, we may delay payment of any withdrawal for up to six months. Interest at the rate in effect for Option D during this period will be paid on the amount withdrawn. Income To the extent permitted by law, each option payment and any Protection withdrawal shall be free from legal process and the claim of any creditor of the person entitled to them. No option payment and no amount held under an option can be taken or assigned in advance of its payment date, unless the Owner's written consent is given before the Insured dies. This consent must be received at our Principal Administrative Office. Part 7. Notes On Our Computations This Part covers some technical points about this policy. Net Investment For each division of the Separate Account, the Net Investment Factor Factor for any Valuation Period is the gross investment rate for that period plus 1.00000000 and minus an asset charge. This asset charge will be not more than .00002455 for each day of a Valuation Period. The Net Investment Factor may be greater or less than 1.00000000. For each division of the Separate Account, the gross investment rate for any Valuation Period is equal to: . The net earnings of that division during the Valuation Period, divided by . The value of the total assets of that division at the beginning of the Valuation Period. The net earnings of each division are equal to the accrued investment income and capital gains and losses (realized and unrealized) of that division reduced by any amount charged against that division for taxes paid or reserved for by us. The gross investment rate will be determined by us in accordance with generally accepted accounting principles and applicable laws, rules and regulations. This determination shall be conclusive upon the Owner, the Insured, any Beneficiary, any assignee, and any other person under this policy. Accumulation The value of an accumulation unit in each division was set at Unit Value $1.00000000 on the first Valuation Date selected by us. The value on any date thereafter is equal to the product of the Net Investment Factor for that division for the Valuation Period that includes that date and the accumulation unit value on the preceding Valuation Date. Adjustments Of We have the right to split or consolidate the number of Units And Values accumulation units credited to the policy, with a corresponding increase or decrease in the unit values. We may exercise this right whenever we consider an adjustment of units to be desirable. However, strict equity will be preserved in making any adjustment. No adjustment will have any material effect on the benefits, provisions, or investment return of this policy, or on the Owner, Insured, any Beneficiary, any assignee or other person, or on us. Basis Of The Basis Of Computation is the mortality table and interest Computation rate we use to determine: . The minimum cash surrender values; . The maximum monthly mortality charges; . The minimum annual interest earned on the fixed account value of the policy; and . The minimum payments under Payment Options C, E, and F. B960-9400 The mortality table for the minimum cash surrender values and for the maximum monthly mortality charges is shown in each Table Of Maximum Monthly Mortality Charges. The minimum annual rate used to credit interest on the fixed account value of the policy is shown on the Schedule Page. The mortality table specified applies to amounts in a standard underwriting classification. Appropriate modifications are made to this table for any amount that is not in a standard underwriting classification. In computing the minimum payments under Payment Options C, E, and F, we use mortality rates from the 1983 Table "a" with Projection G for 30 years and with female rates set back five years. The interest used is at an annual rate of 2.5%. Method Of When required by the state where this policy was delivered, we Computing Values filed a detailed statement of the method we use to compute the policy benefits and values. These benefits and values are not less than those required by the laws of that state. B960-9400 - 25 - WHERE TO FIND IT Page No. The Schedule Page ....................................................... 1 Table Of Maximum Monthly Mortality Charges .............................. 2 Table Of Minimum Face Amount Percentages ................................ 3 Table Of Surrender Charges .............................................. 4 Part 1. - The Basics Of This Policy .......................................... 5 The Parties Involved - Owner, Insured, Beneficiary, Irrevocable Beneficiary ................................. 5 Dates - Policy Date, Policy Anniversary Date, Policy Year, Issue Date, Monthly Calculation Date, Valuation Date, Valuation Period, Valuation Time, Register Date ................................ 5 Policy A Legal Contract ................................................. 6 Policy Is Not Participating ............................................. 6 Representations And Contestability ...................................... 6 Misstatement Of Age Or Sex .............................................. 6 Currency ................................................................ 6 Meaning Of In Force ..................................................... 6 Principal Administrative Office ......................................... 6 Part 2. - Premium Payments ................................................... 7 The First Premium ....................................................... 7 Planned Premiums ........................................................ 7 Premium Flexibility And Premium Notices ................................. 7 Where To Pay Premiums ................................................... 7 Right To Refund Premiums ................................................ 7 Net Premium ............................................................. 7 Allocation Of Net Premiums .............................................. 7 Part 3. - Accounts, Values, and Charges ...................................... 8 The Separate Account And The Guaranteed Principal Account ................. 8 The Separate Account .................................................... 8 Changes In The Separate Account ......................................... 8 Accumulation Units ...................................................... 8 Purchase And Sale Of Accumulation Units ................................. 8 The Guaranteed Principal Account ........................................ 9 Values Of This Policy ..................................................... 9 Account Value Of Policy ................................................. 9 Variable Account Value Of Policy ........................................ 9 Fixed Account Value Of Policy ........................................... 9 Interest On Fixed Account Value ........................................ 10 Monthly Policy Charges ................................................... 10 Monthly Charges ........................................................ 10 Administrative Charge .................................................. 10 Mortality Charge ....................................................... 10 Rider Charge ........................................................... 11 Grace Period And Termination ........................................... 11 Part 4. - Life Benefits ..................................................... 11 Policy Ownership ......................................................... 11 Rights Of Owner ........................................................ 11 Assigning This Policy .................................................. 11 Changing The Owner Or Beneficiary ...................................... 12 Transfers Of Values .................................................... 12 Surrendering This Policy And Making Withdrawals .......................... 12 Right To Surrender ..................................................... 12 Cash Surrender Value ................................................... 12 Making Withdrawals ..................................................... 12 How We Pay ............................................................. 13 Borrowing On This Policy ................................................. 14 Right To Make Loans .................................................... 14 Effect Of Loan ......................................................... 14 Maximum Loan Available ................................................. 14 Interest On Loans ...................................................... 14 Policy Debt Limit ...................................................... 15 Repayment Of Policy Debt ............................................... 15 Other Borrowing Rules .................................................. 15 Reinstating This Policy .................................................. 16 When Reinstatement Can Be Made ......................................... 16 Requirements To Reinstate .............................................. 16 Right To Change The Selected Face Amount ................................. 16 Increases In The Selected Face Amount .................................. 16 Decreases In The Selected Face Amount .................................. 16 Evidence Of Changes .................................................... 16 Reports To Owner ......................................................... 17 Annual Report .......................................................... 17 Illustrative Report .................................................... 17 Part 5. - The Death Benefit ................................................. 17 Amount Of Death Benefit ................................................ 17 Death Benefit Options .................................................. 17 Minimum Face Amount .................................................... 17 Changes In The Death Benefit Option .................................... 18 When We Pay ............................................................ 18 Interest On Death Benefit .............................................. 18 Suicide Exclusion ...................................................... 18 Part 6. - Payment Options ................................................... 19 Availability Of Options ................................................ 19 Minimum Amounts ........................................................ 19 Description Of Options ................................................. 19 Electing A Payment Option .............................................. 23 Effective Date And Payment Dates ....................................... 23 Withdrawals And Changes ................................................ 24 Income Protection ...................................................... 24 Part 7. - Notes On Our Computations ......................................... 24 Net Investment Factor .................................................. 24 Accumulation Unit Value ................................................ 24 Adjustments Of Units And Values ........................................ 24 Basis Of Computation ................................................... 24 Method Of Computing Values ............................................. 25 Any riders and endorsements, and a copy of the application for the policy, follow page 25. B960-9400 [LETTERHEAD OF MML BAY STATE LIFE INSURANCE COMPANY APPEARS HERE] Flexible Premium Variable Whole Life Insurance Policy This Policy provides that: Insurance is payable when the Insured dies. Within specified limits, flexible premiums may be paid during the Insured's lifetime. No dividends will be paid. B960-9400
Item 30. Exhibit (d) ii.
Accelerated Death Benefit Rider For Terminal Illness | ||
PART OF POLICY NO. ISSUE DATE OF THIS RIDER | ||
This rider provides that an accelerated death benefit payment may be made under this policy. We discuss this rider, and the rules that apply to it, in the provisions that follow.
Benefits payable under this rider may be taxable. The Owner should seek tax advice prior to requesting an accelerated death benefit payment.
An accelerated death benefit payment will not be allowed if the Owner is required to request the payment by any third party (including any creditor, governmental agency, trustee in bankruptcy, or any other person) or as the result of a court order.
This rider does not provide for long-term care insurance or for nursing-home care insurance. | ||
Rider Benefit |
Subject to the terms of this rider, an accelerated death benefit will be paid to the Owner upon request once we receive proof that the Insured has a terminal illness. | |
Accelerated Benefit Payment | ||
In this section we discuss payment of the accelerated death benefit and the amounts used in determining the amount of the payment. | ||
Eligible Amount |
The Eligible Amount is the amount of death benefit under this policy that can be considered for acceleration. It will be determined as of the Acceleration Date. This Amount includes the following as of that Date:
• The amount equal to the excess of:
• The death benefit payable upon the death of the Insured under the base policy; over
• The policy value (or account value less surrender charge); and
• The amount payable upon the death of the Insured under any life insurance rider included with this policy, if that rider provides level or increasing coverage for at least two years after the Acceleration Date.
The Eligible Amount does not include:
• The amount payable upon the death of the Insured under any life insurance rider that does not provide level or increasing coverage for at least two years after the Acceleration Date; and
• The amount of any insurance provided under this policy on the life of someone other than the Insured; and
• The amount of benefit under any accidental death benefit rider. |
ABR-9300B(NT) |
ABR Page 1 |
ABR Page 2 | ||
Amount To Be Accelerated | Subject to the terms of this rider, the Owner may accelerate any portion of the Eligible Amount up to the maximum limit. The maximum amount to be accelerated is equal to the lesser of:
• 0 75% of the Eligible Amount; and
• $250,000 minus the total amount accelerated under all other policies issued on the life of the Insured by us and any of our affiliates.
We reserve the right to impose a minimum limit on the amount to be accelerated; if we do so, this limit will not exceed $25,000. | |
Amount Of Payment |
The amount of payment under this rider will be computed based on the amount to be accelerated less:
• Interest at the annual interest rate we have declared for policies in this class; and
• A fee of not more than $250.
If required, a detailed statement of the method we use to compute the amount of the accelerated benefit payment has been filed with the insurance department of the state where the rider was delivered. | |
How We Pay |
Payment of the accelerated benefit will be made to the Owner in a lump sum. However, we will not make the payment if we first receive due proof of the Insured’s death; in this case, we will instead pay the death benefit as if no request had been received under this rider. | |
Effect On Policy |
After the accelerated benefit payment is made, this policy will remain in force. Premiums and charges will continue in accordance with the policy provisions.
A lien will be established against this policy. The amount of the lien will be equal to the amount to be accelerated under this rider. Interest will not be charged on the lien. The Owner may not voluntarily repay all or any portion of the lien. However, the amount of the lien will be deducted from the amount of payment under this policy upon the death of the Insured. | |
Other Definitions And Requirements | ||
Acceleration Date |
The Acceleration Date is the first date on which all the requirements for acceleration, except any examination of the Insured by a physician of our choice that we may require, have been met. Our right to require this examination is discussed in the Proof Of Terminal Illness provision below. | |
Requirements For Acceleration | Before the accelerated benefit can be paid, all of the following requirements must be met:
1. If this policy is in force after lapse as extended term insurance, it must have been under that lapse option for the entire 12-month period preceding the Acceleration Date.
2. We must receive at our Principal Administrative Office:
a. The Owner’s written request for payment of an accelerated death benefit under this policy;
b. The Insured’s written authorization to release medical records to us; and
c. The written consent to this request of any assignee and any irrevocable beneficiary under this policy.
3. We must receive proof, satisfactory to us, that the Insured has a terminal illness. | |
ABR-9300B(NT) |
Terminal Illness |
As used in this rider, “terminal illness” is a medical condition that:
• Is first diagnosed by a legally qualified physician after the Issue Date of this policy; and
• With reasonable medical certainty, will result in the death of the Insured within 12 months from the date diagnosed; and
• Is not curable by any means available to the medical profession. | |
Proof Of Terminal Illness | Proof of terminal illness is written certification, satisfactory to us, that a legally qualified physician has diagnosed the Insured as having a terminal illness. To establish this proof, we reserve the right to require that the diagnosis be confirmed with examination of the Insured, at our expense, by a physician of our choice. This examination may include any x-rays, blood tests, and other procedures that are reasonable and necessary to determine whether the Insured has a terminal illness. To be acceptable to us, this examination must be completed within 90 days after the date we notify the Owner of this requirement. | |
Legally Qualified Physician | As used in this rider, a “legally qualified physician” is a person who is licensed by the state in which he or she practices to give advice or treatment for the terminal illness and who is acting within the scope of that license. A legally qualified physician must be someone other than the Owner or the Insured, or a spouse, mother-in-law, father-in-law, stepparent, or natural or adoptive brother, sister, parent, grandparent, or child of the Owner or the Insured. | |
General Provisions | ||
Rider Part Of This Policy | This rider is made a part of the policy numbered above as of the Issue Date of this rider. If the Issue Date of this rider is not shown above, it is the same as the Issue Date of this policy. All the provisions of this policy apply to this rider, except for those that are not consistent with this rider. | |
Termination Of This Rider | This rider will end automatically on the date:
1. An accelerated benefit payment is made; or
2. This policy terminates for any reason; or
3. This policy matures; or
4. This policy is changed to a different policy on which this rider is not available; or
5. Two years before coverage under this policy is scheduled to terminate. | |
Cancellation Of This Rider | This rider may be cancelled by the Owner’s written request. |
MML BAY STATE LIFE INSURANCE COMPANY | ||
/s/ John V. Murphy |
/s/ Ann F. Lomeli | |
President | Secretary |
ABR-9300B(NT) |
ABR Page 3 |
Item 30. Exhibit (d) iii.
Accidental Death Benefit Rider | ||
This rider provides an accidental death benefit on the life of the Insured. We discuss this benefit, and the rules that apply to it, in the provisions that follow. | ||
Rider Benefit |
The benefit provided by this rider is a death benefit for the accidental death of the Insured. We will pay this death benefit if all the conditions of this rider are met and none of the exclusions discussed below apply. Any amount due under this rider will be added to the death benefit provided by this policy. | |
Amount Of Benefit |
The amount of benefit for this rider is shown on the Schedule Page.
We will double the benefit for this rider if death was the result of injury received while the Insured:
• Was a passenger in or on a public conveyance; and
• That conveyance was being operated by a common carrier to transport passengers for hire.
The word “passenger” does not include the operator or any crew member of the public conveyance. It does not include anyone who is in or on the conveyance to give or receive any training. “Crew member” includes anyone who has any duty in or on the conveyance. | |
Changes In Amount Of Benefit |
The amount of benefit for this rider may be increased or decreased while this rider and the policy are in force. Any increase must be for at least $15,000.
Any increase requires a written application. Satisfactory evidence of insurability of the Insured is also needed. Any increase will become effective on the Monthly Calculation Date that is on, or next follows, the date the application for the increase is approved. The charges for any increase will be based on the rates we are using on the effective date of that increase.
The amount of benefit may be decreased upon written request. However, it cannot be decreased to less than $15,000. Any decrease will be effective on the Monthly Calculation Date that is on, or next follows, the date the request was signed. If a decrease follows one or more increases, the decrease will be taken from the most recent increase(s). | |
Proof Of Accidental Death |
To pay any benefit under this rider, we require that due proof of the accidental death be given to us at our Principal Administrative Office. This proof must show that the Insured’s death occurred:
• As a direct result of accidental bodily injury independently of all other causes; and
• Within 180 days after the injury was received; and
• While this policy and this rider were in force; and
• On or after the Insured’s first birthday.
Except for drowning or internal injuries shown by autopsy, the injury causing death must be shown by a visible wound on the exterior of the body. Unless prohibited by law, we have the right to examine the body at any time. |
ADB-9400B |
ADB Page 1 |
ADB Page 2 |
Exclusions |
There are some exclusions to the coverage provided by this rider. No accidental death benefit will be payable if the Insured’s death results directly or indirectly from any of these causes.
Suicide - Suicide, while the Insured is sane or insane.
War - War, declared or undeclared, or any act of war.
Military Service - Service in the military forces of any country at war or in any civilian noncombatant unit serving with those forces. “War” includes undeclared war and any act of war. “Country” includes any international organization or group of countries.
Aviation - Travel in, or descent from or with, any kind of aircraft aboard which the Insured is a pilot or crew member or is giving or receiving any training. “Crew member” includes anyone who has any duty aboard the aircraft.
Natural Causes - Bodily or mental illness, disease, or infirmity of any kind, or medical or surgical treatment for any of these.
Drug - The taking or injection of any drug, hypnotic, or narcotic, accidentally or otherwise.
Felony - Injury received while committing a felony. | |
Contestability |
We can bring legal action to contest the validity of this rider for any material misrepresentation of a fact made in the application for this rider. However, we cannot, in the absence of fraud, contest the validity of this rider after it has been in force during the lifetime of the Insured for two years from its Issue Date. The Issue Date of this rider is shown on the Schedule Page.
We can bring legal action to contest the validity of an increase for any material misrepresentation of a fact made in the application for the increase. However, we cannot, in the absence of fraud, contest the validity of the increase after it has been in effect during the lifetime of the Insured for two years after the effective date of the increase. | |
Rider Part Of Policy |
This rider is made a part of this policy as of the Issue Date of this rider in return for the application for this rider and the payment of the charges for this rider. The Schedule Page shows the charges from the Policy Date to the first Policy Anniversary Date. Charges after that are shown in the Table Of Monthly Charges for this rider. That Table is attached to this rider. All the provisions of this policy apply to this rider, except for those that are inconsistent with this rider. | |
Termination Of This Rider |
This rider ends automatically:
• On the Expiration Date of this rider, as shown on the Schedule Page; or
• Upon termination of this policy for any reason; or
• At the end of the 61 day grace period provided by the policy. | |
Cancellation Of This Rider |
This rider may be cancelled by the Owner’s written request. Cancellation will take effect on the Monthly Calculation Date that is on, or next follows, the date we receive the written request at our Principal Administrative Office. |
MML BAY STATE LIFE INSURANCE COMPANY | ||
/s/ Ann F. Lomeli | ||
President |
Secretary |
ADB-9400B
Item 30. Exhibit (d) iv.
Death Benefit Guarantee Rider
| ||
This rider guarantees that, while this rider is in force, the policy will not terminate under the terms of the Grace Period And Termination provision of the policy. We discuss this benefit, and the rules that apply to it, in the provisions that follow. | ||
Rider Benefit |
While this rider is in force, the policy will not terminate if the account value less any policy debt is not enough to cover the monthly charges due on a Monthly Calculation Date, as stated in the Grace Period And Termination provision of the policy. | |
Termination Of This Rider | The Expiration Date and charges for this rider are shown on the Schedule Page. If all charges are paid for this rider, it will continue in force until that Date. However, this rider will automatically terminate before its Expiration Date on the date any of the following occurs:
• Termination of this policy for any reason other than insufficient account value;
• The Selected Face Amount of this policy is changed to an amount less than $50,000; or
• The end of the 61-day grace period (see Rider Grace Period provision below) after failure to meet the policy premium requirement (see below) and to pay an amount of premium sufficient to maintain the guarantee under this rider.
Once this rider terminates, it cannot be reinstated. | |
Policy Premium Requirement To Keep Rider In Force | As of each Monthly Calculation Date, the policy premium requirement must be met in order to prevent termination of this rider. This requirement is that, as of the Monthly Calculation Date, the sum of all policy premiums paid, less any amounts withdrawn and less the amount of any policy debt, is not less than the sum of Minimum Monthly Policy Premiums for this rider since its Issue Date.
The Minimum Monthly Policy Premium for this rider is set as of its Issue Date. We may change it later to reflect other changes in the policy. To determine the Minimum Monthly Policy Premiums for this rider since its Issue Date, we use the Minimum Monthly Premium for this rider in effect on each Monthly Calculation Date. | |
Rider Grace Period |
If, on a Monthly Calculation Date, the policy premium requirement has not been met, we will mail to the last address authorized by the Owner, a notice stating the amount of premium that must be paid to maintain the guarantee under this rider. This amount is:
• The smallest amount needed to meet the policy premium requirement for the current Monthly Calculation Date; plus
• Two times the Minimum Monthly Policy Premium in effect on that Date.
We allow a grace period of 61 days from the current Monthly Calculation Date for payment of the amount needed to maintain the guarantee under this rider. If we do not receive the required premium by the end of this grace period, the rider will terminate. | |
Contestability |
We can bring legal action to contest the validity of this rider for any material misrepresentation of a fact made in the application for this rider. However, we cannot, in the absence of fraud, contest the validity of this rider after it has been in force during the lifetime of the Insured for two years from its Issue Date. The Issue Date of this rider is shown on the Schedule Page. | |
Rider Part Of Policy |
This rider is made a part of this policy as of the Issue Date of this rider in return for the application for this rider and the payment of the charges for this rider. The maximum charges for this rider are shown on the Schedule Page. We have a right to charge less than these maximum charges. Any change in charges will apply to all individuals who are in the same class as the Insured. All the provisions of this policy apply to this rider, except for those that are inconsistent with this rider. |
DBG-9400B | DBG Page 1 |
DBG Page 2 |
Cancellation Of This Rider | This rider may be cancelled by the Owner’s written request. Cancellation will take effect on the Monthly Calculation Date that is on, or next follows, the date we receive the written request at our Principal Administrative Office. |
MML BAY STATE LIFE INSURANCE COMPANY | ||
/s/ Ann F. Lomeli | ||
President |
Secretary |
DBG-9400B |
Item 30. Exhibit (d) v.
Disability Benefit Rider | ||
This rider provides a benefit if the Insured becomes totally disabled. We discuss this benefit, and the rules that apply to it, in the provisions that follow. | ||
Rider Benefit |
The benefit provided by this rider is an amount of money we will credit to this policy on specific Monthly Calculation Dates. We call this the Disability Benefit Amount. It will be treated as a premium paid subject to the terms of the policy. This benefit will be provided after the Insured has been totally disabled for six months and all the conditions of this rider are met. Subject to the Exclusions provision below, the Monthly Calculation Dates for which the Disability Benefit Amount will be credited are:
• Any Monthly Calculation Date after the Insured has been totally disabled for six months during the continuance of total disability; and
• Any Monthly Calculation Date during the first six months of total disability; and
• Any Monthly Calculation Date (except the Issue Date of this rider) during the 61-day period before total disability began.
For any of these Monthly Calculation Dates that has already passed at the time a claim is approved, the Disability Benefit Amount will be considered to have been credited as of that Monthly Calculation Date.
The allowance of benefits under this rider guarantees that this policy will continue in force while the Insured is totally disabled. Also, the allowance of those benefits will not reduce the amount payable in any settlement of this policy. | |
Disability Benefit Amount |
The Disability Benefit Amount on a Monthly Calculation Date is the greater of:
• The Specified Monthly Amount for this rider, shown on the Schedule Page; and
• An amount that, when credited as a premium, results in a net premium equal to the sum of all monthly charges due on the Monthly Calculation Date. (Net premiums are discussed in Part 2 of this policy, and monthly charges are discussed in Part 3.) | |
Exclusions | This rider does not provide any benefit for:
• Any Monthly Calculation Date before the Policy Anniversary Date nearest the Insured’s 10th birthday;
• Total disability directly caused by any willfully and intentionally self-inflicted injury; or
• Total disability caused by war while the Insured is in the military forces of any country at war or in any civilian noncombatant unit serving with those forces. “War” includes undeclared war and any act of war. “Country” includes any international organization or group of countries. | |
Limitation On Right To Increase Selected Face Amount | Any increase in Selected Face Amount may cause an increase in the Disability Benefit Amount for this rider. In certain cases, however, benefits under this rider cannot be increased. In those cases, we have the right to refuse an increase in the Selected Face Amount. Those cases are:
• The rider benefits after the increase would exceed our published limits for such benefits.
• The Insured does not meet our underwriting requirements for the additional rider benefits.
• A higher rating would apply to the additional rider benefits than to the existing benefits. |
DBR-9400B |
DBR Page 1 |
DBR Page 2 | ||
This limitation does not apply to any increase elected in accordance with any insurability protection type of rider this policy has. | ||
Total Disability |
Total disability is an incapacity of the Insured that:
• Is caused by sickness or injury; and
• Begins while this rider and this policy are in force; and
• For the first 24 months of any period of total disability, prevents the Insured from performing substantially all the duties of the Insured’s occupation; and
• After total disability has continued for 24 months, prevents the Insured from engaging in any occupation the Insured is qualified to perform.
For the first 24 months of any period of total disability, the Insured’s occupation is the Insured’s usual work, employment, business, or profession at the time total disability began. After total disability has continued for 24 months, any occupation the Insured is qualified to perform means any work, employment, business, or profession that the Insured is reasonably qualified to do based on education, training, or experience. Until the Insured reaches an age at which formal education may be legally ended, occupation means attendance at school.
Example: You are a full-time surgeon. You receive an injury to your hands that prevents you from performing surgery, but you can carry on a general medical practice. For the first 24 months, your occupation is surgeon. After that time, your occupation will be any that you are reasonably qualified to do based on your education, training, or experience. Since you can carry on a general medical practice, we would no longer consider you to be totally disabled
For some conditions, we consider the Insured to be totally disabled even if the Insured is able to work. These conditions are the total loss of sight of both eyes, or the total loss of use of both hands, or both feet, or one hand and one foot. Any of these will be total disability as long as the loss continues. | |
Recurrent Disabilities |
A period of total disability due to the same condition or related condition as that of an earlier period of total disability may be considered to be a continuation of the earlier period. This depends on how much time has passed from the end of the earlier period to the date the current total disability began. If less than 30 days have passed, we will consider it to be a continuation of the earlier period. If 30 days or more have passed, we will consider it to be a new period of total disability.
Example: You were totally disabled for 10 months because of a severe knee injury. Two weeks after you recover, your knee fails and you are totally disabled again. We consider this to be a continuation of the earlier period of total disability. | |
Notice Of Claim |
Notice of claim means notice to us at our Principal Administrative Office that the Insured is totally disabled and that a claim may be made under this rider. We require that this notice be in writing and that it identify the Insured. Notice given by or for the Owner shall be notice of claim.
There are two time limits for giving notice of claim. First, no benefit will be allowed unless this notice is given to us while the Insured is living and during the continuance of total disability. Second, no benefit will be provided for any Monthly Calculation Date more than one year before we were given the notice. However, there is one exception to each of these time limits. That is, if it was not reasonably possible to give us notice of claim within the time limit, the delay will not reduce the benefit if notice is given as soon as it is reasonably possible to do so. | |
DBR-9400B |
Proof Of Claim |
Before any benefit is allowed, proof of claim must be given to us at our Principal Administrative Office. Proof may be given by or for the Owner. Proof of claim means satisfactory written proof that:
• The Insured is totally disabled; and
• Total disability began while this rider and this policy were in force; and
• Total disability began before the Policy Anniversary Date nearest the Insured’s 65th birthday; and
• Total disability has continued for six months.
We have forms that are to be used to make a claim. They will be sent promptly upon request. As part of the proof of claim, we have the right to require that the Insured be examined by a physician chosen by us.
Proof of claim must be given to us within certain time limits. These are discussed in the provision that follows. | |
When Proof Of Claim Must Be Made | Proof of claim must be received at our Principal Administrative Office while the Insured is living and during the continuance of total disability. Also, it must be received within one year after the earlier of:
• The Policy Anniversary Date nearest the Insured’s 65th birthday; and
• Termination of this policy.
However, if it was not reasonably possible to give us proof of claim on time, the delay will not reduce the benefit if proof is given as soon as it is reasonably possible to do so. | |
Proof Of Continued Disability |
During the first two years after proof of claim is received, we may require satisfactory proof of continued disability at reasonable intervals. After two years, we may require proof not more than once a year. As part of this proof, we have the right to require an examination of the Insured at our expense by a physician chosen by us.
The proof will not be required after the Policy Anniversary Date nearest the Insured’s 65th birthday, if total disability began before the Policy Anniversary Date nearest the Insured’s 60th birthday. | |
When Benefits End | The benefits will end when any of the following occurs:
• The Insured is no longer totally disabled; or
• Satisfactory proof of continued total disability is not given to us as required; or
• The Insured refuses or fails to have an examination we require; or
• The day before the Policy Anniversary Date nearest the Insured’s 70th birthday, if total disability began on or after the Policy Anniversary Date nearest the Insured’s 60th birthday. | |
Contestability |
We can bring legal action to contest the validity of this rider for any material misrepresentation of a fact made in the application for this rider. However, we cannot, in the absence of fraud, contest the validity of this rider after it has been in force during the lifetime of the Insured for two years after its Issue Date. The Issue Date of this rider is shown on the Schedule Page. |
DBR-9400B |
DBR Page 3 |
DBR Page 4 | ||
Rider Part Of Policy |
This rider is made a part of this policy as of the Issue Date of this rider in return for the application for this rider and the payment of the charges for this rider. The Schedule Page shows the charges from the Issue Date of this rider to the next Policy Anniversary Date. Charges after that are shown in the Table Of Monthly Charges for this rider. That Table is included with this rider. All the provisions of this policy apply to this rider, except for those that are inconsistent with this rider. | |
Termination Of This Rider | This rider ends automatically when either of the following occurs:
• Termination of this policy for any reason; or
• The Policy Anniversary Date nearest the Insured’s 65th birthday if the Insured is not totally disabled on that Date. | |
Cancellation Of This Rider |
This rider may be cancelled by the Owner’s written request. Cancellation will take effect on the Monthly Calculation Date that is on, or next follows, the date we receive the written request at our Principal Administrative Office. |
MML BAY STATE LIFE INSURANCE COMPANY | ||
/s/ Ann F. Lomeli | ||
President |
Secretary |
DBR-9400B
Item 30. Exhibit (d) vi.
Insurability Protection Rider | ||
This rider provides the right to increase the Selected Face Amount of this policy without evidence of insurability. We discuss this right, and the rules that apply to it, in the provisions that follow. | ||
Rider Benefit |
While this rider is in force, the Selected Face Amount of this policy can be increased on each Option Date. Evidence of insurability will not be needed to elect any increase under this rider.
Example: The next Option Date is June 10th of next year. On that date, the Selected Face Amount of this policy may be increased. This increase can be elected even though the Insured can no longer qualify for new insurance.
If the Selected Face Amount is not increased on an Option Date, the right to increase on that date is lost. However, the right to increase on each later Option Date will not be affected. | |
Option Dates |
An Option Date is a date on which an increase in the Selected Face Amount can be elected. An Option Date can be a Regular Option Date or a Substitute Option Date.
Each Regular Option Date is a Policy Anniversary Date. The Schedule Page shows each Regular Option Date for this rider.
A Substitute Option Date is the Monthly Calculation Date that is on or next follows the 60th day after the Insured’s marriage, the birth of a child of the Insured, or the legal adoption of a child by the Insured. A Substitute Option Date occurs only if there is a right to increase on the next Regular Option Date. If an increase is elected on a Substitute Option Date, there shall be no right to increase until after the next Regular Option Date.
Example: You have a right to increase on the next Regular Option Date, June l0th of next year. A child of the Insured is born today. The 60th day after the birth of the child is a Substitute Option Date. If you elect an increase on that Substitute Option Date, you will not have a right to increase again until after June 10th of next year. | |
Electing An Increase |
A written application will be required to elect an increase in the Selected Face Amount. This must be completed and received at our Principal Administrative Office within the 60-day period ending on the Option Date. Also, the policy must have sufficient value on the Monthly Calculation Date that is on, or next follows, the Option Date to pay the monthly charges for the policy including the increase elected.
If these requirements are met, the increase will become effective on the Option Date. It will not be effective before that date.
Monthly mortality charges for any increase elected under this rider will be based on the same rates used for the most recently issued part of the Selected Face Amount of this policy as of the Issue Date of this rider. | |
Amount Of Increase |
Each increase elected must be for at least $15,000; it cannot be for more than the amount of benefit for this rider, as shown on the Schedule Page. But, there is an exception for an increase elected on a Substitute Option Date because of a multiple birth. In this case, the maximum increase is the amount of benefit for this rider multiplied by the number of children born. | |
Term Insurance |
The amount of benefit for this rider is shown on the Schedule Page. While this rider is in force, term insurance equal to this amount is provided for the 60-day period before each Option Date on which an increase may be elected. If we receive due proof that the Insured died during this period, we will add this term insurance to the death benefit provided by the policy. |
IPR-9401B | IPR Page 1 |
IPR Page 2 |
Suicide Exclusion |
A limited death benefit is payable for any life insurance provided by this rider if the Insured commits suicide, while sane or insane, during the two-year suicide period for the coverage. If a limited death benefit is payable under the policy because of the Insured’s suicide, there will be no additional death benefit payable under this rider by the policy. Otherwise, the limited death benefit under this rider will be the charges for this rider deducted from the account value since the Issue Date of this rider.
The two-year suicide period for coverage provided by this rider begins:
• On the Issue Date of this rider, for any term insurance; and
• On the effective date of the increase, for any increase elected under this rider. | |
Contestability |
We can bring legal action to contest the validity of this rider for any material misrepresentation of a fact made in the application for this rider. However, we cannot, in the absence of fraud, contest the validity of this rider after it has been in force during the lifetime of the Insured for two years after its Issue Date. The Issue Date of the rider is shown on the Schedule Page.
The contestable period for any increase elected under this rider will be measured from the Issue Date of this rider. | |
Rider Part Of Policy |
This rider is made a part of this policy as of the Issue Date of this rider in return for the application for this rider and the payment of charges for this rider. The Schedule Page shows the charges from the Issue Date of this rider to the next Policy Anniversary Date. Charges after that are shown in the Table Of Monthly Charges for this rider. All the provisions of this policy apply to this rider, except for those that are inconsistent with this rider. | |
Termination Of This Rider |
The last Regular Option Date is shown on the Schedule Page. If all charges are paid, this rider will continue in force through that date. However, this rider will end automatically before that date at the time either of the following occurs:
• Termination of this policy for any reason; or
• Election of an increase on a Substitute Option Date if that increase is the last one that may be elected under this rider. | |
Cancellation Of This Rider |
This rider may be cancelled by the Owner’s written request. Such cancellation will take effect on the Monthly Calculation Date that is on, or next follows, the date we receive the written request at our Principal Administrative Office. |
MML BAY STATE LIFE INSURANCE COMPANY | ||
/s/ Ann F. Lomeli | ||
President |
Secretary |
IPR-9401B |
Item 30. Exhibit (d) vii.
Endorsement
Right To Exchange Insured
This policy was changed before it was signed by us. This change adds the following section to the Life Benefits part of the policy.
Right To Exchange Insured | ||
This policy may be exchanged for a new policy on the life of a substitute insured. We discuss this right, and the rules that apply to it, in the provisions that follow. | ||
Requirements For Exchange | To make an exchange, all of the following conditions must be met as of the Date of Exchange:
• This policy must be in force, and must have been in force for at least one year;
• The Owner of the new policy must have an insurable interest in the life of the substitute insured; and
• The substitute insured must not be over 75 years of age on the birthday nearest the Date of Exchange.
Before the exchange can become effective, we require:
• A written application for exchange, received by us at our Principal Administrative Office;
• Evidence of insurability of the substitute insured that is satisfactory to us; and
• Payment to us of the cost to exchange (discussed below in the Cost To Exchange provision). | |
Date Of Exchange |
The Date of Exchange will be the Monthly Calculation Date that is on or next follows the later of:
• The date we approve the application for exchange; and
• The date the cost to exchange is paid to us at our Principal Administrative Office.
Example: The Monthly Calculation Date is the 10th of each month. We approve the application for exchange on May 5, 19X8. The cost to exchange is paid on May 15, 19X8. The Date of Exchange will be June 10, 19X8.
The insurance on the previous insured will continue to, but not including, the Date of Exchange. The insurance on the substitute insured will take effect on the Date of Exchange. | |
The New Policy |
The new policy will be on the same form as this policy, unless this form is not available as of the Policy Date of the new policy. In the latter case, we will use a form we determine to be as close to this one in features as is then available.
The Policy Date of the new policy will be the same as the Policy Date of this policy. There is, however, one exception. It applies if the substitute insured was born after the Policy Date of this policy. In that case, the Policy Date of the new policy will be the Policy Anniversary Date of this policy that next follows the date of birth of the substitute insured. |
E12171B-9400 |
Page 1 |
Page 2 |
After exchange, the new Policy will be considered to have been issued as of its Policy Date. But, it will be modified to show that the contestable and suicide periods, as they apply to the substitute insured, will be measured from the Date of Exchange. The Suicide Exclusion provision of the new policy will also be modified to state that the limited benefit on suicide will be:
• The account value of this policy immediately before the exchange; plus
• The amount of premiums paid for the new policy; minus
• Any amounts withdrawn under the new policy; and minus
• Any policy debt under the new policy. | ||
Exchange Method |
The Selected Face Amount and the Death Benefit Option for the new policy will be the same as for this policy.
The account value immediately after the exchange will be equal to:
• The account value immediately before the exchange; minus
• The monthly charges deducted on the Date of Exchange.
Immediately after the exchange, the account value for the new policy will be allocated among the divisions of the Separate Account and the Guaranteed Principal Account (including outstanding loans) in the same proportion as the account value of this policy immediately preceding the exchange. All monthly charges, surrender charges, and other values on and after the Date of Exchange will be based on the life and risk classification of the substitute insured. | |
Cost To Exchange |
The cost to exchange is the sum of:
• An administrative fee of $75; and
• Any excess policy debt as discussed below in the Policy Debt After Exchange provision. | |
Policy Debt After Exchange |
Any policy debt under this policy on the Date of Exchange will, if not repaid at that time, be transferred to the new policy. However, if the amount of that debt is more than the maximum loan available under the new policy on the Date of Exchange, the excess must be repaid on or before that date. | |
Assignment After Exchange |
Any assignment of this policy in effect on the Date of Exchange will apply to the new policy. The rights of the Owner of the new policy and the interest of any Beneficiary under the new policy or any other person will be subject to the assignment. |
MML BAY STATE LIFE INSURANCE COMPANY |
/s/ Ann F. Lomeli |
Secretary |
E12171B-9400 |
Item 30. Exhibit (e)
[LOGO OF MASSMUTUAL APPEARS HERE] Life Application Part 1 (A10GE) - General Version This application package may be used to apply for the following individual policies: . All New Non-Qualified Life Insurance Policies for One Insured - -------------------------------------------------------------------------------- Contents This package includes: . Part 1 of Application . Investor Account Card for Variable Life . Agent's Statement . Temporary Life Insurance Receipt . MIB and Fair Credit Reporting Act Notice - -------------------------------------------------------------------------------- See additional information on reverse side Massachusetts Mutual Life Insurance Company and affiliated insurance companies Springfield MA 01111-0001 A10GE197Notes On Using This Application Package - -------------------------------------------------------------------------------- Carefully review the Agent's Guide Booklet for specific instructions and details --------------------- for completing the application forms. . Any non-application pages that are not needed may be removed from the package. . Do not use this application for changes, additions or reinstatements, or for increases on universal life (UL) or variable life (VL) policies; instead, use the appropriate Change Application. . VL monies must be remitted immediately; do not hold them while completing requirements for other products being applied for concurrently. . Fully complete the Agent's Statement. Do not omit item 9 (Telephone Numbers). . If more space is needed in answering questions, use the "Remarks" sections included throughout the application. Checklist - -------------------------------------------------------------------------------- For Enterprise Plus (Universal Life) and Enterprise 10 (10-Year Level Term): [_] Check C.M. Life Insurance Company at top of application. [_] For UL, do not use item 20(b), "Initial Additional Premium," for ------ Section 1035 Exchanges. For Variable Life Select (VL): [_] Check MML Bay State Life Insurance Company at top of application. [_] Do not use item 20(b), "Initial Additional Premium," for Section ------ 1035 Exchanges. [_] Complete and forward the Investor Account Card (IAC). [_] Give owner the current VL Select Prospectus. Signature Instructions for Part 1 of Application (Agreement and Signatures): [_] Proposed Insured must always sign (if under age 16, parent or legal guardian signs in that space). [_] Applicant, if different from the Proposed Insured, must also sign. [_] Owner must always sign at the bottom of the page, even if already ------ --------------- signed as Insured or as Applicant. --------------------------------- For Conversion, Exchange, or Option Exercise: [_] In all cases, the Owner and any Assignee of the original policy sign on the right side of the signature area. [_] The Proposed Insured, if not the Owner of the original policy, must sign on the left side. [_] For Option Exercise, the Proposed Insured and the Owner must always sign, even if no additional amount of insurance is applied for. -------------------------------------------------------- For Prepaid Cases: [_] Complete the health questions on the Temporary Life Insurance Receipt. [_] If all health questions are answered "No": --- [_] Finish completing the Receipt and give Premium Payer Part to the client. [_] Obtain a separate check for VL Premium. [_] Obtain a separate check for Adjustable Life Insurance Purchase Rider (ALIR) payment. [_] If any health question is answered "Yes" or is left unanswered: --------------------- [_] Do not take any monies. ------ [_] Do not give the receipt. ------ Give Client: [_] MIB and Fair Credit Notice, and [_] Buyer's Guide (if applicable). A10GE197 APPLICATION NO. LIFE INSURANCE APPLICATION (PART 1) To: [_] Massachusetts Mutual Life Insurance Co. [_] MML Bay State Life Insurance Co. [_] C.M. Life Insurance Co. Springfield, Massachusetts 01111-0001 140 Garden St., Hartford, CT 06154 For: [_] New Life Insurance Policy [_] New Policy as Exchange of Term Insurance [_] Conversion of Term Insurance [_] New Policy Under Guaranteed Insurability Option [_] ------------------- - -------------------------------------------------------------------------------- Client Data - -------------------------------------------------------------------------------- 1. Name of Proposed Insured first name (hereinafter referred to as Insured) [_][_][_][_][_][_][_][_][_][_][_] middle name [_][_][_][_][_][_][_][_][_] last name [_][_][_][_][_][_][_][_][_][_][_][_][_] suffix (e.g., Jr.) [_][_][_] 2. Current Address ---------------------------------------------------------- street & no. city state [_][_][_][_][_]-[_][_][_][_] zip 3. Prior Address (if within 5 years ---------------------------------------------------------- street & no. city state [_][_][_][_][_]-[_][_][_][_] zip 4. Business/Employer Name & Address ---------------------------------------------------------- name ---------------------------------------------------------- street & no. city state [_][_][_][_][_]-[_][_][_][_] zip 5. Social Security Number [_][_][_]-[_][_]-[_][_][_][_] 6. Date of Birth --------------------------------------- mo. day yr. 7. [_] Male [_] Female 8. Birthplace ------------------------------- 9. Citizen of USA [_] Yes [_] No If "No," what country? ------------------- Type of Visa [_] Perm. [_] Temp. 10. Applicant [_] Owner [_] Insured [_] Other --------------------------------------------- (Print full name and relationship to Insured) 11. Plan Account Name (Employer) (complete if applicable) -------------------------------------- Plan Account No. -------------------------------- - -------------------------------------------------------------------------------- 12. Owner(Select only one of (a) through (k).) (*Print full name(s) and relationship(s) to the Insured.) (a) [_] Insured * (b) [_] Upon attainment of age , the Insured shall become --------------- the Owner. Until then, the Owner shall be the Insured's ----------- , if living otherwise the Insured's -------------------- ----------- , if living, otherwise the Insured. -------------------- * (c) [_] Lifetime Ownership in the Insured's , if living, ----------------- thereafter in the Insured's , if living, thereafter ---------------- in the Insured. * (d) [_] Insured's , or his/her estate. ------------------------------------- * (e) [_] Joint Ownership: , or the survivor(s) of them. ----------------------- (f) [_] as Trustee(s), or the then-acting Trustee(s) ------------------------ under the Trust Agreement dated . (Copy of signed ------------------ Trust Agreement required.) (g) [_] Corporation , its successors or assigns. ---------------------------- (h) [_] Business Associate/Business Partner , or his/her estate. ------------ (i) [_] Partnership . ------------------------------------------------------- (j) [_] Incorporated Charitable Organization , its -------------------------- successors or assigns. * (k) [_] Other (e.g., Non-Incorporated Charity, Custodian, or Tenancy-In- Common) ------------------------------------------------------------- If the last Owner is other than the Insured and all Owners predecease the Insured, then the Owner shall be the estate of the last Owner to die unless otherwise requested. 13. Owner's (if other than the Insured) Soc. Sec. No. or Taxpayer ID No. ------------------------------------------------------------ (If more than one Owner, give name and Soc. Sec. No. of all Owners in 15.) 14. Owner's (if other than the Insured) Address ---------------------------------------------------------------------------- street & no. city state [_][_][_][_][_]-[_][_][_][_] zip 15. Remarks - -------------------------------------------------------------------------------- A10GE197 APPLICATION NO. Page 2 - -------------------------------------------------------------------------------- 16. Beneficiary (Select only one of (a) through (i).) (For all Beneficiaries, print full name(s) and relationship(s) to the Insured.) Payment to all Beneficiaries shall be made in one sum unless otherwise requested. (a) [_] Primary ------------------------------------------------------------ ------------------------------------------------------------ Secondary (optional) ----------------------------------------------- --------------------------------------------------------------- [_] AND any lawful children of the Insured Select [_] AND any children born of the marriage of the Insured and said spouse only one [_] AND any children born of the marriage of, or legally adopted by, the Insured and said spouse option [_] *Trustee(s) under the Will of the Insured Tertiary (third to receive payment) (optional) ---------------------------- --------------------------------------------------------------------- [_] issue per stirpes of: [_] Primary Beneficiary(ies) [_] Secondary Beneficiary(ies) [_] Tertiary Beneficiary(ies) (b) [_] Estate of the Insured (Select only if Estate is Primary Beneficiary.) (c) [_] *Trustee(s) under the Will of the Insured (Select only if Trustee(s) under the Will is Primary Beneficiary) (d) [_] __________________________________________________ as Trustee(s), or the then-acting Trustee(s), under the Trust Agreement dated _______________ (e) [_] Corporation named in 12(g) (f) [_] Business Associate/Business Partner named in 12(h) (g) [_] Partnership named in 12(i) (h) [_] Incorporated Charitable Organization named in 12(j) (i) [_] Other ------------------------------------------------------------------- *"Trustee(s) under the Will of the Insured" means the then-acting Trustee(s) of the Trust under the Insured's Will that is probated. If no Will of the Insured is probated or no Trust is in effect under the Will that is probated, payment will be made to the Owner or to the estate of the Owner. Optional Provisions (for (a) and (f) only): UTMA/UGMA Custodian- During minority of the named child(ren), ----------------------------------- (name of adult to act as Custodian) shall be Custodian for said child(ren) under the Uniform ------------------ (state) Transfers/Gifts to Minors Act. (If the Custodian is named for more than one child, the Custodian will act separately for each.) Option D, Monthly Interest Payments,for [_] Primary Beneficiary [_] Secondary Beneficiary [_] Tertiary Beneficiary (not available for any beneficiary for whom UTMA/UGMA is selected) Deferral Clause for [_] Primary [_] Secondary [_] Tertiary Beneficiary(ies). Payment shall be made on the date [_] 30 days [_] days after the Insured's --- death. Any beneficiary whose death occurs before such date will be considered as having predeceased the Insured. If two or more persons are the beneficiaries in any class, payment shall be made equally to them or equally to the surviving beneficiaries in that class unless otherwise requested. If percentages or fractions are indicated and any beneficiary dies before the Insured, any share due that beneficiary will be paid proportionately to the surviving beneficiaries in that class. If payment is made in one sum and there is no beneficiary entitled to payment when the Insured dies and the Insured is the Owner at that time, payment shall be made to the estate of the Insured; but if the Insured is not the Owner, payment shall be made to the Owner. - -------------------------------------------------------------------------------- Life Insurance Data - -------------------------------------------------------------------------------- 17. Product [_] Whole Life [_] 10-Year Level Term [_] Limited Pay WL [_] APT -------- [_] Enhanced Whole Life [_] Variable Life [_] Modified Whole Life [_] Universal Life [_] --------------------------------------------- 18. Amount of Insurance (a or b) (a) Face Amount $ ----------------------- (b) Face Amount purchased by a premium of $ at premium frequency ---------- applied for in 39. [_] This premium includes all riders. - -------------------------------------------------------------------------------- A10GE197 APPLICATION NO. Page 3 - ------------------------------------------------------------------------------------------------------------------------------------ Life Insurance Data (continued) - ------------------------------------------------------------------------------------------------------------------------------------ 19. Variable Life Net Premium Allocation (must total 100%) 20. Variable Life and Universal Life [_] MML Equity % (a) Planned Premium (at frequency) $ ---------------- --------------------------- [_] MML Money Market % (b) Initial Additional Premium $ ---------------- ------------------------------ [_] MML Managed Bond % (c) Death Benefit Option (if applicable) [_] 1 [_] 2 ---------------- [_] MML Blend % 21. Automatic Premium Loan [_] Yes [_] No ---------------- [_] GPA % (not available on Term or Variable Life) ---------------- [_] Opp. Capital Appreciation % 22. Loan Interest Rate (where elective) ---------------- [_] Opp. Growth % ---------------- [_] Adjustable [_] 8% [_] 6% (VL only) [_] % [_] Opp. Global Securities % ------ ---------------- [_] Opp. Strategic Bond % 23. Policy Date (optional) ---------------- ---------------------- [_] % 24. To Save Issue Age (optional) ---------------------- ---------------- ---------------- - ------------------------------------------------------------------------------------------------------------------------------------ For Variable Life Insurance, the Applicant acknowledges: . Receipt of a prospectus for the policy applied for; . That the variable value of the policy may increase or decrease in accordance with the experience of the Separate Account(s); . That there are no minimum guarantees as to the variable value; . That the fixed value of the policy earns interest at a rate not less than a minimum specified rate; and . That the death benefit may be variable or fixed under specified conditions. - ------------------------------------------------------------------------------------------------------------------------------------ 25. If the policy applied for will be used in connection with an employer-sponsored plan involving both males and females, will the policy be issued on a Unisex basis? [_] Yes [_] No 26. Waiver Of Premium and Disability Benefit Riders on: * [_] Applicant-Adult Insured (Disability Only) [_] Insured (Disability Waiver) (not available on VL) * [_] Applicant-Adult Insured (Death or Disability) [_] Insured (Disability Benefit) (UL and VL only) * [_] Applicant-Juvenile Insured (Death Only) Specified Monthly Amount (VL only) $ * [_] Applicant-Juvenile Insured (Death or Disability) ---------------------- *Complete Supplement A3300 - ------------------------------------------------------------------------------------------------------------------------------------ 27. Other Riders 28. Dividend Option (not available on Variable Life) [_] Accid. Dth Ben $ [_] Guar. Insurability $ [_] Paid-up Additions(not available on Term) --------- ---------- [_] Add'l Life Ins. Purch. (ALIR) $ [_] Dth. Ben. Guar. [_] Reduce Premiums [_] Cash ---------- [_] Ren. Term 1-Yr. $ [_] $ [_] Accumulate at Interest [_] Suppl. Insurance (EWL & -------- ---------------- ---------- LISR) [_] Life Insurance Supplement Rider (LISR) [_] Dividend applied as Yearly } (not available on (a) Requested Supplemental Ins. Amt. $ Term Purchase with balance to: } Term, EWL, or LISR) ------------------------- (b) LISR Annual Premium $ [_] Paid-up Additions [_] Reduce Premiums ------------------------- (c) LISR Lump-Sum Payment $ [_] ------------------------- ------------------------------------------- [_] Cost Of Living Adj.: 29. ALIR Dividend Option (a) Incr. Factor (xx.xx) (b) Expiry Age [_] Paid-up Additions [_] Same as Basic Policy -------- -------- [_] Other Insured Term: (a) Name (b) Amt. $ ------------------------ ------------- (c) Qualified (spouse, child, adopted child, stepchild, self) [_] Y [_] N - ------------------------------------------------------------------------------------------------------------------------------------ 30. Life Insurance currently applied for, contemplated, or now in force on the Insured in other companies. (Exclude amounts shown in 32(a).) If none, check here [_] Currently Name of Other Company (No MassMutual or affiliates) Amount Year(s) Issued or Applied For - ------------------------------------------------------------------------------------------------------------------------------------ $ [_] - ------------------------------------------------------------------------------------------------------------------------------------ [_] - ------------------------------------------------------------------------------------------------------------------------------------ [_] - ------------------------------------------------------------------------------------------------------------------------------------ 31. Total amount of new insurance to be placed currently in all companies $ ------------------------------------ 32. Replacement/Section 1035 Exchange (For each policy listed in (a), include completed replacement forms with this application.) (Do not complete for Term Conversions and Term Exchanges) (a) Will the insurance now being applied for replace or change, or is it intended to replace or change, any insurance or annuity, in whole or in part, issued by this or any other company? [_] Yes [_] No If "Yes," complete the following. Company Name Policy Number Product Face Amount - ------------------------------------------------------------------------------------------------------------------------------------ $ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ (b) If the policy applied for is intended to qualify for a Section 1035 exchange, the approximate value of the policy to be exchanged is $ and will be applied for on the new -------------------------------- policy in the form of: [_] ALIR [_] LISR [_] Additional Premium (UL, VL) [_] Initial Premium (Other Life). (If exchanging another company's policy, the policy, a completed absolute assignment form, and the other company's blank surrender form should accompany this application.) APPLICATION NO. Page 4 - -------------------------------------------------------------------------------- Juvenile Data (ages 0-15) - -------------------------------------------------------------------------------- 33. Total life insurance currently applied for, contemplated, or now in force on Insured's father/mother/siblings in all companies. (Name, age, relationship to Insured, and amount - explain if none) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 34. Total life insurance now in force in all companies on Applicant if other than parent of Insured $ ___________________________________________________ 35. Does the Insured reside with the Applicant? [_] Yes [_] No If "No," the Insured resides with Name ___________________________ Relationship to Insured ___________________ 36. Remarks - -------------------------------------------------------------------------------- Conversion, Exchange, and Option Data - -------------------------------------------------------------------------------- Term Insurance Conversion or Exchange - -------------------------------------------------------------------------------- 37.(a) [_] Conversion of term insurance under policy(ies) numbered: ______________ ______________ ______________ Date of New Policy (required) ____________ Type of Term: ______________ ______________ ______________ If not all of the term insurance is to be converted, complete the following. Balance to be Policy Number Name(s) of Term Rider(s) if applicable Amount to be converted Terminated Continued ---------------------------------------------------------------------------------------------------------------------- [_] [_] ---------------------------------------------------------------------------------------------------------------------- [_] [_] ---------------------------------------------------------------------------------------------------------------------- (b) [_] Exchange of term insurance under policy(ies) numbered _____________ [_] Term policy numbered ___________ is amended by adding the right to exchange the term insurance provided by the policy for new term insurance. It is to be exchanged for the new term insurance applied for in this application. The policy will terminate when this new policy takes effect. Any dividends to the credit of the exchanged policy will be paid in cash. [_] The _________ term rider under policy numbered is amended by adding the right to exchange the term insurance provided by the rider for the new term insurance. It is to be exchanged for the new term policy applied for in this application. The rider will terminate when this new policy takes effect. If the existing policy has more than one term rider and not all of them are being exchanged, identify the one(s) being exchanged:_____________________ -------------------------------------------------------------------- The following applies to conversions only: (c) If the term insurance provides that ADB, GIO/IPR, and/or Waiver Of Premium are to be included in the new policy, the riders will automatically included unless otherwise requested here: Do not include [_] ADB [_] GIO/IPR [_] Waiver Of Premium (d) [_] Policy(ies) listed above in (a) or (b) does not have rider(s) applied for in 27 (requires evidence of insurability). (e) [_] The Face Amount applied for in 18 is greater than the amount available for the conversion; this additional amount is $ __________________ (requires evidence of insurability). - -------------------------------------------------------------------------------- Guaranteed Insurability Option - -------------------------------------------------------------------------------- 38.(a) Option under Policy(ies) Numbered Type of Option Date Amount Being Exercised [_] Regular [_] Substitute $ --------------------------------- ------------------------- [_] Regular [_] Substitute $ --------------------------------- ------------------------- [_] Regular [_] Substitute $ --------------------------------- ------------------------- (b) [_] For Substitute Option Date Reason: [_] marriage [_] birth of child(ren) [_] adoption of child(ren) Date of applicable event: __________ (c) [_] Face Amount applied for in 18 exceeds total of amounts being exercised under option; this additional amount is $ ____________________ (requires evidence of insurability). (d) [_] Original policy(ies) does not have rider(s) applied for in 27 (requires evidence of insurability). A10GE197 APPLICATION NO. Page 5 - -------------------------------------------------------------------------------- Payment Data - -------------------------------------------------------------------------------- 39. Premium Payments (a) Billing Type (b) Frequency [_] Automatic Bank Account Withdrawal [_] Annual [_] Quarterly [_] Regular [_] Semiannual [_] Monthly (not with Regular) [_] Invoice/Franchise [_] ----------------------------------------------------------- 40. Premium Payer: [_] Insured [_] Owner [_] Other -------------------------------------------------------- Mailing Address: [_] Insured's Home [_] Other -------------------------------------------------------- [_] Insured's Business -------------------------------------------------------- [_] Owner's Address -------------------------------------------------------- 41. Has the first premium on the insurance applied for been paid? [_] Yes [_] No If "Yes," amount paid is $ ----------- - ------------------------------------------------------------------------------------------------------------------------------------ Personal Data Regarding the Insured - ------------------------------------------------------------------------------------------------------------------------------------ 42. (a) Has the Insured smoked cigarettes during the past 12 months? [_] Yes [_] No (b) If "No," has the Insured used tobacco or nicotine in any other form during the past 12 months? [_] Yes [_] No (c) Has the Insured used tobacco or nicotine in any form during the past 3 years? (If "Yes," give details in 50.) [_] Yes [_] No - ------------------------------------------------------------------------------------------------------------------------------------ Complete the following only if Evidence of Insurability is required. Explain "Yes" answers in 50. - ------------------------------------------------------------------------------------------------------------------------------------ 43. (a) Insured's Occupation(s) and Exact Duties Occupation(s) Exact Duties ----------------------------------------------------------- ---------------------------------------------------------- ----------------------------------------------------------- ---------------------------------------------------------- (b) Length of time with current employer ______________________________ (If less than 6 mos., give name(s) of previous employer(s), occupation(s), duties, and dates of employment for last three years in 50.) 44. Insured's current driver's license no. State -------------------------------------------- -------------------- 45. Does the Insured now contemplate any foreign travel? [_] Yes [_] No 46. Within the last 3 years has the Insured been, or does the Insured now expect to become, a pilot, student pilot, or crew member of any type of aircraft? If "Yes," complete Aviation Supplement A3310 [_] Yes [_] No 47. Within the last 3 years has the Insured taken part in, or does the Insured now expect to take part in, underwater diving, hang gliding, para sailing, para kiting, parachuting, skydiving, mountain climbing, or organized racing by automobile, motorcycle, motorboat, or snowmobile, or any other form(s) of hazardous activity? If "Yes," complete Avocation Supplement A3320 [_] Yes [_] No 48. Within the last 5 years has the Insured been in a motor vehicle accident, been convicted of operating a motor vehicle while under the influence of alcohol or other drugs, been convicted of a moving violation, or received a driver's license restriction or revocation? [_] Yes [_] No 49. Has the Insured ever been convicted of a felony? [_] Yes [_] No 50. Remarks A10GE197 APPLICATION NO. Page 6 - -------------------------------------------------------------------------------- Agreement And Signatures - -------------------------------------------------------------------------------- The person(s) signing below agree that: The Application - This is Part 1 of an application for Life Insurance. The application includes any Part 2 that may be required and any amendments and supplements to either Part. To the best of the knowledge and belief of the person(s) signing below, all statements in this Part 1 are complete and true and were correctly recorded. Each person signing below adopts all of the statements made in the application and agrees to be bound by them. Company, as used in this Application, refers to Massachusetts Mutual Life Insurance Company and/or MML Bay State Life Insurance Company and/or C.M. Life Insurance Company. Liability of Company - The insurance applied for will not take effect unless each of the applicable conditions is met: 1. For all cases: The first premium has been paid during the lifetime of all ------------- persons to be insured by the policy and the application has been approved by the Company at its Home Office/Principal Administrative Office. 2. For insurance purchased under a guaranteed insurability rider or ---------------------------------------------------------------- agreement: The first premium must be paid within the time period specified --------- in the rider or agreement. If all applicable conditions are met, the insurance purchased under such rider or agreement becomes effective according to its terms. 3. For conversion or exchange: The policy that provides the insurance being -------------------------- converted or exchanged must be received by the Company at it Home Office/Principal Administrative Office. The first premium may be reduced by any conversion allowances permitted. If all applicable conditions are met, the insurance purchased under an exchange or conversion becomes effective, and coverage being converted or exchanged terminates, on the Issue Date of the policy applied for. 4. For insurance not provided for in 2 or 3 above: The first premium may be ---------------------------------------------- paid to the agent in exchange for a Temporary Life Insurance Receipt signed by that agent. If this is done, the Company shall be liable only as set forth in that Receipt. If not, (i) the policy must be delivered to the person named as Owner therein; and (ii) at the time of payment and delivery, all statements that relate to the insurability of all persons to be insured under the policy are complete and true as though they were made at that time. Authority of Agents - No agent can change the terms of this application or any policy issued by the Company. No agent can waive any of the Company's rights or requirements or extend the time for any payment. Changes and Corrections - Any change or correction of the application will be shown on an Amendment of Application attached to the policy. Acceptance of any policy issued shall be acceptance of any change or correction of the application made by the Company. However, any correction or change of amount, classification, plan of insurance, or riders applied for in this application must be agreed to in writing. Authorization To Obtain And Disclose Information (For The Insured And/Or Applicant) - I have received the Notice about the Medical Information Bureau, Inc. (MIB). I have also received the Notice about the Fair Credit Reporting Act. I understand and authorize an investigative report to be made. This report may include information about my character, general reputation, personal characteristics, and mode of living. I hereby authorize certain parties that have any records or knowledge of me and my health (or my children and their health if juvenile insurance), to make such information available to the Company and its reinsurers. These parties include: any licensed physician, medical practitioner, hospital, clinic, other medical or medically related facility, insurance company, the MIB, or other organization. I agree that a photocopy or facsimile of this authorization may be used to obtain information. - -------------------------------------------------------------------------------- ANY POLICY ISSUED AS A RESULT OF A MATERIAL MISSTATEMENT OR OMISSION OF FACTS MAY BE VOIDED, AND THE COMPANY'S ONLY OBLIGATION SHALL BE TO RETURN PREMIUMS PAID. - -------------------------------------------------------------------------------- For All Cases For Conversions, Exchanges, and Option Purchases Proposed Insured (if age 16 or older) Owner of Original Policy - ---------------------------------------------------- ------------------------------------------------------ Applicant, as given in 10 (if not Proposed Insured) Assignee of Original Policy - ---------------------------------------------------- ------------------------------------------------------ - -------------------------------------------------------------------------------------------------------------- Signed at on ------------------------------------------------------------------------- ------------------------- city state date - -------------------------------------------------------------------------------------------------------------- General Agent submitting application (Agcy. No.) Agent who actually solicited this application (print name here) - ------------------------------------------------- --------------------------------------------- ----------------- - ----------------------------------------------------------------------------------------------------------------------------- A10GE197 Massachusetts Mutual Life Insurance Company and affiliated insurance companies Springfield MA 01111-0001 Taxpayer Identification - The Owner of the policy applied for herein certifies, under penalties of perjury, that: (i) the number referred to in 5 or 13 of this application is his/her correct Taxpayer Identification Number (or he/she is waiting for a number to be issued); and (ii) he/she is not subject to backup withholding either because he/she has not been notified by the Internal Revenue Service (IRS) that he/she is subject to backup withholding as a result of a failure to report all interest or dividends, or the IRS has notified him/her that he/she is no longer subject to backup withholding. If the IRS has notified the Owner that he/she is subject to backup withholding and he/she has not received notice from the IRS that backup withholding has terminated, he/she should strike out the language here in (ii) that he/she is not subject to backup withholding due to notified payee underreporting. on - --------------------------------------------------- ------------------------- Signature of Owner of New Policy Date APPLICATION NO. Massachusetts Mutual Life Insurance Company and Affiliated Insurance Companies Investor Account Card This suitability form is required for all variable products unless otherwise directed. - ------------------------------------------------------------------------------------------------------------------------------------ 1. Owner's Name _____________________________________________ 2. Approximate net worth (exclusive of home, fur- nishings, and automobiles) ------------------------------------------------ For non-individually owned contracts, leave 3 through 9 blank. 3. Number of Dependents _________________________________ 4. Age(s) of Dependents __________________________ 5. Owner's Date of Birth ________________________________ 6. Estimated current annual household income -------------------------------------------------------------- Earned Unearned $ _________________________ $ __________________________ -------------------------------------------------------------- 7. Name of Owner's Employer __________________________________ 8.Owner's Occupation _______________________________________ no. & street city state zip 9. Address of Employer ______________________________________________________________________|__|__|__|__|__|-|__|__|__|__| 10. Is Employer a member of the NASD? 11. Owner's estimated Federal Income Tax bracket [_] Yes [_] No [_] 15% [_] 28% [_] 31% _______ % 12. Investment Objectives: (check all that apply) [_] Growth of Assets [_] Conservation of Principal [_] Other (specify) _____________________________ [_] Retirement Income [_] Tax Sheltered Accumulations 13. I am comfortable assuming: (check all that apply) [_] Low Risk [_] Moderate Risk [_] High Risk [_] Other (specify) _____________________________ 14. Source of Funds: [_] Current Income [_] Qualified Plan Distribution [_] IRA Rollover [_] Personal Savings [_] Mutual Fund Redemption [_] Other (specify) _____________________________ [_] CD/Money Market Fund [_] Insurance Proceeds If the owner of this contract is other than an individual, i.e. trust, guardian, conservator, etc., substantiating documents that include authorized signatures must be submitted. 15. Comments: 16. To the best of my knowledge, the above answers are true and correctly recorded. I believe the contract or policy applied for is suitable for my investment objectives. _____________________________________________________________ ____________________________________________________________ Signature of Owner Date - ------------------------------------------------------------------------------------------------------------------------------------ 17. Attestation of Registered Representative The Owner listed above has been informed of the risks involved in this investment, and I certify that I have reasonable grounds for believing that this contract or policy is suitable for the Owner's objectives. _____________________________________________________________ ____________________________________________________________ Signature of Registered Representative Date - ------------------------------------------------------------------------------------------------------------------------------------ 18. Home Office Use Only _____________________________________________________________ ____________________________________________________________ Approval of Authorized Principal Date Comments: - ------------------------------------------------------------------------------------------------------------------------------------ LAC-9700 APPLICATION NO. AGENT'S STATEMENT - ------------------------------------------------------------------------------- Complete for all cases - ------------------------------------------------------------------------------- Additional Issue Information 1. Is best underwriting class anticipated? [_] Yes [_] No 2. If Insured's name is to appear on the policy other than as "First Name- Middle Initial-Last Name," specify below -------------------------------------------------------------------------- 3. (a) Is application from a new premium-payer client to the company? [_] Yes [_] No (b) If the Insured is a previous client, give the Client Identification No. --------------------------------- 4. How long have you known the Insured? _____________________________________ 5. How well do you know the Insured? [_] Very well [_] Casually [_] Met on solicitation(Give details in 22.) 6. (a) Insured's Annual Earned Income Actual Agent Estimate ------ ------ -------------- $ _______________________________ [_] [_] (b) Insured's Annual Unearned Income -------- $ _______________________________ [_] [_] (c) Spouse's Total Annual Income $ _______________________________ [_] [_] (d) Insured's Net Financial Worth $ _______________________________ [_] [_] 7. Insured's Marital Status [_] Single [_] Married [_] Widowed [_] Divorced 8. Do you have any knowledge of a present disability of the Insured? [_] Yes [_] No (If "Yes," explain in 22.) 9. (a) Soliciting Agent telephone (if different from agency) ------------------------------ (b) Insured's telephone (Best time of day to call _________________________) Home _________-_________-_________ Business _________-_________-________ 10. (a) To the best of your knowledge, during the last six months has any policy on the life of the Insured been, or if the application is approved is it contemplated that any policy will subsequently be, surrendered or otherwise terminated, lapsed, or placed on other than a premium-paying basis, rewritten to release cash values, reduced in amount or term of coverage, assigned as collateral for a loan, or subjected to borrowing of loan values? [_] Yes [_] No (If "Yes," complete the following.) Company Name Policy Number Product Face Amount --------------------------------------------------------------------- $ --------------------------------------------------------------------- $ --------------------------------------------------------------------- $ --------------------------------------------------------------------- (b) Have you delivered the appropriate replacement form? [_] Yes [_] No (c) Is a copy of the sales illustration used being forwarded with this application? [_] Yes [_] No 11. If ALIR is requested, to the best of your understanding ALIR payments will be [_] for one year [_] on a continuing basis 12. (a) Will dividends from any existing MassMutual Policy be used to pay all or part of the initial premium on this policy? [_] Yes [_] No (If "Yes," complete Form F5341.) (b) Will initial premium be paid by a loan from any MassMutual policy? [_] Yes [_] No (If "Yes," complete Form F5341.) Information About This Sale 13. Was this application taken by mail? [_] Yes [_] No 14. Supporting information for a business-related sale (a) Business is a: [_] Sole Proprietorship [_] Partnership [_] Corporation Year established ___________ No. of employees ____________ (b) If policy is to be owned by a business or business associate, give names of the other officers or partners and the amount of insurance the business now carries on their lives. (If any officers or partners are not insured, explain in 22.) Name Title Amount ________________________ __________________ $_______________ ________________________ __________________ $_______________ ________________________ __________________ $_______________ 15. (a) Is this part of a multi-life case? [_] Yes [_]No (b) If yes, total number of applications _______ (c) Was census submitted to Home Office? [_] Yes [_]No (d) Guaranteed Acceptance Prog. for Exec. (GAPE)? [_] Yes [_]No (e) Is any policy to be part of a: [_] Pension/Profit Sharing Plan [_] Split Dollar Plan 16. If Split Dollar, Method: [_]Endorsement [_]Collateral Assignment 17. Primary purpose of insurance(check one only) Personal Needs: [_] Mortgage Cancellation [_] Retirement [_] Estate Taxes [_] Income for Dependents [_] Education Fund [_] Gifts/Bequests [_] Other Personal Needs(Explain in 22.) Business Needs: [_] Stock Redemption [_] Cross Purchase [_] Key Employee [_] Deferred Compensation [_] Sec.162 Bonus Plan [_] Other Business Needs(Explain in 22.) Agent and Compensation Information 18. (a) Are you the Proposed Insured? [_] Yes [_]No (b) Is Insured your spouse/child/parent/sibling? [_] Yes [_]No 19. If you are not a full-time MassMutual Agent, what is your primary company affiliation? _________________________________________ 20. List below the agent(s) who will receive commissions. If more than one, enter percentage applicable to each. Agent's Name Ident. Code First Yr. % Ren'l % 1. ________________ __________________ _____________ ___________ 2. ________________ __________________ _____________ ___________ 3. ________________ __________________ _____________ ___________ 4. ________________ __________________ _____________ ___________ 5. ________________ __________________ _____________ ___________ 6. ________________ __________________ _____________ ___________ 100% 100% 21. If the sale of this policy will be credited to more than one General Agency, specify below: Agency Name Agency No. % of Split __________________ __________________ _________________ __________________ __________________ _________________ 100% 22. Remarks - -------------------------------------------------------------------------------- Date ______________________ Signature of Soliciting Agent ____________________ - -------------------------------------------------------------------------------- A1AGE197 APPLICATION NO. TEMPORARY LIFE INSURANCE RECEIPT To: [_] Massachusetts Mutual Life Insurance Co. [_] MML Bay State Life Insurance Co. [_] C.M. Life Insurance Co. Springfield, Massachusetts 01111-0001 140 Garden St., Hartford, CT 0615 Person(s) Proposed _____________________________________________________________________________________________________ for Insurance Last Name First Name Initial Suffix (e.g., Jr., III) (please print) _____________________________________________________________________________________________________ Last Name First Name Initial Suffix (e.g., Jr., III) ==================================================================================================================================== Health Questions (If more than one person is proposed for insurance and a "Yes" answer applies to either one, the question must be answered "Yes." No agent is authorized to accept premium if any of the questions are answered "Yes" or left unanswered.) Has the Proposed Insured(s): 1. Ever been treated for, or been diagnosed by a member of the medical profession as having, cancer, stroke, or disease of the heart? [_] Yes [_] No 2. In the last 10 years applied for life insurance and been declined, postponed, rated, or restricted? [_] Yes [_] No 3. In the last 90 days been admitted, or been advised by a member of the medical profession to be admitted, to a hospital or other medical facility? [_] Yes [_] No 4. Ever been treated for, or been diagnosed by a member of the medical profession as having, a deficiency of the immune system such as acquired immune deficiency syndrome (AIDS)? [_] Yes [_] No R10GE197 (Company Part) (continued on reverse side) - ------------------------------------------------------------------------------------------------------------------------------------ 1296105901 TEMPORARY LIFE INSURANCE RECEIPT APPLICATION NO. Company: [_] Massachusetts Mutual Life Insurance Co. [_] MML Bay State Life Insurance Co. [_] C.M. Life Insurance Co. Springfield, Massachusetts 01111-0001 140 Garden St., Hartford, CT 06154 Payment in the amount of $ ______________________________ for life insurance on ____________________________________________________ ____________________________________________________________________________________________________________________________________ Print Name of Proposed Insured(s) was received by _________________________________________________________ on _____________________________________________________ . Agent's Signature Date IMPORTANT: THIS RECEIPT PROVIDES A LIMITED AMOUNT OF LIFE INSURANCE FOR A LIMITED PERIOD OF TIME. THE LIFE INSURANCE IS SUBJECT TO THE PROVISIONS OF THIS RECEIPT. NO LIFE INSURANCE GOES INTO EFFECT UNDER THIS RECEIPT UNLESS (i) ALL HEALTH QUESTIONS WERE ANSWERED "NO" AND (ii) PART 1 OF THE APPLICATION FOR LIFE INSURANCE HAS BEEN COMPLETED AS OF THE DATE OF THIS RECEIPT. NO LIFE INSURANCE GOES INTO EFFECT UNDER THIS RECEIPT FOR AMOUNTS APPLIED FOR UNDER CONVERSION OR GUARANTEED-INSURABILITY OPTIONS. - ------------------------------------------------------------------------------------------------------------------------------------ Temporary Life Insurance Subject to the limitations stated in this receipt, the temporary life insurance provided by this receipt becomes effective as of the date of this receipt. The temporary life insurance provided by this receipt continues to, but not including, the earliest of: 1. The date 60 days after the date the temporary life insurance becomes effective; 2. The date the life insurance applied for is approved; 3. The date a policy, other than as applied for, is presented to the applicant for acceptance or rejection; 4. If the application is rejected, the date the Company mails the notice of rejection and refunds the payment made; 5. The date the premium payer requests from the Company a refund of the amount paid under this receipt. If benefits are payable under the policy issued pursuant to the application for insurance, no benefits are payable under this receipt. (continued on reverse side) R10GE197 COMPANY'S LIABILITY Subject to the provisions of this receipt, the amount of temporary life insurance is equal to the amount of life insurance applied for, including any riders. However, the amount of temporary life insurance plus the life insurance under any other receipt(s) the Company has outstanding on each person proposed for insurance cannot exceed the following limits: Age* Limit Age* Limit under 56 $1,000,000 66-70 $250,000 56-60 750,000 71-75 100,000 61-65 500,000 over 75 0 *Age means the age, on the birthday nearest the date of this receipt, of each person proposed for insurance. These limits include amounts under any accidental death benefit agreement or rider applied for. If the amount of insurance applied for exceeds these limits, the Company's only liability for the excess will be to return the amount of payment made for it. If any Proposed Insured commits suicide, while sane or insane, the Company's only liability under this receipt is to refund the payment made. If the check or draft received in payment for the premium is not honored when first presented for payment, coverage under this receipt is void. CONTESTABILITY We rely on all statements made by or for the Proposed Insured(s) in this receipt and in the application. The Company can contest the validity of the temporary life insurance for any material misrepresentation of fact either in the health questions stated in this receipt or in the application numbered above. AUTHORITY OF AGENT No agent can change the terms of this receipt, or the application, or any policy issued by the Company. No agent can waive any conditions or extend the time requirements to meet them. No agent is authorized to accept premium before Part 1 of the application for life insurance has been completed. No agent is authorized to accept premium if any of the health questions stated on the Company Part of this receipt are answered "Yes" or left unanswered. (Premium Payer Part) ................................................................................ Payment in the amount of $ was received on ---------------- -------------------- Date AGREEMENT AND SIGNATURES The person(s) signing below agree that: They have received and read (or had read to them) the receipt detached from this form for the amount indicated above. They understand and agree to its terms and conditions. To the best of their knowledge and belief, the answers to all health questions stated on the reverse side are complete and true and were correctly recorded before they signed their name(s) below. - ------------------------------------------------ Premium Payer - ------------------------------------------------ ------------------------------ Person(s) Proposed for Insurance (if different) Signed at on ---------------------------------------- -------------------------- City State Date (Company Part) R10GE197 (Company Part) Notice To Insured And/Or Applicant For Insurance Thank you for applying for insurance with us. We will give your application prompt consideration and will notify you of our action as soon as possible. In addition to your answers on the application, we must also consider information from other sources. These sources may include results of a physical examination, an investigative consumer report, and reports from doctors who have attended you or from hospitals where you have been treated. MEDICAL INFORMATION BUREAU NOTICE - Information regarding your insurability will be treated as confidential. We or our reinsurers may, however, make a brief report thereon to the Medical Information Bureau, Inc., a non-profit membership organization of life insurance companies, which operates an information exchange on behalf of its members. If you apply to another Bureau member company for life or health insurance coverage, or a claim for benefits is submitted to such a company, the Bureau, upon request, will supply that company with the information it may have in its files. Upon receipt of a request from you, the Bureau will arrange disclosure of any information it may have in your file. Unless the Medical Director feels that it is in your best interest to disclose this information to your physician, it will be disclosed directly to you. If you question the accuracy of information in the Bureau's file, you may contact the Bureau and seek a correction in accordance with the procedures set forth in the federal Fair Credit Reporting Act. The address of the Bureau's information office is Post Office Box 105, Essex Station, Boston, Massachusetts 02112, telephone number (617) 426-3660. We or our reinsurers may also release information in our file to other life insurance companies to whom you may apply for life or health insurance, or to whom a claim for benefits may be submitted. The purpose of the Bureau is to protect its member companies and their policyholders from the costs created by people who try to hide facts about their insurability. Information furnished by the Bureau cannot be used as a basis for evaluating risks. However it may be used to alert us to the possible need for further investigation. THE BUREAU DOES NOT HAVE MEDICAL REPORTS FROM HOSPITALS AND DOCTORS. THE INFORMATION IN ITS FILES DOES NOT SHOW WHETHER AN INSURANCE APPLICATION WAS ACCEPTED, PLACED IN AN INCREASED PREMIUM CLASS OR DECLINED. (This Notice is only valid where permitted by law). FAIR CREDIT REPORTING ACT NOTICE - As previously noted, an investigative consumer report may be made on you. It will cover information about your insurability, including information regarding your character, general reputation, personal characteristics and mode of living. The information may be obtained through personal interviews with you, an adult family member, friends, neighbors and associates. You may send us a written request for a complete and accurate disclosure of the nature and scope of any report that is made. If requested, we will be happy to let you know whether or not we asked for an investigative consumer report to be made. If we did, we will also tell you the name and address of the consumer reporting agency that furnished the report. By contacting that agency, you may inspect and receive a copy of the report. OUR PURPOSE - Part of our basic Company purpose is to provide insurance at the lowest possible cost. The underwriting process is necessary both to assure this low cost and to make sure that each policyholder contributes his or her fair share of the cost. The procedures described above benefit you as a policyholder, because they assist us in providing your insurance at the lowest possible cost. N148-9000 Adult [LOGO OF MASSMUTUAL APPEARS HERE] Form Application Part 2 (A50GE) - General Version This application may be completed for all products when the Proposed Insured's insurance age is 16 years or older. (Use Juvenile Form Part 2, A55, for ages 0 through 15.) - -------------------------------------------------------------------------------- Contents Part 2 of Application: . For use by an Authorized Agent with Non-Medical Privilege . For use by an Authorized Examiner - -------------------------------------------------------------------------------- See additional information on reverse side Massachusetts Mutual Life Insurance Company and affiliated insurance companies Springfield MA 01111-0001 A50GE197 There is a direct relationship between providing complete and accurate medical history and facilitating the underwriting and issue cycle so that clients receive the best possible service. Avoid The Common Reasons For Delays In Processing ================================================================================ 1. If amount limits, underwriting requirements, etc. qualify the Proposed Insured non-medically, do not have the client examined. 2. Answer all questions completely - . Ensure that all required questions are answered. Don't skip any "yes/no" questions. . Fully describe all medical history and findings. . A history should be described thoroughly but concisely so that the "who, what, when and why" are clear to the reader. . When the Proposed Insured is unclear as to the specifics, try to include as much information as possible, particularly as to the relevant dates, names and addresses of physicians, hospitals, etc. . In "Explanatory Details and Remarks," reference to the precise "Question ------- Number" is important. For example, if reference is to a question with more than one part, do not enter the Question Number as "5"; use "5c" even though it may seem obvious which part of the question is being referred to. 3. Ensure that all necessary signatures have been obtained (Proposed Insured, Witness, Examiner) and, where forms require dating, the dates have been included. General Instructions ================================================================================ Medical ------- . When scheduling an exam, furnish the client with the name of the soliciting agent, agency name and number and the total amount of insurance applied for so this information may be included by the examiner at the bottom of page 3. . If an examiner has not previously been authorized by the Home Office, authorization should be obtained from the Medical Examiner's Section of New Business before the exam is performed. Form M1300, Explanation ------ of Using Unauthorized Examiner, should also be completed. Non-medical ----------- . If the Proposed Insured is a member of the agent's immediate family, the "Witness" area of the Part 2 is to be signed by the agent and --- either the General Agent or the authorized Manager. A50GE197 APPLICATION (PART 2) APPLICATION NO. To: [_] Massachusetts Mutual Life Insurance Co. [_] MML Bay State Life Insurance Co. [_] C.M. Life Insurance Co. Springfield, Massachusetts 01111-0001 140 Garden St., Hartford, CT 06154 - -------------------------------------------------------------------------------- Personal Information - -------------------------------------------------------------------------------- In all cases, the terms "you" and "your" refer to the Proposed Insured. 1. a. Full name of Proposed Insured First Name [_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_] Middle Name [_][_][_][_][_][_][_][_][_][_][_][_][_][_] Last Name [_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_] Suffix [_][_][_] (e.g. Jr., III) mo. day yr. b. Date of Birth _______________________________________________________________ c. Client ID (If known) ________________________________________________________ d. Social Security No. [_][_][_] [_][_] [_][_][_][_] - -------------------------------------------------------------------------------- Do not complete 2 if being medically examined. 2. a. Height in shoes ______ ft. _____ in. b. Weight (clothed) __________ lbs. c. Loss in weight in the past year? [_] Yes [_] No If "Yes," Amount ________ lbs. Reason __________________________________ - -------------------------------------------------------------------------------- Age if Age at 3. Family History Living Death Cause of Death - -------------------------------------------------------------------------------- a. Father - -------------------------------------------------------------------------------- b. Mother - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- General Health - -------------------------------------------------------------------------------- If "Yes" to any question, please explain in 11 below. Yes No - -------------------------------------------------------------------------------- 4. Have any of your parents, brothers or sisters: a. had cardiovascular disease prior to age 60?............. [_] [_] b. ever had diabetes, kidney disease, or other familial Disorder?............................................... [_] [_] - -------------------------------------------------------------------------------- 5. a. Have you smoked cigarettes in the past 12 months?....... [_] [_] b. If "No," have you used tobacco or nicotine in any other form during the past 12 months?......................... [_] [_] c. Have you used tobacco or nicotine in any form during the past 3 years?....................................... [_] [_] - -------------------------------------------------------------------------------- 6. Have you ever received any treatment in relation to alcoholism or use of alcohol?.............................. [_] [_] - -------------------------------------------------------------------------------- 7. Have you ever used barbiturates, narcotics, cocaine or other controlled substances not prescribed by a physician?. [_] [_] - -------------------------------------------------------------------------------- 8. Have you applied for life or health insurance and been declined, postponed, rated or restricted in the last ten years?................................................. [_] [_] - -------------------------------------------------------------------------------- 9. Have you ever requested or received a pension, benefits, or payment because of an injury, sickness or disability?... [_] [_] - -------------------------------------------------------------------------------- 10. Have you been treated for, or been diagnosed by a member of the medical profession as having, a deficiency of the immune system such as acquired immune deficiency syndrome (AIDS) or AIDS related complex (ARC)?...................... [_] [_] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 11. COMPLETE 11 FOR EACH "YES" ANSWER IN 4 - 10 ABOVE - -------------------------------------------------------------------------------- Question Number Explanatory Details and Remarks - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- A50GE197 Page 2 APPLICATION NO. - -------------------------------------------------------------------------------- Medical History - -------------------------------------------------------------------------------- Complete 29 Below For Each Medical History Checked in 12 - 27 For Questions 12 - 27, have you ever been advised of, treated for, or had any known indication of: - -------------------------------------------------------------------------------- 12. ASTHMA OR BRONCHITIS [_] Not Applicable Type: a - [_] Asthma b - [_] Bronchitis c - [_] Chronic Bronchitis d - [_] Other ______________________ (specify) Yes No [_] [_] Wheezing between acute attacks? [_] [_] Are the symptoms continuing? - -------------------------------------------------------------------------------- 13. ARTHRITIS [_] Not Applicable Type: a - [_] Degenerative/Osteoarthritis b - [_] Rheumatoid c - [_] Gouty d - [_] Other ______________________ (specify) Bones or joints involved _________________ __________________________________________ - -------------------------------------------------------------------------------- 14. ULCER [_] Not Applicable Type: a - [_] Duodenal b - [_] Gastric (stomach) c - [_] Other ______________________ (specify) Yes No [_] [_] Have you had a bleeding ulcer? [_] [_] Do you now have symptoms? [_] [_] Was surgery required? - -------------------------------------------------------------------------------- 15. COLITIS OR ILEITIS [_] Not Applicable Type: a - [_] Spastic or Mucous Colitis b - [_] Ulcerative Colitis c - [_] Crohn's Disease (Ileitis) d - [_] Other ______________________ (specify) Yes No [_] [_] Was there associated bleeding? [_] [_] Do you now have symptoms? - -------------------------------------------------------------------------------- 16. CYSTS [_] Not Applicable a - Type: ________________________________ (specify) [_] Check here if removed Pathology: [_] Benign (non cancerous) [_] Malignant (cancerous) b - Type: ________________________________ (specify) [_] Check here if removed Pathology: [_] Benign (non cancerous) [_] Malignant (cancerous) - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------------ 17. Disorder of: a-[_] Eyes b-[_] Ears c-[_] Nose d-[_] Throat e-[_] None of These - ------------------------------------------------------------------------------------------------------------------------------------ 18. a-[_] Spine c-[_] Back e-[_] Muscles g-[_] Joints b-[_] Bones d-[_] Neck f-[_] Nerves (incl. Neuritis) h-[_] None of These - ------------------------------------------------------------------------------------------------------------------------------------ 19. a-[_] Fainting c-[_] Convulsions e-[_] Recurrent Headache g-[_] Nervous Disorder b-[_] Dizziness d-[_] Paralysis f-[_] Stroke h-[_] Mental Disorder i-[_] None of These - ------------------------------------------------------------------------------------------------------------------------------------ 20. a-[_] Pneumonia d-[_] Pleurisy g-[_] Persistent Hoarseness b-[_] Emphysema e-[_] Shortness of Breath h-[_] Chronic Respiratory i-[_] None of These c-[_] Tuberculosis f-[_] Persistent Cough Disorder - ------------------------------------------------------------------------------------------------------------------------------------ 21. a-[_] High Blood Pressure c-[_] Heart Murmur e-[_] Heart Attack g-[_] Blood Vessel Disorder b-[_] Rheumatic Fever d-[_] Palpitation f-[_] Chest Pain h-[_] Heart Disorder i-[_] None of These - ------------------------------------------------------------------------------------------------------------------------------------ 22. a-[_] Hemorrhoids d-[_] Anorexia Nervosa g-[_] Recurrent Indigestion j-[_] Intestinal Disorder b-[_] Hepatitis e-[_] Bulimia h-[_] Stomach Disorder k-[_] Gallbladder Disorder c-[_] Diverticulitis f-[_] Liver Disorder i-[_] Recurrent Diarrhea l-[_] Intestinal Bleeding m-[_] None of These - ------------------------------------------------------------------------------------------------------------------------------------ 23. a-[_] Kidney Stone d-[_] Sugar in Urine g-[_] Kidney Disorder i-[_] Pus in Urine b-[_] Albumin in Urine e-[_] Prostate Disorder h-[_] Reproductive System j-[_] Sexually Transmitted c-[_] Blood in Urine f-[_] Bladder Disorder Disorder Disease k-[_] None of These - ------------------------------------------------------------------------------------------------------------------------------------ 24. a-[_] Diabetes b-[_] Thyroid Disorder c-[_] Endocrine (glandular) Disorder d-[_] None of These - ------------------------------------------------------------------------------------------------------------------------------------ 25. a-[_] Allergies c-[_] Leukemia e-[_] Congenital Disorder g-[_] None of These b-[_] Anemia d-[_] Blood Disorder f-[_] Recurrent Infections - ------------------------------------------------------------------------------------------------------------------------------------ 26. a-[_] Sciatica c-[_] Lameness e-[_] Amputation g-[_] None of These b-[_] Gout d-[_] Deformity f-[_] Speech Defect - ------------------------------------------------------------------------------------------------------------------------------------ 27. a-[_] Skin Cancer c-[_] Cancer e-[_] Tumor b-[_] Fibroids d-[_] Skin Disorder f-[_] Lymph Gland Disorder g-[_] None of These - ------------------------------------------------------------------------------------------------------------------------------------ - -------------------------------------------------------------------------------- Other Medical Information and Details - -------------------------------------------------------------------------------- 28. Other than previously stated in this application, within the last five years ------------------------------------------------ have you: Yes No a. Had any mental or physical disorder?.......................... [_] [_] b. Had a consultation, surgery, or injury requiring treatment by a physician, hospital or other medical facility?........... [_] [_] c. Had any electrocardiogram, x-ray or other diagnostic test?.... [_] [_] d. Been advised to have medical treatment, diagnostic tests, hospitalization or surgery which was not completed; or are you now planning to seek such advice or treatment?..... [_] [_] e. Been, or are you currently, under treatment or taking any medication?............................................... [_] [_] For each item checked "Yes," enter details in 29. A50GE197 APPLICATION NO. - ------------------------------------------------------------------------------------------------------------------------------------ COMPLETE 29 FOR EACH APPROPRIATE ITEM CHECKED IN 12 - 28 ABOVE - ------------------------------------------------------------------------------------------------------------------------------------ 29. Explanatory Details and Remarks for Medical History (Use form A51 for additional histories). - ------------------------------------------------------------------------------------------------------------------------------------ A. Ques. Medication/ Still Under # of Attacks/ Dates (mo/yr) No. Diagnosis Treatment Treatment Occurrences Onset Recovery --------------------------------------------------------------------------------------------------------------------------------- [_]Yes [_]No ------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------------------------------------- Physician / Medical Facility Name Address ZIP ---------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------------ B. Ques. Medication/ Still Under # of Attacks/ Dates (mo/yr) No. Diagnosis Treatment Treatment Occurrences Onset Recovery --------------------------------------------------------------------------------------------------------------------------------- [_]Yes [_]No ------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------------------------------------- Physician / Medical Facility Name Address ZIP ---------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------------ C. Ques. Medication/ Still Under # of Attacks/ Dates (mo/yr) No. Diagnosis Treatment Treatment Occurrences Onset Recovery --------------------------------------------------------------------------------------------------------------------------------- [_]Yes [_]No ------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------------------------------------- Physician / Medical Facility Name Address ZIP ---------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------------ D. Ques. Medication/ Still Under # of Attacks/ Dates (mo/yr) No. Diagnosis Treatment Treatment Occurrences Onset Recovery --------------------------------------------------------------------------------------------------------------------------------- [_]Yes [_]No ------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------------------------------------- Physician / Medical Facility Name Address ZIP ---------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------------ 30. Personal Physician Information a. [_] Name / Address given in: [_] 29A [_] 29B [_] 29C [_] 29D b. Reason you last consulted this physician [_] Have no personal physician [_] As indicated in: [_] 29A [_] 29B [_] 29C [_] 29D [_] Other - give Personal Physician Name / Address here: [_] Routine or General Exam - all findings normal [_] Other - give details here: Physician Name Date Last Seen - ---------------------------------------------------------------------- ---------------------------------------- Address Diagnosis or Reason Last Seen - ---------------------------------------------------------------------- -------------------------------------- City State ZIP Medication/ Treatment - ---------------------------------------------------------------------- --------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------------ Agreement and Signatures I agree that: (1) this application consists of Parts 1 and 2 and any amendments and supplements which shall be attached to the policy if issued and (2) no knowledge on the part of any agent, medical examiner or any other person as to any facts pertaining to me shall be considered as having been made to or brought to the knowledge of the Company unless stated in either Part 1 or part 2 of this application or any amendments or supplements. To the best of my knowledge and belief, all information is complete and true and was correctly recorded before I signed my name below. Signed at on , 19 --------------------------------------------------------------- ------------------------- -------------- city state date Witness Proposed Insured ----------------------------------------------- ------------------------------------------------------ Medical Examiner - or Agent if Non-Medical - ------------------------------------------------------------------------------------------------------------------------------------ A50GE197 Amount Agency Agency Printed Name Applied For $ Name No. of Agent ------------------------ ------------------------- ------------------- -------------------------------- APPLICATION NO. MEDICAL EXAMINER'S REPORT EXAMINATION TO BE MADE IN PRIVATE AND THIS BLANK TO BE COMPLETED BY THE MEDICAL EXAMINER IN HIS OR HER HANDWRITING - -------------------------------------------------------------------------------- 1. A. Height in shoes ft. in. ----------- ---------- B. Weight (clothed) lbs. ------------- C. Loss in weight the past year [_] Yes [_] No If "Yes", Amount lbs. Reason -------- ------------------------------- - -------------------------------------------------------------------------------- 2. BLOOD PRESSURE (sitting): If first reading over 140/90 or under 110/70, make two additional readings. ---------------------------------------------------- Systolic ---------------------------------------------------- Diastolic (fifth phase) - -------------------------------------------------------------------------------- 3. PULSE: At Rest After Exercise 3 Minutes Later Rate ---------------------------------------------------- Irregularities per min. - -------------------------------------------------------------------------------- 4. HEART: Is there any Enlargement [_] Yes [_] No Dyspnea [_] Yes [_] No Murmur(s) [_] Yes [_] No Edema [_] Yes [_] No (Describe below - if more than one, describe separately) ----------------- Location Murmur Murmur 1. 2. Indicate: ----------------- Frequency: - Constant [_] [_] - Inconstant [_] [_] Apex by X. Transmission: [GRAPHIC - Transmitted [_] [_] OF RIBCAGE - Localized [_] [_] Murmur area by O. APPEARS HERE] Timing: Point of greatest - Systolic [_] [_] intensity by M. - Diastolic [_] [_] - Presystolic [_] [_] Transmission by Grade: - Soft (Gr. 1 - 2) [_] [_] Based on the history and examination, - Mod. (Gr. 3 - 4) [_] [_] what is your impression? - Loud (Gr. 5 - 6) [_] [_] After exercise characteristics: - Increased [_] [_] - Absent [_] [_] - Unchanged [_] [_] - Decreased [_] [_] - -------------------------------------------------------------------------------- 5. Is there on examination any abnormality of the following: (Circle applicable items and give details) Yes No A. Head; eyes; ears; nose; mouth; pharynx? ......................................... [_] [_] B. Skin (incl. scars); lymph nodes; varicose veins or peripheral arteries? ......... [_] [_] C. Nervous system (include reoexes, gait, paralysis)? .............................. [_] [_] D. Lungs? .......................................................................... [_] [_] E. Abdomen (include scars)? ........................................................ [_] [_] F. Genitourinary system? ........................................................... [_] [_] G. Endocrine system (include thyroid and breasts)? ................................. [_] [_] H. Musculoskeletal system (include spine, joints, amputations, deformities)? ....... [_] [_] - ------------------------------------------------------------------------------------------------------ 6. A. Are there any hernias? .......................................................... [_] [_] B. Any hemorrhoids (by history or observation)? .................................... [_] [_] - ------------------------------------------------------------------------------------------------------ 7. Are you aware of or do you suspect any other medical, alcoholic or drug history? .... [_] [_] (A confidential report may be sent to the Medical Director.) - ------------------------------------------------------------------------------------------------------ A urinalysis must be performed unless a specimen is being sent. 8. URINALYSIS: Albumin Sugar If albumin or sugar is found, or the blood pressure is over 140/90, or if there is a history of genitourinary disease, diabetes or hypertension, a specimen should be mailed to the designated lab facility. Is a specimen being sent to the designated lab facility? ... [_] [_] - ------------------------------------------------------------------------------------------------------ 9. Have you drawn blood or completed an EKG or X-ray on the Proposed Insured? [_] Drawn Blood [_] EKG [_] X-ray - ------------------------------------------------------------------------------------------------------ 10. Details of "yes" answers and supplementary remarks. Identify them by question number. - -------------------------------------------------------------------------------- Ques. No. Comments - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Place lab ID slip } [BAR CODE APPEARS HERE] bar code label here } } - -------------------------------------------------------------------------------- Do you know the Proposed Insured? [_] Yes [_] No Are you related? [_] Yes [_] No I have reviewed the history and examined the Proposed Insured in private and witnessed his/her signature at [_] My office [_] Proposed Insured's place of business [_] Proposed Insured's residence [_] ------------------------------------- on this day of , 19 at o'clock M. -------------- ------------- -------- -------- ----- - ---------------------------------------------------- Printed Name or Paramedical Facility (if used) M.D. - ----------------------------------------------- Signature of Medical Examiner M.D. - ----------------------------------------------- Printed Name of Medical Examiner - -------------------------------------------------------------------------------- Confidential information should be forwarded on separate copy to: Medical Director, Massachusetts Mutual Life Insurance Company, Springfield, Massachusetts 01111 A59GE197
Item 30. Exhibit (f) i.
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF MML BAY STATE LIFE INSURANCE COMPANY Article I --------- The name of the Corporation is MML Bay State Life Insurance Company. Article II ---------- The corporation was originally incorporated under the laws of the State of Missouri, but has elected to continue its existence through adoption of the State of Connecticut as its corporate domicile. The date of incorporation shall be deemed to be April 1, 1935, which was the date of its original incorporation. Article III ----------- The registered office of the corporation in the State of Connecticut is 140 Garden Street, Hartford, Connecticut 06154. The name of the registered agent at that office is Joseph P. DeCresce, whose residence address is 1 Gold Street, Hartford, Connecticut 06103. Article IV ---------- The purpose for which the corporation is organized is to conduct the business of life and health insurance, and to engage in any lawful act or activity for which corporations may be organized under Section 33-645 of the Connecticut General Statutes. Article V --------- The total number of shares of all classes of stock which the corporation is authorized to issue is 25,000 shares of Common Stock of the par value of $200 each. Article VI ---------- The personal liability of a director to the corporation or its shareholders for monetary damages for breach of duty as a director shall be limited in amount to the compensation received by the director for serving the corporation during the year of the violation in question; provided, however, that this provision shall not limit the liability of a director for any breach of duty that (1) involved a knowing and culpable violation of law; (2) enabled the director or an associate, as defined in Section 33-840 of the Connecticut General Statutes, to receive an improper personal economic gain; (3) showed a lack of good faith and a conscious disregard for the duty of the director to the corporation under circumstances in which the director was aware that his or her conduct or omission created an unjustifiable risk of serious injury to the corporation; (4) constituted a sustained and unexcused pattern of inattention that amounted to an abdication of the director's duty to the corporation; or (5) created liability under Section 33-757 of the Connecticut General Statutes. Article VII ----------- The business and affairs of the corporation shall be managed by its Board of Directors.
Item 30. Exhibit (f) ii.
LAWS of MML BAY STATE LIFE INSURANCE COMPANY ARTICLE I CERTIFICATE OF INCORPORATION AND CORPORATE SEAL Section 1. Certificate of Incorporation. The name and purpose of the corporation shall be as set forth in the Certificate of Incorporation. These By- laws, the powers of the corporation and of its directors and shareholders, and all matters concerning the conduct and regulation of the business and affairs of the corporation shall be subject to such provisions in regard thereto, if any, as are set forth in the Certificate of Incorporation. All references in these By-laws to the Certificate of Incorporation shall mean the Certificate of Incorporation as from time to time amended. Section 2. Offices. The registered office of the corporation shall be located in the City of Hartford, Connecticut. The principal administrative office of the corporation shall be located in the City of Springfield, Massachusetts. The corporation, in addition to its registered office and its principal office, may establish and maintain such other offices and places of business as the Board of Directors, or such officer so authorized by the Board, may from time to time determine. Section 3. Corporate Seal. The corporate seal shall be in the form of a circle and shall bear the name of the corporation and shall indicate its formation under the laws of the State of Connecticut; provided, that the form of such seal shall be subject to alteration from time to time by the Board of Directors. ARTICLE II MEETINGS OF SHAREHOLDERS Section 1. Annual Meeting. The annual meeting of the shareholders of the corporation for the election of directors and for the transaction of such other business as may properly come before such meeting shall be held on the second Wednesday in the month of April of each year (or the next succeeding day thereafter not a legal holiday) or on such other date that is not a legal holiday, in either case as may be stated in the notice of the meeting. The place of such meeting shall be the principal administrative office of the corporation or such other place within the United States as shall be fixed by the Board of Directors and stated in the notice of the meeting. Section 2. Special Meetings. A special meeting of the shareholders may be called at any time by the President or the Board of Directors and shall be called by the President upon the written request of ten percent of the shareholders of record entitled to vote, such written request to state the purpose or purposes of the meeting and to be delivered to the Secretary of the corporation. All special meetings shall be held at the principal administrative office of the corporation or at such other place as may be designated by the President at a date and time to be fixed by the President, which date shall not be later than thirty days from the date of receipt of any written request. Section 3. Notice of Meetings. Except as otherwise required by statute, a written notice of each meeting of shareholders, whether annual or special, stating the place, date and hour and, if a special meeting, the purposes of the meeting, shall be given not less than ten nor more than sixty days before the meeting to each shareholder of record entitled to vote as of the date of said notice, by leaving such notice with him or at his residence or usual place of business. If mailed, such notice is deemed given when deposited in the United States mail, postage prepaid, directed to the shareholder at his address as it appears on the records of the corporation. All such notices shall be given by the Secretary or by such other officer as may be designated by the President. No notice of any meeting of shareholders need be given to a shareholder if a written waiver of notice, executed before, during or after the meeting by such shareholder or his duly authorized attorney is filed with the records of the meeting, or to any shareholder who shall attend such meeting in person or by proxy otherwise than for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened, or to any shareholder with whom communication is at the time unlawful. Unless a new record date is fixed, notice of adjournment of a meeting of shareholders to another date, time or place need not be given if such date, time and place are announced at such meeting prior toits adjournment. Section 4. Quorum. At all meetings of shareholders, the shareholders present, in person or by proxy, representing a majority of the shares entitled to vote at the meeting shall be sufficient to constitute a quorum for the transaction of business. In the absence of a quorum, any officer entitled to preside over or act as secretary of such meeting may adjourn the meeting at such time as he deems advisable. At any such adjourned meeting at which a quorum may be present, any business may be transacted which might have been transacted at the meeting as originally called. Section 5. Voting. Shareholders entitled to vote shall have one vote for each share of stock and a proportionate vote for a fractional share of stock entitled to vote held by them of record according to the records of the corporation. The corporation shall not, directly or indirectly, vote any share of its own stock. The vote upon any question shall be by ballot whenever requested by any person entitled to vote but, unless such a request is made, voting may be conducted in any way approved by the meeting. In the absence of a higher standard required by law or these By-laws, any matter properly before a meeting of shareholders shall be decided by a majority of the votes cast thereon. Section 6. Proxies. Shareholders entitled to vote may vote either in person or by proxy in writing, which proxy shall be filed with the Secretary or other person responsible to record the proceedings of the meeting before being voted. Unless otherwise specifically limited by its terms, such proxy shall entitle the holder thereof to vote at any adjournment of such meeting but shall not be valid after eleven months from its date, unless the proxy provides for a longer period. The Secretary shall determine the validity of any proxy submitted for use at any meeting. Section 7. Waiver of Irregularities. Unless otherwise provided by statute, all informalities and irregularities in calls, notices of meetings and in the manner of voting, form of proxy, credentials and methods of ascertaining those present, shall be deemed waived if no objection is made thereto at the meeting. Section 8. Informal Action by Shareholders. So far as permitted by applicable law, any action required or permitted to be taken at any meeting of shareholders may be taken without a meeting if a written consent setting forth such action is signed by all the shareholders entitled to vote thereon and such written consent is filed with the records of the corporation. ARTICLE III BOARD OF DIRECTORS Section 1. General Powers and Qualifications. The property, affairs and business of the corporation shall be managed by the Board of Directors, except as reserved to the shareholders by law, the Certificate of Incorporation or these By-laws. In particular, and without limiting the generality of the foregoing, the Board shall annually determine the divisible surplus of the corporation and the distribution thereof and it shall make such rules and regulations as it shall deem necessary or convenient for the proper conduct of the business and affairs of the corporation. The Board may (a) issue all or from time to time any part of the unissued capital stock of the corporation authorized under the Certificate of Incorporation; and (b) determine, subject to any requirement of law or the Certificate of Incorporation, the consideration (not less than par value for shares having par value) for which stock is to be issued and the manner of allocating such consideration between capital and surplus. Section 2. Number, Election and Term of Office. The Board of Directors shall be composed of not less than three nor more than fifteen directors, with the number of directors to be fixed from time to time by a vote of a majority of the Board of Directors. Subject to the provisions of Section 7 of this Article III, the directors shall be elected annually by the shareholders entitled to vote at the annual meeting of shareholders, by a plurality of the votes at such election. No director need be a shareholder. Each director, whether elected at an annual meeting or pursuant to Section 7 of this Article III, shall continue in office until the annual meeting of shareholders next held after his election and until his successor shall have been elected and qualified, or until his death, resignation or removal in the manner hereinafter provided. Section 3. Meetings. An annual meeting of the Board of Directors for the election of officers and for the transaction of such other business as may properly come before the meeting shall be held upon the notice hereinafter provided for a special meeting. The directors, however, may hold such meeting, without notice, at the place where the annual meeting of shareholders is held, immediately following such meeting. The Board of Directors by resolution may provide for the holding of regular meetings, with or without notice, and may fix the times and places, within or without the State of Connecticut, at which such meetings shall be held. Special meetings of the Board of Directors may be called by the President and shall be called by the President upon receipt of a written request of not less than two directors. All special meetings shall be held at a date, time and place to be fixed by the President, and the President shall direct the Secretary (a) to give notice of each special meeting to each director mailed to him at his address as it appears upon the records of the corporation at least five days before the day on which the meeting is to be held or (b) to give notice to him in person or by telephone at least two days before such meeting. Such notice shall state the time and place of the meeting, but unless otherwise required by statute, the Certificate of Incorporation or these By-laws, need not state the purpose thereof. Notice of a meeting need not be given to any director if a written waiver of notice, executed by him before, during or after the meeting, is filed with the records of the meeting. Section 4. Quorum. A majority of the full Board of Directors shall constitute a quorum for the transaction of business. When a quorum is present at any meeting, a majority of the directors present may take any action except as otherwise expressly required by law, the Certificate of Incorporation or these By-laws. In the absence of a quorum, a majority of the directors present at the time and place of any meeting, may adjourn such meeting from time to time until a quorum be present. If by reason of one or more vacancies there is less than the minimum number of directors, the Board of Directors shall have the power to function legally prior to the filling of the vacancy; provided, however, that there shall always be a quorum. Section 5. Chairman. The Board of Directors may elect a Chairman from among its members. The Chairman, if one is elected, shall preside at all meetings of the Board of Directors and shall have such other powers and duties as may be granted or assigned to him from time to time by the Board of Directors. If a Chairman is elected but is absent or unable to preside at meetings of the Board of Directors, or if no Chairman is elected, the President shall preside at such meetings. Section 6. Resignation and Removal. Any director may resign at any time by giving written notice of such resignation to either the Board of Directors, the Chairman or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon receipt. Any director may be removed either with or without cause at any time by the affirmative vote of the shareholders of record holding a majority of the outstanding shares of the corporation entitled to vote for the election of directors, given at a meeting of the shareholders called for that purpose. Section 7. Vacancies. A vacancy in the Board of Directors arising by reason of death, resignation, removal, increase in the number of directors or otherwise, which may occur between annual meetings of the shareholders of the corporation, may be filled by a majority vote of the remaining directors, although less than a quorum. Any such vacancy may also be filled by the shareholders entitled to vote for the election of directors at any meeting held during the existence of such vacancy. Section 8. Compensation. Directors, as such, shall not be compensated for their services, but by resolution of the Board of Directors may be paid a fee for attendance at each meeting of the Board of Directors or a committee thereof. Nothing herein contained shall prevent any director from serving the corporation in any other capacity or receiving compensation therefor. Section 9. Informal Action by Directors. So far as permitted by applicable law, any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if a written consent setting forth such action is signed by all the directors and such written consent is filed with the records of the corporation. Section 10. Committees. The Board of Directors, by the affirmative vote of a majority of the Board, may appoint from its members such committees as it may deem advisable . Each committee shall have two or more members who shall serve at the pleasure of the Board of Directors. A majority of the designated committee members shall constitute a quorum for the transaction of business by such committee. When a quorum is present at any committee meeting, a majority of the committee members may take any action in respect of that committee except as otherwise expressly required by law, the Certificate of Incorporation or these By-laws. Section 11. Informal Action by Committees. So far as permitted by applicable law, any action required or permitted to be taken at any meeting of a committee appointed by the Board of Directors may be taken without a meeting if a written consent setting forth such action is signed by all the members of such committee and such written consent is filed with the records of the corporation. ARTICLE IV OFFICERS Section 1. Number. The officers of the corporation shall be a President, a Secretary and a Treasurer, and such other officers as may be elected or appointed in accordance with the provisions of Section 3 of this Article IV. So far as permitted by applicable law, any two or more offices may be held by the same person. Section 2. Election, Term of Office and Qualifications. The President, the Treasurer and the Secretary shall be elected annually by the directors at their first meeting following the annual meeting of shareholders, by vote of a majority of the directors present and voting. The President shall be and remain a director. No other officer need be a director. Except as otherwise provided by law, the Certificate of Incorporation or these By-laws, the President, the Treasurer and the Secretary shall hold office until the first meeting of the directors following the next annual meeting of shareholders and their respective successors are chosen and qualified, or, in each case, until he sooner dies, resigns or is removed, unless a shorter period shall have been specified by the terms of his election. Section 3. Other Officers. The Board of Directors from time to time may elect or appoint other officers or agents, including but not limited to one or more vice presidents, one or more assistant treasurers and one or more assistant secretaries, each of whom shall hold office for such period, have such authority and perform such duties as are provided in these By-laws or as the Board of Directors from time to time may determine. The Board of Directors may delegate to any officer or committee the power to appoint any such other officers or agents and to prescribe their respective authority and duties. Section 4. The President. The President shall, subject to the control of the Board of Directors, have general charge of the business, affairs and property of the corporation, and control over its several officers. The President shall do and perform such other duties and may exercise such other powers as from time to time may be assigned to him by these By-laws or by the Board of Directors. Section 5. The Treasurer. Subject to the order of the Board of Directors, the Treasurer shall have supervision over the funds, receipts and disbursements of the corporation. He shall cause all monies and other valuable effects to be deposited in the name and to the credit of the corporation, in such banks, trust companies or other depositories as shall be selected by the Board of Directors or which he shall select pursuant to authority conferred upon him by the Board of Directors. He shall cause the funds of the corporation to be disbursed by checks or drafts upon the authorized depositories of the corporation drawn pursuant to authority conferred upon him by the Board of Directors and shall cause to be taken and preserved proper vouchers for all monies disbursed. He shall cause to be kept at the principal administrative office of the corporation correct books of account of its business and transactions and shall render to the President or Board of Directors, whenever requested, an account of the financial condition of the corporation and of his transactions as Treasurer. He shall be empowered, from time to time, to require of the officers or agents of the corporation reports or statements giving such information as he may desire with respect to any and all financial transactions of the corporation, and shall have such other powers and duties as from time may be assigned to him by these By-laws or by the Board of Directors or the President. Section 6. The Secretary. The Secretary shall keep and record all the minutes of the meetings of shareholders and the Board of Directors in books to be maintained for that purpose. He shall give notice of meetings to each member of the Board of Directors in accordance with the provisions of these By-laws or as required by statute. He shall be custodian of the records of the Board of Directors. He shall keep the seal of the corporation and shall see that the seal is affixed to all documents the execution of which, on behalf of the corporation under its seal, shall have been duly authorized or required. He shall see that all corporate records required by law to be kept or filed are properly kept or filed. He shall perform all duties and shall have all powers incident to the office of the Secretary, and shall perform such other duties and have such other powers as from time to time may be assigned to him by these By-laws or by the Board of Directors or the President. Section 7. Chief Actuary. A chief actuary, if appointed or elected by the Board of Directors, shall have charge of all calculations relating to policies issued by the corporation, including reserves or liabilities thereunder, and of constructing mathematical tables for use by the corporation and the preparation of data for submission to the Board of Directors relating to surplus funds of the corporation and the distribution thereof. The chief actuary shall perform such other duties and shall have such powers as may be assigned to him from time to time by the Board of Directors or the President. Section 8. Chief Legal Officer. A chief legal officer, if appointed or elected by the Board of Directors, shall have charge of the legal affairs of the corporation and shall have such other duties and such powers as may be assigned to him from time to time by the Board of Directors or the President. Section 9. Chief Investment Officer. A chief investment officer, if appointed or elected by the Board of Directors, shall have such duties and such powers as may be assigned to him from time to time by the Board of Directors or the President. Section 10. Comptroller. A comptroller, if appointed or elected by the Board of Directors, shall have charge of the accounting affairs of the corporation and shall have such other duties and such powers as may be assigned to him from time to time by the Board of Directors or the President. Section 11. Resignation and Removal. Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, the President or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon receipt. Any officer may be removed, either with or without cause, by vote of a majority of the total number of directors constituting the entire Board of Directors. Section 12. Vacancies. A vacancy in any office because of death, resignation, removal or any other cause shall be filled for the unexpired term in the manner prescribed by these By-laws for the regular election or appointment to such office. Section 13. Salaries. The salaries or other compensation of the officers shall be fixed from time to time by the Board of Directors, and no officer shall be prevented from receiving such salary or other compensation by reason of the fact that he is also a director of the corporation. ARTICLE V INDEMNIFICATION The corporation shall, to the fullest extent and under the circumstances permitted by Connecticut law, as amended from time to time, indemnify any person serving or who has served (a) as a director, officer, employee or agent of the corporation or (b) at the corporation's request, as a director, trustee, officer, partner, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against all liabilities and expenses incurred by him in connection with the defense or disposition of any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal, while serving or thereafter, by reason of his having been such a director, trustee, officer, partner, employee or agent, except (unless otherwise permitted by Connecticut law) (y) in connection with a proceeding by or in the right of the corporation in which he was adjudged liable to the corporation or (z) in connection with any other proceeding charging improper personal benefit to him in which he was adjudged liable on the basis that personal benefit was improperly received by him. Expenses, including counsel fees, reasonably incurred by any such director, trustee, officer, partner, employee or agent who is a party to a proceeding may be paid by the corporation in advance of the final disposition thereof upon receipt of a written affirmation of the person's good faith belief that he has met the standard of conduct permitting indemnification and a written undertaking to repay the advance upon a determination that he did not meet the standard of conduct; provided, however, that a determination is also made that on the basis of the facts then known indemnification would not be precluded. The right of indemnification hereby provided shall not be exclusive of or affect any other right to which any such director, trustee, officer, partner, employee or agent may be entitled. Nothing contained in this Article shall affect any other right to indemnification to which such persons may be entitled by contract or otherwise under law. ARTICLE VI EXECUTION OF INSTRUMENTS Except as the Board of Directors may generally or in particular cases authorize the execution thereof in some other manner, all documents, instruments or writings of any nature made, accepted or endorsed by the corporation shall be signed, executed, verified, acknowledged and delivered by the President, a vice president of any rank or the Secretary. ARTICLE VII CAPITAL STOCK Section 1. Number of Shares; Par Value. The total number of shares and the par value of all stock which the corporation is authorized to issue shall be as stated in the Certificate of Incorporation. Section 2. Certificates of Stock. Each shareholder shall be entitled to a certificate, signed by the President and by the Treasurer or Secretary, certifying the number and class of the shares owned by him in the corporation. Such signatures may be facsimiles. Certificates for shares of the stock of the corporation shall be in such form as shall be approved by the Board of Directors, and the seal of the corporation shall be affixed thereto. There shall be entered upon the stock books of the corporation the number of each certificate issued, the name of the person owning the shares represented thereby, the number of shares and the date thereof. ARTICLE VIII APPLICATIONS, POLICIES AND PREMIUMS The President, the chief actuary, if any, and the chief legal officer, if any, shall prescribe and approve all forms of policies issued by the corporation, including all riders and provisions included in or attached to such policies, and the forms of application therefor. The President and the chief actuary, if any, shall fix all rates of premiums. The Board of Directors may determine from time to time the maximum amount of insurance to be issued on an individual life. ARTICLE IX FISCAL YEAR The fiscal year of the corporation shall end on the last day of December annually. ARTICLE X AMENDMENTS These By-laws may be amended or repealed by the Board of Directors, except that the Board may take no action which by law or the Certificate of Incorporation is required to be taken by the shareholders. Any By-law so amended or repealed by the directors may be further altered, amended or reinstated by the shareholders in the manner provided below. These By-laws may be amended or repealed by a majority vote of the shareholders present at any annual meeting or at a special meeting called for that purpose, provided that (a) the notice of any such annual or special meeting shall specify the subject matter of the proposed amendment or repeal and (b) any such proposed amendment or repeal shall have been submitted in writing and filed with the Secretary at least five days prior to such meeting. In amending or repealing any By-law, the shareholders may provide that such By-law may not be amended or repealed by the Board of Directors. ARTICLE XI EFFECTIVE DATE These By-laws shall become effective with the redomestication of the corporation in the State of Connecticut.
Item 30. Exhibit (h) i. c. 1.
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND II,
FIDELITY DISTRIBUTORS CORPORATION
And
MML BAY STATE LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the 1st day of June, 1999 by and among MML BAY STATE LIFE INSURANCE COMPANY, (hereinafter the “Company”), a Massachusetts corporation, on its own behalf and on behalf of each segregated asset account of the Company set forth on Schedule A hereto as may be amended from time to time (each such account hereinafter referred to as the “Account”), and the VARIABLE INSURANCE PRODUCTS FUND II, an unincorporated business trust organized under the laws of the Commonwealth of Massachusetts (hereafter the “Fund”) and FIDELITY DISTRIBUTORS COPORATION (hereinafter the Underwriter”), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management investment company and is available to act as the investment vehicle for separate accounts established for variable life insurance policies and variable annuity contracts (collectively, the “Variable Insurance Products”) to be offered by insurance companies which have entered into participation agreements with the Fund and the Underwriter (hereinafter “Participating Insurance Companies”); and
WHEREAS, the beneficial interest in the Fund is divided into several series of shares, each representing the interest in a particular managed portfolio of securities and other assets, any one or more of which may be made available under this Agreement, as may be amended from time to time by mutual agreement of the parties hereto (each such series hereinafter referred to as a “Portfolio”); and
WHEREAS, the Fund has obtained an order from the Securities and Exchange Commission, dated September 17, 1986 (File No. 812-6422), granting Participating Insurance Companies and variable annuity and variable life insurance separate accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and 15 (b) of the Investment Company Act of 1940, as amended, (hereinafter the “1940 Act”) and Rules 6e-2(b) (15) and 6e-3(T) (b) (15) thereunder, to the extent necessary to permit shares of the Fund to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated life insurance companies (hereinafter the “Shared Funding Exemptive Order”); and
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WHEREAS, the Fund is registered as an open-end management investment company under the 1940 Act and its shares are registered under the Securities Act of 1933, as amended (hereinafter the “1933 Act”); and
WHEREAS, Fidelity Management & Research Company (the “Adviser”) is duly registered as an investment adviser under the federal Investment Advisers Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain Variable Insurance Products under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated asset account, established by resolution of the Board of Directors of the Company, on the date shown for such Account on Schedule A hereto, to set aside and invest assets attributable to the aforesaid variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended, (hereinafter the “1934 Act”), and is a member in good standing of the National Association of Securities Dealers, Inc. (hereinafter “NASD”); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares in the Portfolios on behalf of each Account to fund certain of the aforesaid Variable Insurance Products and the Underwriter is authorized to sell such shares to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in considerations of their mutual promises, the Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares of the Fund which each Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the order for the shares of the Fund. For purposes of this Section 1.1, the Company shall be the designee of the Fund for receipt of such orders from each Account and receipt by such designee shall constitute receipt by the Fund; provided that the Fund receives notice of such order by 9:00 a.m. Boston time on the next following Business Day. “Business Day” shall mean any day on which the New York Stock Exchange is open for trading and on which the Fund calculates its net asset value pursuant to the rules of the Securities and Exchange Commission.
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1.2. The Fund agrees to make its shares available indefinitely for purchase at the applicable net asset value per share by the Company and its Accounts on those days on which the Fund calculates it net asset value pursuant to rules of the Securities and Exchange Commission and the Fund shall use reasonable efforts to calculate such net asset value on each day which the New York Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of Trustees of the Fund (hereinafter the “Board”) may refuse to sell shares of any Portfolio to any person, or suspend or terminate the offering of shares of any Portfolio if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board acting in good faith and in light of their fiduciary duties under federal and applicable state laws, necessary in the best interests of the shareholders of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will be sold only to Participating Insurance Companies and their separate accounts. No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any insurance company or separate account unless an agreement containing provisions substantially the same as Articles I, III, V, VII and Section 2.5 of Article II of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company’s request, any full or fractional shares of the Fund held by the Company, executing such requests on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the request for redemption. For purposes of this Section 1.5, the Company shall be the designee of the Fund for receipt of requests for redemption from each Account and receipt by such designee shall constitute receipt by the Fund; provided that the Fund receives notice of such request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio shares offered by the then current prospectus of the Fund shall be made in accordance with the provisions of such prospectus. The Company agrees that all net amounts available under the Variable Insurance Products with the form number(s) which are listed on Schedule A attached hereto and incorporated herein by this reference, as such Schedule A may be amended from time to time hereafter by mutual written agreement of all the parties hereto, (the “Contracts”) shall be invested in the Fund, in such other Funds advised by the Adviser as may be mutually agreed to in writing by the parties hereto, or in the Company’s general account, provided that such amounts may also be invested in an investment company other than the Fund if (a) such other investment company, or series thereof, has investment objectives or policies that are substantially difference from the investment objectives and policies of all the Portfolios of the Fund; or (b) the Company gives the Fund and the Underwriter 45 days written notice of its intention to make such other investment company available as a funding vehicle for the Contracts; or (c) such other investment company was available as a funding vehicle for the Contracts prior to the date of this Agreement and the Company so informs the Fund and Underwriter prior to their signing this Agreement (a list of such funds appearing on Schedule C to this Agreement); or (d) the Fund or Underwriter consents to the use of such other investment company.
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1.7. The Company shall pay for Fund shares on the next Business Day after an order to purchase Fund shares is made in accordance with the provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal funds so wired, such funds shall cease to be the responsibility of the Company and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund’s shares will be by book entry only. Stock certificates will not be issued to the Company or any Account. Shares ordered from the Fund will be recorded in an appropriate title for each Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (via electronic transmission and/or facsimile, concurrent with the transmission of the net asset value per share information set forth in Section 1.10) to the Company of any income, dividends or capital gain distributions payable on the Fund’s shares. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on the Portfolio shares in additional shares of that Portfolio. The Company reserves the right to revoke this election and to receive all such income dividends and capital gain distributions in cash. The Fund shall notify the Company of the number of shares so issued as payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each Portfolio available to the Company on each Business Day on a daily basis as soon as reasonably practical after the net asset value per share is calculated each Business Day (normally by 6:30 p.m. Boston time) via electronic transmission and/or facsimile and shall use its best efforts to make such net asset value per share available by 7 p.m. Boston time. The Underwriter shall provide the Company each Business Day with same day notice of Fund shares held by the Accounts by 3 p.m. Boston time via electronic transmission and/or facsimile.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or will be registered under the 1933 Act; that the Contracts will be issued and sold in compliance in all material respects with all applicable Federal and State laws and that the sale of the Contracts shall comply in all material respects with state insurance suitability requirements. The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established each Account prior to any issuance or sale thereof as a segregated asset account under Section 132G of Chapter 175 of the Massachusetts Insurance Code and has registered or, prior to any issuance or sale of the Contracts, will register each Account as a unit investment trust in accordance with the provisions of the 1940 Act to serve as a segregated investment account for the Contracts.
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2.2. The Fund represents and warrants that Fund shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance and sold in compliance with the laws of the Commonwealth of Massachusetts and all applicable federal and state securities laws and that the Fund is and shall remain registered under the 1940 Act. The Fund shall amend the Registration Statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares. The Fund shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated Investment Company under Subchapter M of the Internal Revenue Code of 1986, as amended, (the “Code”) and that it will make every effort to maintain such qualification (under Subchapter M or any successor or similar provision) and that it will notify the Company immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future.
2.4. The Company represents that the Contracts are currently treated as life insurance or annuity contracts, under applicable provisions of the Code and that it will make every effort to maintain such treatment and that it will notify the Fund and the Underwriter immediately upon having a reasonable basis for believing that the contracts have ceased to be so treated or that they might not be so treated in the future.
2.5. (a) With respect to Initial Class shares, the Fund currently does not intend to make any payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise, although it may make such payments in the future. The Fund has adopted a “no fee” or “defensive” Rule 12b-1 Plan under which it makes no payments for distribution expenses. To the extent that it decides to finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a board of trustees, a majority of whom are not interested persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance distribution expenses.
(b) With respect to Service Class shares, the Fund has adopted a Rule 12b-1 Plan under which it makes payments to finance distribution expenses. The Fund represents and warrants that it has a board of trustees, a majority of whom are not interested persons of the Fund, which has formulated and approved the Fund’s Rule 12b-1 Plan to finance distribution expenses of the Fund and that any changes to the Fund’s Rule 12b-1 Plan will be approved by a similarly constituted board of trustees.
2.6. The Fund makes no representation as to whether any aspect of its operations (including, but not limited to, fees and expenses and investment policies) complies with the insurance laws or regulations of the various states except that the Fund represents that the Fund’s investment policies, fees and expenses are and shall at all times remain in compliance with the laws of the Commonwealth of Massachusetts and the Fund and the Underwriter represent that their respective operations are and shall at all times remain in material compliance with the laws of the Commonwealth of Massachusetts to the extent required to perform this Agreement.
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2.7. The Underwriter represents and warrants that it is a member in good standing of the NASD and is registered as a broker-dealer with the SEC. The Underwriter further represents that it will sell and distribute the Fund shares in accordance with the laws of the Commonwealth of Massachusetts and all applicable state and federal securities laws, including with limitation the 1933 Act, the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly existing under the laws of the Commonwealth of Massachusetts and that it does and will comply in all material respects with the 1940 Act.
2.9 The Underwriter represents and warrants that the Adviser is and shall remain duly registered in all material respects under all applicable federal and state securities laws and that the Adviser shall perform its obligations for the Fund in compliance in all material respects with the laws of the Commonwealth of Massachusetts and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their directors, officers, employees, investment advisers, and other individuals/entities dealing with the money and/or securities of the Fund are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Fund in an amount not less than the minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid Bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company.
2.11. The Company represents and warrants that all of its directors, officers, employees, investment advisers, and other individuals/entities deal with the money and/or securities of the Fund are covered by a blanket fidelity bond or similar coverage for the benefit of the Fund, and that said bond is issued by a reputable bonding company, includes coverage for larceny and embezzlement, and is in an amount not less that $5 million. The Company agrees to make all reasonable efforts to see that this bond or another bond containing these provisions is always in effect, and agrees to notify the Fund and the Underwriter in the event that such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many printed copies of the Fund’s current prospectus and Statement of Additional Information as the Company may reasonably request. If requested by the Company in lieu thereof, the Fund shall provide camera-ready film containing the Fund’s prospectus and Statement of Additional Information, and such other assistance as is reasonably necessary in order for the Company once each year (or more frequently if the prospectus and/or Statement of Additional Information for the Fund is amended during the year) to have the prospectus for the Contracts and the Fund’s prospectus printed together in one document, and to have the
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Statement of Additional Information for the Fund and the Statement of Additional Information for the Contracts printed together in one document. Alternatively, the Company may print the Fund’s prospectus and/or its Statement of Additional Information in combination with other fund companies’ prospectuses and statements of additional information. Except as provided in the following three sentences, all expenses of printing and distributing Fund prospectuses and Statements of Additional Information shall be the expense of the Company. For prospectuses and Statements of Additional Information provided by the Company to its existing owners of Contracts in order to update disclosure annually as required by the 1933 Act and/or the 1940 Act, the cost of printing shall be borne by the Fund. If the Company chooses to receive camera-ready film in lieu of receiving printed copies of the Fund’s prospectus, the Fund will reimburse the Company in an amount equal to the product of A and B where A is the number of such prospectuses distributed to owners of the contracts, and B is the Fund’s per unit cost of typesetting and printing the Fund’s prospectus. The same procedures shall be followed with respect to the Fund’s Statement of Additional Information.
The Company agrees to provide the Fund or its designee with such information as may be reasonably requested by the Fund to assure that the Fund’s expenses do not include the cost of printing any prospectuses or Statements of Additional Information other than those actually distributed to existing owners of the Contracts.
3.2. The Fund’s prospectus shall state that the Statement of Additional Information for the Fund is available from the Underwriter or the Company (or in the Fund’s discretion, the Prospectus shall state that such Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies of its proxy statements reports to shareholders, and other communications (except for prospectuses and Statements of Additional Information, which are covered in Section 3.1) to shareholders in such quantity as the Company shall reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) | Solicit voting instructions from Contract owners; |
(ii) | Vote the Fund shares in accordance with instructions received from Contract owners; and |
(iii) | Vote Fund shares for which no instructions have been received in a particular separate account in the same proportion as Fund shares of such portfolio for which instructions have been received in that separate account, |
So long as and to the extent that the Securities and Exchange Commission continues to interpret the 1940 Act to require pass-through voting privileges for variable contract owners. The Company reserves the right to vote Fund shares held in any segregated asset account in its own right, to the extent permitted by law. Participating Insurance Companies shall be responsible for assuring that each of their separate accounts participating in the Fund calculates voting privileges in a manner consistent with the standards set forth on Schedule B attached hereto and incorporated herein by this reference, which standards will also be provided to the other Participating Insurance Companies.
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3.5. The Fund will comply with all provisions of the 1940 Act requiring voting by shareholders, and in particular the Fund will either provide for annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund is not one of the trusts described in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in accordance with the Securities and Exchange Commission’s interpretation of the requirements of Section 16(a) with respect to periodic elections of trustees and with whatever rules the Commission may promulgate with respect thereto.
3.6. The Fund shall use its best efforts to notify the Company of any proxy proposals for shareholders 60 (sixty) days prior to the appropriate Board vote for such proposals.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund or its designee, each piece of sales literature or other promotional material in which the Fund or its investment adviser or the Underwriter is named, at least five Business Days prior to its use. No such material shall be used if the Fund or its designee reasonably objects to such use within five Business Days after receipt of such material.
4.2. The Company shall not give any information or make any representations or statements on behalf of the Fund or concerning the Fund in connection with the sale of the Contracts other than the information or representations contained in the registration statement or prospectus for the Fund shares, as such registration statement and prospectus may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in sales literature or other promotional material approved by the Fund or its designee or by the Underwriter, except with the permission of the Fund or the Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall cause to be furnished to the Company or its designee, each piece of sales literature or other promotional material in which the Company and/or its separate account(s), is named at least five Business Days prior to its use. No such Material shall be used if the Company or its designee reasonably objects to such use within five Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or make any representations on behalf of the Company or concerning the Company, each Account, or the Contracts other than the information or representations contained in a registration statement or prospectus for the Contracts, as such registration statement and prospectus may be amended or supplemented from time to time, or in published reports for each Account which are in the public domain or approved by the Company for distribution to Contract owners, or in sales literature or other promotional material approved by the Company or its designee, except with the permission of the Company.
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4.5. The Fund will provide to the Company at least one complete copy of all registration statements, prospectuses, Statements of Additional Information, reports, proxy statements, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Fund or its shares, contemporaneously with the filing of such document with the Securities and Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of all registration statements, prospectuses, Statements of Additional Information, reports, solicitations for voting instructions, sales literature and other promotional materials, applications for exemptions, requests for no action letters, and all amendments to any of the above, that relate to the Contracts or each Account, contemporaneously with the filing of such document with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase “sales literature or other promotional material” includes, but is not limited to, any of the following that refer to the Fund or any affiliate of the Fund: advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media), sales literature (i.e., any written communication distributed or made generally available to customers or public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, and registration statements, prospectuses, Statements of Additional Information, shareholder reports, and proxy materials.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other compensation to the Company under this agreement, except that if the Fund or any Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then the Underwriter may make payments to the Company or to the underwriter for the Contracts if and in amounts agreed to by the Underwriter in writing and such payments will be made out of existing fees otherwise payable to the Underwriter, past profits of the Underwriter or other resources available to the Underwriter. No such payments shall be made directly by the Fund.
5.2. All expenses incident to performance by the Fund under this Agreement shall be paid by the Fund. The Fund shall see to it that all its shares are registered and authorized for issuance in accordance with applicable federal law and, if and to the extent deemed advisable by the Fund, in accordance with applicable state laws prior to their sale. The Fund shall bear the expenses for the cost of registration and qualification of the Fund’s shares, preparation and filing of the Fund’s prospectus and registration statement, proxy materials and reports, setting the prospectus in type, setting in type and printing the proxy materials
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and reports to shareholders (including the costs of printing a prospectus that constitutes an annual report), the preparation of all statements and notices required by any federal or state law, and all taxes on the issuance or transfer of the Fund’s shares.
5.3. The Company shall bear the expenses of distributing the Fund’s prospectus, proxy materials and reports to owners of Contracts issued by the Company.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts in such a manner as to ensure that the Contracts will be treated as variable contracts under the Code and the regulations issued thereunder. Without limiting the scope of the foregoing, the Fund will at all times comply with Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the diversification requirements for variable annuity, endowment, or life insurance contracts and any amendments or other modifications to such Section or Regulations. In the event of a breach of this Article VI by the Fund, it will take all reasonable steps (a) to notify Company of such breach and (b) to adequately diversify the Fund so as to achieve compliance within the grace period afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts investing in the Fund. An irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Portfolio are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners; or (f) a decision by an insurer to disregard the voting instructions or contract owners. The Board shall promptly inform the Company if it determines that an irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of which it is aware to the Board. The Company will assist the Board in carrying out its responsibilities under the Shared Funding Exemptive Order, by providing the Board with all information reasonably necessary for the Board to consider any issues raised. This includes, but is not limited to, an obligation by the Company to inform the Board whenever contract owner voting instructions are disregarded.
7.3. If it is determined by a majority of the Board, or a majority of its disinterested trustees, that a material irreconcilable conflict exists, the Company and other Participating Insurance Companies shall, at their expense and to the extent reasonably practicable (as determined by a majority of the disinterested trustees), take whatever steps are necessary to
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remedy or eliminate the irreconcilable material conflict, up to and including: (1), withdrawing the assets allocable to some or all of the separate accounts from the Fund or any Portfolio and reinvesting such assets in a different investment medium, including (but not limited to) another Portfolio of the Fund, or submitting the question whether such segregation should be implemented to a vote of all affected Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract owners, or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected contract owners the option of making such a change; and (2), establishing a new registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision by the Company to disregard contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Fund’s election, to withdraw the affected Account’s investment in the Fund and terminate this Agreement with respect to such Account; provided, however that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Any such withdrawal and termination must take place within six (6) months after the Fund gives written notice that this provision is being implemented, and until the end of that six month period the Underwriter and Fund shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a particular state insurance regulator’s decision applicable to the Company conflicts with the majority of other state regulators, then the Company will withdraw the affected Account’s investment in the Fund and terminate this Agreement with respect to such Account within six months after the Board informs the Company in writing that it has determined that such decision has created an irreconcilable material conflict; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Until the end of the foregoing six month period, the Underwriter and Fund shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Fund.
7.6. For purposes of Section 7.3 through 7.6 of this Agreement, a majority of the disinterested members of the Board shall determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund be required to establish a new funding medium for the Contracts. The Company shall not be required by Section 7.3 to establish a new funding medium for the Contracts if an offer to do so has been declined by vote of a majority of Contract owners materially adversely affected by the irreconcilable material conflict. In the event that the Board determines that any proposed action does not adequately remedy any irreconcilable material conflict, then the Company will withdraw the Account’s investment in the Fund and terminate this Agreement within six (6) months after the Board informs the Company in writing of the foregoing determination,
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provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Shared Funding Exemptive Order) on terms and conditions materially different from those contained in the Shared Funding Exemptive Order, than (a) the Fund and/or the Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. | Indemnification By The Company |
8.1(a). The Company agrees to indemnify and hold harmless the Fund and each trustee of the Board and Officers and each person, if any, who controls the Fund within the meaning of Section 15 or the 1933 Act (collectively, the “Indemnified Parties” for purposes of this Section 8.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund’s shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the Registration Statement or prospectus for the Contracts or contained in the Contracts or sales literature for the Contract (or any amendment or supplement to any of the foregoing), or arise out or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Fund for use in the Registration Statement or prospectus for the Contracts or in the Contracts or sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Funds shares; or
(ii) arise out of or as a result of statements or representations (other than statements or representations contained in the Registration Statement, prospectus
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or sales literature of the Fund not supplied by the Company, or persons under its control) or wrongful conduct of the Company or persons under its control, with respect to the sale or distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, prospectus, or sales literature of the Fund or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon information furnished to the Fund by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the services and furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach of this Agreement by the Company, as limited by and in accordance with the provisions of Section 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as such may arise from such Indemnified Party’s willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party’s duties or by reason of such Indemnified Party’s reckless disregard of obligations or duties under this Agreement or to the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnified provision. In case any such action is brought against the Indemnified Parties, the Company shall be entitled to participate, at its own expense, in the defense of such action. The Company also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Company to such party of the Company’s election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Company will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation.
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8.1(d). The Indemnified Parties will promptly notify the Company of the commencement of any litigation or proceedings against them in connection with the insurance or sale of the Fund Shares or the Contracts or the operation of the Fund.
8.2. | Indemnification by the Underwriter |
8.2(a) The Underwriter agrees to indemnify and hold harmless the Company and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the “Indemnified Parties” for purposes of this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Underwriter) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund’s shares or the Contracts and:
(i) | arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or prospectus or sales literature of the Fund (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or mission was made in reliance upon and in conformity with information furnished to the Underwriter or Fund by or on behalf of the Company for use in the Registration Statement or prospectus for the Fund or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Funds shares; or |
(ii) | arise out of or as a result of statements or representations (other than statements or representations contained in the Registration Statement, prospectus or sales literature for the Contracts not supplied by the Underwriter or persons under its control) or wrongful conduct of the Fund, Adviser or Underwriter or persons under their control, with respect to the sale or distribution of the Contracts or Fund shares; or |
(iii) | arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, prospectus, or sales literature covering the Contracts, or any amendment thereof or supplement thereto, or the omission or |
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alleged omission to state therein a material fact required to be stated therein or necessary to make the statement or statements therein not misleading, if such statement or omission was made in reliance upon information furnished to the Company by or on behalf of the Fund; or |
(iv) | arise as a result of any failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification requirements specified in Article VI of this Agreement); or |
(v) | arise out of or result from any material breach of any representation and/or warranty made by the Underwriter in this Agreement or arise out of or result from any other material breach of this Agreement by the Underwriter; as limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof. |
8.2(b) The Underwriter shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which Indemnified Party would otherwise be subject by reason of such Indemnified Party’s willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party’s duties or by reason of such Indemnified Party’s reckless disregard of obligations and duties under this Agreement or to each Company or the Account, whichever is applicable.
8.2(c) The Underwriter shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Underwriter in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Underwriter of any such claim shall not relieve the Underwriter from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Underwriter will be entitled to participate, at its own expense, in the defense thereof. The Underwriter also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Underwriter to such party of the Underwriter’s election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Underwriter will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation.
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8.2(d) The Company agrees promptly to notify the Underwriter of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of the Contracts or the operation of each Account.
8.3. | Indemnification by the Fund |
8.3(a) The Fund agrees to indemnify and hold harmless the Company, and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the “Indemnified Parties” for purposes of this Section 8.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Fund) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements result from the gross negligence, bad faith or willful misconduct of the Board or any member thereof, are related to the operations of the Fund and:
(i) | arise as a result of any failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure to comply with the diversification requirements specified in Article VI of this Agreement); or |
(ii) | arise out of or result from any material breach of any representation and/or warranty made by the Fund in this Agreement or arise out of or result from any other material breach of this Agreement by the Fund; |
as limited by and in accordance with the provisions of Section 8.3(b) and 8.3(c) hereof.
8.3(b) The Fund shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as such may arise from such Indemnified Party’s willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party’s duties or by reason of such Indemnified Party’s reckless disregard of obligations and duties under this Agreement or to the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c) The Fund shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Fund in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Fund of any such claim shall not relieve the Fund from any liability which it may have to the Indemnified Party against whom such
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action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Fund will be entitled to participate, at its own expense, in the defense thereof. The Fund also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Fund to such party of the Fund’s election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Fund will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation.
8.3(d) The Company and the Underwriter agree promptly to notify the Fund of the commencement of any litigation or proceedings against it or any of its respective officers or directors in connection with this Agreement, the issuance or sale of the Contracts, with respect to the operation of either Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the Commonwealth of Massachusetts.
9.2. This Agreement shall be subject to the provisions of the l933, l934, and l940 acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the Securities and Exchange Commission may grant (including, but not limited to, the Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until the first to occur of:
(a) | termination by any party for any reason by one hundred eighty (180) days advance written notice delivered to the other parties; or |
(b) | termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio based upon the Company’s determination that shares of such Portfolio are not reasonably available to meet the requirements of the Contracts; or |
(c) | termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio in the event any of the Portfolio’s shares are not registered, issued or sold in accordance with applicable state and/or federal law or such law precludes the use of such shares as the underlying investment media of the Contracts issued or to be issued by the Company; or |
(d) | termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio in the event that such Portfolio |
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ceases to qualify as a Regulated Investment Company under Subchapter M of the Code or under any successor or similar provision, or if the Company reasonably believes that the Fund may fail to so qualify; or |
(e) | termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio in the event that such Portfolio fails to meet the diversification requirements specified in Article VI hereof; or |
(f) | termination by either the Fund or the Underwriter by written notice to the Company, if either one or both of the Fund or the Underwriter respectively, shall determine, in their sole judgment exercised in good faith, that the Company and/or its affiliated companies has suffered a material adverse change in its business, operations financial condition or prospects since the date of this Agreement or is the subject of material adverse publicity; or |
(g) | termination by the Company by written notice to the Fund and the Underwriter, if the Company shall determine, in sole judgment exercised in good faith, that either the Fund or the Underwriter has suffered a material adverse change in its business, operations, financial condition or prospects since the date of this Agreement or is the subject of material adverse publicity; or |
(h) | termination by the Fund or the Underwriter by written notice to the Company, if the Company gives the Fund and the Underwriter the written notice specified in Section 1.6(b) hereof and at the time such notice was given there was no notice of termination outstanding under any other provision of the Agreement; provided, however any termination under this Section 10.1(h) shall be effective one hundred eighty (180) days after the notice specified in Section 1.6(b) was given. |
10.2. Effect of Termination. Notwithstanding any termination of this Agreement, the Fund and the Underwriter shall at the option of the Company, continue to make available additional shares of the Fund pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as “Existing Contracts”). Specifically, without limitation, the owners of the Existing Contracts shall be permitted to reallocate investments in the Fund, redeem investments in the Fund and/or invest the Fund upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 10.2 shall not apply to any terminations under Article VII and the effect of such Article VII terminations shall be governed by Article VII of this Agreement.
10.3. The Company shall not redeem Fund shares attributable to the Contracts (as opposed to Fund shares attributable to the Company’s assets held in the Account) except (i) as necessary to implement Contract Owner initiated or approved transactions, or (ii) as required by state and/or federal laws or regulations or judicial or other legal precedent of general application (hereinafter referred to as a “Legally Required Redemption”) or (iii) as
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permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon request, the Company will promptly furnish to the Fund and the Underwriter the opinion of counsel for the Company (which counsel shall be reasonably satisfactory to the Fund and the Underwriter) to the effect that any redemption pursuant to clause (ii) above is a Legally Required Redemption. Furthermore, except in cases where permitted under the terms of the Contracts, the Company shall not present Contract owners from allocating payments to a Portfolio that was otherwise available under the Contracts without first giving the Fund or the Underwriter 90 days notice of the intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
MML Bay State Life Insurance Company
1295 State Street
Springfield, MA 01111-0001
Attention: Office of General Counsel
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the property of the Fund for the enforcement of any claims against the Fund as neither the Board, officers, agents or shareholders assume any personal liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory authority, each party hereto shall treat as confidential the names and addresses of the owners of the Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party.
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12.3 The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument.
12.5 If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. Notwithstanding the generality of the foregoing, each party hereto further agrees to furnish the California Insurance Commissioner with any information or reports in connection with services provided under this Agreement which such Commissioner may request in order to ascertain whether the insurance operations of the Company are being conducted in a manner consistent with the California Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may not be assigned by any party without the prior written consent of all parties hereto; provided, however, that the Underwriter may assign this Agreement or any rights or obligations hereunder to any affiliate of or company under common control with the Underwriter, if such assignee is duly licensed and registered to perform the obligations of the Underwriter under this Agreement. The Company shall promptly notify the Fund and the Underwriter of any change in control of the Company.
12.9. The Company shall furnish, or shall cause to be furnished, to the Fund or its designee copies of the following reports:
(a) | the Company’s annual statement (prepared under statutory accounting principles) and annual report (prepared under generally accepted account principles (“GAAP”), if any), as soon as practical and in any event within 90 days after the end of each fiscal year; |
(b) | the Company’s quarterly statements (statutory) (and GAAP, if any), as soon as practical and in any event within 45 days after the end of each quarterly period: |
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(c) | any financial statement, proxy statement, notice or report of the Company sent policy holders, as soon as commercially reasonable after the delivery thereof to stockholders; |
(d) | any registration statement (without exhibits) filed on behalf of the Company pursuant to any securities offering related to a reorganization of the Company and any associated financial reports of the Company filed with the Securities and Exchange Commission or any extraordinary financial reports filed with any state insurance regulator, as soon as commercially reasonable after the filing thereof; |
(e) | any other report submitted to the Company by independent accountants in connection with any annual, interim or special audit made by them of the books of the Company, as soon as practical after the receipt thereof, but nothing in this subsection (e) shall require the Company to disclose any information not otherwise available to the public. |
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and on its behalf by its duly authorized representative and its seal to be hereunder affixed hereto as of the date specified below.
MML BAY STATE LIFE INSURANCE COMPANY | ||
By: | /s/ [Signature not Legible] | |
Name: |
| |
Title: |
| |
VARIABLE INSURANCE PRODUCTS FUND II | ||
By: | /s/ Robert C. Pozen | |
Robert C. Pozen | ||
Senior Vice President | ||
FIDELITY DISTRIBUTORS CORPORATION | ||
By: | /s/ Kevin J. Kelly | |
Kevin J. Kelly | ||
Vice President |
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Schedule A
Separate Accounts and Associated Contracts
Name of Separate Account and Date Established by Board of Directors |
Policy Form Numbers (and Product Names) of Contracts Funded By Separate Account | |
MML Bay State Variable Life Separate Account I (June 9, 1982) |
Variable Life Select B960-9400 |
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SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the handling of proxies relating to the Fund by the Underwriter, the Fund and the Company. The defined terms herein shall have the meanings assigned in the Participation Agreement except that the term “Company” shall also include the department or third party assigned by the Insurance Company to perform the steps delineated below.
1. | The number of proxy proposals is given to the Company by the Underwriter as early as possible before the date set by the Fund for the shareholder meeting to facilitate the establishment of tabulation procedures. At this time the Underwriter will inform the Company of the Record, Mailing and Meeting dates. This will be done verbally approximately two months before meeting. |
2. | Promptly after the Record Date, the Company will perform a “tape run”, or other activity, which will generate the names, addresses and number of units which are attributed to each contractowner/policyholder (the “Customer”) as of the Record Date. Allowance should be made for account adjustments made after this date that could affect the status of the Customers’ accounts as of the Record Date. |
Note: The number of proxy statements is determined by the activities described in step #2. The Company will use its best efforts to call in the number of Customers to Fidelity, as soon as possible, but no later than two weeks after the Record Date.
3. | The Fund’s Annual Report no longer needs to be sent to each Customer by the Company either before or together with the Customers’ receipt of a proxy statement. Underwriter will provide the last Annual Report to the Company pursuant to the terms of Section 3.3 of the Agreement to which this Schedule relates. |
4. | The text and format for the Voting Instruction Cards (“Cards” or “Card”) is provided to the Company by the Fund. The Company, as its expense, shall produce and personalize the Voting Instruction Cards. The Legal Department of the Underwriter or its affiliate (“Fidelity Legal”) must approve the Card before it is printed. Allow approximately 2-4 business days for printing information on the Cards. Information commonly found on the Cards includes: |
a. | name (legal name as found on account registration) |
b. | address |
c. | Fund or account number |
d. | Coding to state number of units |
e. | individual Card number for use in tracking and verification of votes (already on Cards as printed by the Fund) |
(This and related steps may occur later in the chronological process due to possible uncertainties relating to the proposals.)
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5. | During this time, Fidelity Legal will develop, produce, and the Fund will pay for the Notice of Proxy and the Proxy Statement (one document). Printed and folded notices and statements will be sent to Company for insertion into envelopes (envelopes and return envelopes are provided and paid for the Insurance Company). Contents of envelope sent to Customers by Company will include: |
a. | Voting Instruction Card(s) |
b. | One proxy notice and statement (one document) |
c. | return envelope (postage pre-paid by Company) addressed to the Company or its tabulation agent |
d. | “urge buckslip” – optional, but recommended. (This is a small, single sheet paper that requests Customers to vote as quickly as possible and that their vote is important. One copy will be supplied by the Fund.) |
e. | cover letter – optional, supplied by Company and reviewed and approved in advance by Fidelity Legal. |
6. | The above contents should be received by the Company approximately 3-5 business days before mail. Individual in charge at Company reviews and approves the contents of the mailing package to ensure correctness and completeness. Copy of this approval sent to Fidelity Legal. |
7. | Package mailed by the Company |
* | The Fund must allow at least a 15-day solicitation time to the Company as the shareowner. (A 5-week period is recommended.) Solicitation time is calculated as calendar days from (but not including) the meeting, counting backwards. |
8. | Collection and tabulation of Cards begins. Tabulation usually takes place in another department or another vendor depending on process used. An often used procedure is to sort Cards on arrival by proposal into vote categories of all yes, not, or mixed replies, and to begin data entry. |
Note: Postmarks are not generally needed. A need for postmark information would be due to an insurance company’s internal procedure and has not been required by Fidelity in the past.
9. | Signatures on Card checked against legal name on account registration which was printed on the Card. |
Note: For Example, If the account registration is under “Bertram C. Jones, Trustee,” then that is the exact legal name to be printed on the Card and is the signature needed on the Card.
10. | If Cards are mutilated, or for any reason are illegible or are not signed properly, they are sent back to Customer with an explanatory letter, a new Card and return envelope. |
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The mutilated or illegible Card is disregarded and considered to be not received for purposes of vote tabulation. Any Cards that have “kicked out” (e.g. mutilated, illegible) of the procedure are “hand verified,” i.e., examined as to why they did not complete the system. Any questions on those Cards are usually remedied individually.
11. | There are various control procedures used to ensure proper tabulation of votes and accuracy of that tabulation. The most prevalent is to sort the Cards as they first arrive into categories depending upon their vote; an estimate of how the vote is progressing may then be calculated. If the initial estimates and the actual vote do not coincide, then an internal audit of that vote should occur. This may entail a recount. |
12. | The actual tabulation of votes is done in units which is then converted to shares. (It is very important that the Fund receives the tabulations stated in terms of a percentage and the number of shares.) Fidelity Legal must review and approve tabulation format. |
13. | Final tabulation in shares is verbally given by the Company to Fidelity Legal on the morning of the meeting not later than 10:00 a.m. Boston time. Fidelity Legal may request an earlier deadline if required to calculate the vote in time for the meeting. |
14. | A Certification of Mailing and Authorization to Vote Shares will be required from the Company as well as an original copy of the final vote. Fidelity Legal will provide a standard form for each Certification. |
15. | The Company will be required to box and archive the Cards received from the Customers. In the event that any vote is challenged or if otherwise necessary for legal, regulatory, or accounting purposes, Fidelity Legal will be permitted reasonable access to such Cards. |
16. | All approvals and “signing-off” may be done orally, but must always be followed up in writing. |
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SCHEDULE C
Other investment companies currently available under variable annuities or variable life insurance issued by the Company:
MML Series Funds
MML Equity Fund
MML Money Market Fund
MML Managed Bond Fund
MML Blend Fund
MML Small Cap Value Equity Fund
MML Equity Index Fund
Panorama Series Funds
PSF Total Return Portfolio
PSF Growth Portfolio
PSF International Equity Portfolio
PSF LifeSpan Diversified Income Portfolio
PSF LifeSpan Balanced Portfolio
PSF LifeSpan Capital Appreciation Portfolio
Oppenheimer Variable Annuity Series Funds
Oppenheimer Global Securities Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Strategic Bond Fund
Oppenheimer Growth Fund
Oppenheimer Growth & Income Fund
Oppenheimer Multiple Strategies Fund
Oppenheimer High Income Fund
Oppenheimer Bond Fund
Oppenheimer Money Fund
OFFITBANK Series Funds
OFFITBANK High Yield Fund
OFFITBANK Investment Grade Global Debt Fund
OFFITBANK Emerging Markets Fund
FIDELITY Series Funds
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Fidelity Money Market Fund
Fidelity High Income Fund
Fidelity II Index 500 Fund
Fidelity Variable Insurance Products Fund II
DREYFUS Series Fund
Dreyfus Stock Index Fund
AMERICAN CENTURY Series Fund
VP Income & Growth Fund (Effective 7/1/98)
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Item 30. Exhibit (h) i. c. 2.
[Fidelity®
Investments
Logo]
May 16, 2007
MML Bay State. Life
Mr. Jim Rodolakis
1295 State Street, B248
Springfield, Massachusetts 01111
Re: | Participation Agreement among Variable Insurance Products Fund II (the “Current Fund”), Fidelity Distributors Corporation (the “Underwriter”) and Insurance Company (the “Company”), dated June 1, 1999, as amended (“Participation Agreement”) |
Dear Mr. Rodolakis:
The Company, the Underwriter, and the Fund are parties to the above-referenced Participation Agreement. As explained in the notice sent to you on May 3, 2007, Fidelity is in the process of reorganizing some of the portfolios of the Current Funds (the “Affected Portfolios”) for administrative purposes. In connection with this reorganization, the Affected Portfolios will be moved into corresponding “shell” portfolios of a new Variable Insurance Products Fund V (“Fund V”). A list of all of the Affected Portfolios in the Current Fund covered by the reorganization and the corresponding Fund V portfolios is set forth on the attached Exhibit.
In connection with this change, we are asking for your consent to (1) the amendment to the Participation Agreement to add Fund V as a “Fund” party under the terms of the Participation Agreement (the “Agreement”); and (2) the assignment of all of the Current Fund’s rights, benefits and obligations under the Participation Agreement with respect to the Affected Portfolios to Fund V, with respect to the corresponding portfolios of Fund V, and the release of the Current Fund from the obligations so assigned (the “Assignment”). The Participation Agreement will remain in full force and effect in accordance with its terms, as so amended and assigned herein. The Amendment will also add the following clarifying language to the Participation Agreement as a new Article A of the Agreement:
This Agreement shall create a separate participation agreement for each Fund, as though the Company and the Underwriter had executed a separate, identical form of participation agreement with each Fund. No rights, responsibilities or liabilities of any Fund shall be attributed to any other Fund.
Your signature below will indicate the Company’s consent to the Amendment and Assignment of the Participation Agreement as set forth above, to become effective immediately upon consummation of the reorganization.
Fidelity Investments Institutional |
100 Salem Street | |
Services Company, Inc. |
Smithfield, RI 02917 |
Thank you for your prompt attention to this matter. If for some reason we have not obtained your signature prior to the reorganization, and the Company submits orders or instructions under the Participation Agreement, we will deem the Company to have consented to the Amendment and Assignment. Please do not hesitate to contact your Fidelity Relationship Manager or Key Account Manager if you have any questions.
Very truly yours,
FIDELITY DISTRIBUTORS CORPORATION | ||
By: | /s/ William Loehning | |
Name: | William Loehning | |
Title: | Executive Vice President | |
VARIABLE INSURANCE PRODUCTS FUND II and VARIABLE INSURANCE PRODUCTS FUND V | ||
By: | /s/ Kimberley Monasterio | |
Name: | Kimberley Monasterio | |
Title: | Treasurer |
The Undersigned Consents to the Amendment and Assignment of the Participation Agreement as of this 26th day of June 2007.
MML BAY STATE. LIFE | ||
By: | /s/ Michael E. Dubois | |
Name: | Michael E. Dubois | |
Title: | Second Vice President and Actuary |
Please keep one copy and return the other to:
Sharon Salter
Director, Contracts Management
Fidelity Investments
100 Salem Street, O2N
Smithfield RI 02917
Item 30. Exhibit (h) i. f. 1.
PARTICIPATION AGREEMENT
Among
T. ROWE PRICE EQUITY SERIES, INC.,
T. ROWE PRICE INVESTMENT SERVICES, INC.,
and
MML BAY STATE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of this 28 th day of April, 1999 by and among MML Bay State Insurance Company (hereinafter, the “Company”), a Connecticut insurance company, on its own behalf and on behalf of each segregated asset account of the Company set forth on Schedule A hereto as may be amended from time to time (each account hereinafter referred to as the “Account” or “accounts,” as applicable), and the undersigned fund, a corporation organized under the laws of Maryland (each hereinafter referred to as the “Fund”) and T. Rowe Price Investment Services, Inc. (hereinafter the “Underwriter”), a Maryland corporation.
WHEREAS, the Fund engages in business as an open-end management investment company and is or will be available to act as the investment vehicle for separate accounts established for variable life insurance and variable annuity contracts (the “Variable Insurance Products”) to be offered by insurance companies which have entered into participation agreements with the Fund and Underwriter (hereinafter “Participating Insurance Companies”); and
WHEREAS, the beneficial interest in the Fund is divided into several series of shares, each designated a “Portfolio” and representing the interest in a particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange Commission (“SEC”) granting Participating Insurance Companies and variable annuity and variable life insurance separate accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended, (hereinafter the “1940 Act”) and Rules 6e-2(b)(15) and 6e-3(T) (b)(15) thereunder, to the extent necessary to permit shares of the Fund to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated life insurance companies (hereinafter the “Shared Funding Exemptive Order”); and
WHEREAS, the Fund is registered as an open-end management investment company under the 1940 Act and shares of the Portfolios are registered under the Securities Act of 1933, as amended (hereinafter the “1933 Act”); and
WHEREAS, T. Rowe Price Associates, Inc. and Rowe Price-Fleming International, Inc, (each hereinafter referred to as the “Adviser”) are each duly registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and any applicable state securities laws; and
WHEREAS, the Company has registered or will register certain variable life insurance or variable annuity contracts supported wholly or partially by the Account (the “Contracts”) under the 1933 Act, and said Contracts are listed in Schedule A hereto, as it may be amended from time to time by mutual written agreement; and
WHEREAS, the Account is duly established and maintained as a segregated asset account, established by resolution of the Board of Directors of the Company, on the date shown for such Account on Schedule A hereto, to set aside and invest assets attributable to the aforesaid Contracts; and
WHEREAS, the Company has registered or will register the Account as a unit investment trust under the 1940 Act, and
WHEREAS, the Underwriter is registered as a broker dealer with the SEC under the Securities Exchange Act of 1934, as amended (hereinafter the “1934 Act”), and is a member in good standing of the National Association of Securities Dealers, Inc. (hereinafter “NASD”); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares in the Portfolios listed in Schedule A hereto, as it may be amended from time to time by mutual written agreement (the “Designated Portfolios”) on behalf of the Account to fund the aforesaid Contracts, and the Underwriter is authorized to sell such shares to unit investment trusts such as the Account at net asset value.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1 The Underwriter agrees to sell to the Company those shares of the Designated Portfolios which the Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the order for the shares of the Designated Portfolios.
1.2 The Fund agrees to make shares of the Designated Portfolios available for purchase at the applicable net asset value per share by Company and the Account on those days on which the Fund calculates its net asset value on each day which the New York Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of Directors of the Fund (hereinafter the “Board”) may refuse to sell shares of any Designated Portfolio to any person, or suspend or terminate the offering of shares of any Designated Portfolio, if such action is required by law or by regulatory
2
authorities having jurisdiction, or is, in the sole discretion of the Board acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, necessary in the best interests of the shareholders of such Designated Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Fund will be sold only to Participating Insurance Companies and their separate accounts. No shares of any Designated Portfolios will be sold to the general public. The Fund and the Underwriter will not sell Fund shares to any insurance company or separate account unless an agreement containing provisions substantially the same as Articles I, III and VII of this Agreement is in effect to govern such sales.
1.4 The Fund agrees to redeem, on the Company’s request, any full or fractional shares of the Designated Portfolios held by the Company, executing such requests on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the request for redemption, except that the Fund reserves the right to suspend the right of redemption or postpone the date of payment or satisfaction upon redemption consistent with Section 22(e) of the 1940 Act and any sales thereunder, and in accordance with the procedures and policies of the Fund as described in the then current prospectus.
1.5 For purposes of Sections 1.1 and 1.4, the Company shall be the designee of the Fund for receipt of purchase and redemption orders from the Account, and receipt by such designee shall constitute receipt by the Fund; provided that the Company receives the order by 4:00 p.m. Eastern Time and the Fund receives notice of such order by 9:30 a.m. Eastern time on the next following Business Day. “Business Day” shall mean any day on which the New York Stock Exchange is open for trading and on which the Fund calculates its net asset value pursuant to the rules of the SEC.
1.6 The Company agrees to purchase and redeem the shares of each Designated Portfolio offered by the then current prospectus of the Fund and in accordance with the provisions of such prospectus.
1.7 The Company shall pay for Fund shares one Business Day after receipt of an order to purchase Fund shares is made in accordance with the provisions of Section 1.5 hereof. Payment shall be in federal funds transmitted by wire by 3:00 p.m. Eastern time. If payment in Federal Funds for any purchase is not received or is received by the Fund after 3:00 p.m. Eastern time on such Business Day, the Company shall promptly, upon the Fund’s request, reimburse the Fund for any charges, costs, fees, interest or other expenses incurred by the Fund in connection with any advances to, or borrowings or overdrafts by, the Fund, or any similar expenses incurred by the Fund, as a result of portfolio transactions effected by the Fund based upon such purchase request. For purposes of Section 2.8 and 2.9 hereof, upon receipt by the Fund of the federal funds so wired, such funds shall cease to be the responsibility of the Company and shall become the responsibility of the Fund.
1.8 Issuance and transfer of the Fund’s shares will be by book entry only. Stock certificates will not be issued to the Company or any Account. Shares ordered from the Fund will be recorded in an appropriate title for each Account or the appropriate subaccount of each Account.
1.9 The Fund shall furnish same day notice (by electronic transmission and/or facsimile as outlined in Section 1.10 hereof) to the Company of any income, dividends or capital gain
3
distributions payable on the Designated Portfolios’ shares. The Company reserves the right to revoke this election and to receive all such income dividends and capital gain distributions in cash. The Fund shall notify the Company of the number of shares so issued as payment of such dividends and distributions.
1.10 The Fund shall make the net asset value per share, including total shares outstanding, for each Designated Portfolio available to the Company on a daily basis as soon as reasonably practical after the net asset value per share is calculated (normally each business day by 6:30 p.m. Eastern time via electronic transmission and/or facsimile) and shall use its best efforts to make such net asset value per share available by 7 p.m. eastern time. If the net asset value is materially incorrect through no fault of the Company, the Company on behalf of each Account shall be entitled to an adjustment to the number of shares purchased or redeemed to reflect the correct net asset value in accordance with Fund procedures, and the Company shall not bear the cost of such correction. Any material error in the net asset value shall be reported to the Company promptly upon discovery (via telephone followed by written documentation of the error).
1.11 The Parties hereto acknowledge that the arrangement contemplated by this Agreement is not exclusive; the Fund’s shares may be sold to other insurance companies (subject to Section 1.3 and Article VI hereof) and the cash value of the Contracts may be invested in other investment companies.
ARTICLE II Representations and Warranties
2.1 The Company represents and warrants that the Contracts are or will be registered under the 1933 Act; that the Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws, and that the sale of the Contracts shall comply in all material respects with state insurance suitability requirements. The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established the Account prior to any issuance or sale thereof as a segregated asset account under the Connecticut insurance laws and has registered or, prior to any issuance or sale of the Contracts, will register the Account as a unit investment trust in accordance with the provisions of the 1940 Act to serve as a segregated investment account for the Contracts.
2.2 The Fund represents and warrants that Fund shares sold pursuant to this Agreement shall be registered under the 1933 Act, - duly authorized for issuance and sold in compliance with the laws of the State of Connecticut and all applicable federal and state securities laws and that the Fund is and shall remain registered under the 1940 Act. The Fund shall amend the Registration Statement for its shares under the 1933 Act and the l940 Act from time to time as required in order to effect the continuous offering of its shares. The Fund shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund or the Underwriter.
2.3 The Fund currently does not intend to make any payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act, although it may make such payments in the future. To the extent that it decides to finance distribution expenses pursuant to Rule 12b-1, the Fund will undertake to have the Board, a majority of whom are not interested persons of the Fund, formulate and approve any plan pursuant to Rule 12b-1 under the 1940 Act to finance distribution expenses.
4
2.4 The Fund makes no representations as to whether any aspect of its operations, including but not limited to, investment policies, fees and expenses, complies with the insurance and other applicable laws of the various states, except that the Fund represents that the Fund’s investment policies, fees and expenses are and shall at all times remain in compliance with the laws of the State of Connecticut to the extent required to perform this Agreement.
2.5 The Fund represents that it is lawfully organized and validly existing under the laws of the State of Maryland and that it does and will comply in all material respects with the 1940 Act.
2.6 The Underwriter represents and warrants that it is a member in good standing of the NASD and is registered as a broker-dealer with the SEC. The Underwriter further represents that it will sell and distribute the Fund shares in accordance with the laws of the State of Connecticut and any applicable state and federal securities laws.
2.7 The Underwriter represents and warrants that the Adviser is and shall remain duly registered under all applicable federal and state securities laws and that the Adviser shall perform its obligations for the Fund in compliance in all material respects with the laws of the state of Connecticut and any applicable state and federal securities laws.
2.8 The Fund and the Underwriter represent and warrant that all of their directors, officers, employees, investment advisers, and other individuals or entities dealing with the money and/or securities of the Fund are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Fund in an amount not less that the minimum coverage as required currently by Rule 17g-1 of the 1940 Act or related provisions as my be promulgated from time to time. The aforesaid bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company.
2.9 The Company represents and warrants that all of its directors, officers, employees, and other individuals/entities employed or controlled by the Company dealing with the money and/or securities of the Fund are covered by a blanket fidelity bond or similar coverage in an amount not less than $5 million. The aforesaid bond includes coverage for larceny and embezzlement and is issued by a reputable bonding company. The Company agrees that any amounts received under such bond in connection with claims that arise from the arrangements described in this Agreement will be held by the Company for the benefit of the Fund. The Company agrees to make all reasonable efforts to see that this bond or another bond containing these provisions is always in effect, and agrees to notify the Fund and the Underwriter in the event that such coverage no longer applies. The Company agrees to exercise its best efforts to ensure that other individuals/entities not employed or controlled by the Company and dealing with the money and/or securities of the Fund maintain a similar bond or coverage in a reasonable amount.
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ARTICLE III. Prospectuses, Statements of Additional Information, and Proxy Statement; Voting
3.1 The Underwriter shall provide the Company with as many copies of the Fund’s current prospectus (describing only the Designated Portfolios listed on Schedule A) as the Company may reasonably request for distribution to existing owners of the Contracts. If requested by the Company, the Fund shall provide the Company with, at the Company’s option, camera ready or pdf files, of fund prospectuses, Statements of Additional Information, proxy material, annual reports and any similar material that is to be distributed to Contract owners and other assistance as is reasonably necessary in order for the Company once each year (or more frequently if the Fund prospectus is amended) to have the prospectus for the Contracts and the Fund’s prospectus printed together in one document (such printing to be at the Company’s expense). The Fund will use its best efforts to provide such Fund prospectus or Statement of Additional Information, in the format (camera ready or pdf files) selected by the Company, within a reasonable period of the preparation of such material to ensure that they can be integrated into Company material also being distributed to Contract owners. The Company will give the Fund reasonable advance notice of the date when such material is being prepared.
3.2 The Fund’s prospectus shall state that the current Statement of Additional Information (“SAI”) for the Fund is available from the Company (or, in the Fund’s discretion, from the Fund), and the Underwriter (or the Fund), at its expense, shall print or otherwise reproduce, and provide sufficient copies of such SAI free of charge to the Company for itself, and for any owner of a Contract who requests such SAI. The Company shall send an SAI to any such Contract owner within 3 business days of the receipt of a request.
3.3 The Fund, at its expense, shall provide the Company with copies of its proxy material, reports to shareholders, and other communications to shareholders in such quantity as the Company shall reasonable require for distributing to Contract owners in the Fund. The Underwriter (at the Company’s expense) shall provide the Company with copies of the Fund’s annual and semi-annual reports to shareholders in such quantity as the Company shall reasonable request for use in connection with offering the Variable Contracts issued by the Company. If requested by the Company in lieu thereof, the Underwriter shall provide such documentation (which may include a final copy of the Fund’s annual and semi-annual reports as set in type or on diskette) and other assistance as is reasonably necessary in order for the Company (at the Company’s expense) to print such shareholder communications for distribution to Contract owners. The Company shall send a copy of the Fund’s annual or semi-annual report within 3 business days of the receipt of a request by a Contract owner.
3.4 The Company shall:
(i) | solicit voting instructions from Contract owners; |
(ii) | vote the Fund shares in accordance with instructions received from Contract owners; and |
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(iii) | vote Fund shares for which no instructions have been received in the same proportion as Funds shares of such Designated Portfolio for which instructions have been received, |
so long as and to the extent that the SEC continues to interpret the 1940 Act to require pass-through voting privileges for variable contract owners or to the extent otherwise required by law. The Company reserves the right to vote Fund shares held in any segregated asset account in its own right, to the extent permitted by law.
3.5 Participating Insurance Companies shall be responsible for assuring that each of their separate accounts participating in a Designated Portfolio calculates voting privileges as required by the Shared Funding Exemptive Order and consistent with any reasonable standard that the Fund may adopt.
3.6 The Fund will comply with all provisions of the 1940 Act requiring voting by shareholders, and in particular the Fund will either provide for annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund is not one of the trusts described in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in accordance with the SEC’s interpretation of the requirements of Section 16(a) with respect to periodic elections of directors or trustees and with whatever rules the SEC may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1 The Company shall furnish, or shall cause to be furnished, to the Fund or its designee, each piece of sales literature or other promotional material that the Company develops or uses and in which the Fund (or a Portfolio thereof) or the Adviser or the Underwriter is named, at least five business days prior to its use. No such material shall be used if the Fund or its designee reasonably object to such use within five business days after receipt of such material. The Fund or its designee reserves the right to reasonably object to the continued use of such material, and no such material shall be used if the Fund or designee so object. The review procedures of this paragraph shall not apply to any advertising or sales literature produced by the Company if all references in such literature regarding the Fund are identical to those that appear in the Fund’s prospectus or Statement of Additional Information.
4.2 The Company shall not give any information or make any representations or statements on behalf of the Fund or concerning the Fund in connection with the sale of the Contracts other than the information or representations contained in the registration statement or prospectus or SAI for the Fund shares, as such registration statement and prospectus or SAI may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in sales literature or other promotional material approved by the Fund or its designee or by the Underwriter, except with the permission of the Fund or the Underwriter or the designee of either.
4.3 The Fund, Underwriter, or its designee shall furnish, or shall cause to be furnished, to the Company, each piece of sales literature or other promotional material in which the Company,
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4.4 and/or its Account, is named at least five business days prior to its use. No such material shall be used if the Company reasonably objects to such use within ten calendar days after receipt of such material. The Company reserves the right to reasonably object to the continued use of such material and no such material shall be used if the Company so objects.
4.5 The Fund and the Underwriter shall not give any information or make any representations on behalf of the Company or concerning the Company, the Account, or the Contracts other than the information or representations contained in a registration statement, prospectus, or SAI for the Contracts as such registration statement, prospectus or SAI may be amended or supplemented from time to time or in published reports for the Accounts which are in the public domain or approved by the Company for distribution to Contract owners, or in sales literature or other promotional material approved by the Company or designee, except with the permission of the Company.
4.6 The Fund will provide to the Company at the Company’s request, at least one complete copy of all registration statements, prospectuses, SAI, reports, proxy statements, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Fund or its shares, within a reasonable time after the filing of such documents(s) with the SEC or other regulatory authorities.
4.7 The Company will provide to the Fund, at the Fund’s request, at least one complete copy of all registration statements, prospectuses, SAIs, reports, solicitations for voting instructions, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Contracts or the Account, within a reasonable time after filing of such document(s) with the SEC or other regulatory authorities.
4.8 For purposes of this Article IV, the phrase “sales literature and other promotional materials” includes, but is not limited to, any of the following that refer to the Fund or any affiliate of the Fund: advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, and registration statements, prospectus, SAIs, shareholder reports, proxy materials, and any other communications distributed or made generally available with regard to the Funds.
ARTICLE V. Fees and Expenses
5.1 The Fund and the Underwriter shall pay no fee or other compensation to the Company under this Agreement, except that if the Fund or any Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then the Underwriter may make payments to the Company or to the underwriter for the contracts if and in amounts agreed to by the
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Underwriter in writing, and such payments will be made out of existing fees otherwise payable to the Underwriter, past profits of the Underwriter, or other resources available to the Underwriter. No such payments shall be made directly by the Fund. Currently, no such payments are contemplated.
5.2 All expenses incident to performance by the Fund under this Agreement shall be paid by the Fund, except as otherwise provided herein. The Fund shall see to it that all its shares are registered and authorized for issuance in accordance with applicable federal law and, if and to the extent deemed advisable by the Fund, in accordance with applicable state laws prior to their sale. The Fund shall bear the expenses for the cost of registration and qualification of the Fund’s shares, preparation and filing of the Fund’s prospectus and registration statement, proxy materials and reports, setting the prospectus in type, setting in type and printing the proxy materials and reports to shareholders (including the costs of printing a prospectus that constitutes an annual report), the preparation of all statements and notices required by any federal or state law, and all taxes on the issuance or transfer of the Fund’s shares.
5.3 The Company shall bear the expenses of printing the Fund’s prospectus (in accordance with 3.1) and of distributing the Fund’s prospectus, proxy materials, and reports to Contract owners and prospective Contract owners.
ARTICLE VI. Diversification and Qualification
6.1 The Fund will invest the assets of each Designated Portfolio in such manner as to ensure that the Contracts will be treated as annuity, endowment, or life insurance contracts, whichever is appropriate, under the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations issued thereunder (or any successor provisions). Without limiting the scope of the foregoing, each designated Portfolio of the Fund will comply with Section 817(h) of the Code and Treasury Regulation §1.817-5, and any Treasury interpretations thereof, relating to the diversification requirements for variable annuity, endowment, or life insurance contracts, and any amendments or other modifications or successor provisions to such Section or Regulations. In the event of a breach of this Article VI by the Fund, it will take all reasonable steps (a) to notify the Company of such breach and (b) to adequately diversify the Fund so as to achieve compliance within the grace period afforded by Regulation §1.817-5.
6.2 The Fund represents that each Designated Portfolio is or will be qualified as a Regulated Investment Company under Subchapter M of the Code, and that it will make every effort to maintain such qualification (under Subchapter M or any successor or similar provisions) and that it will notify the Company immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future.
6.3 The Company represents that the Contracts are currently, and at the time of issuance shall be treated as life insurance, endowment contracts, or annuity insurance contracts, under applicable provisions of the Code, and that it will make every effort to maintain such treatment, and that it will notify the Fund and the Underwriter immediately upon having a reasonable basis for believing the Contracts have ceased to be so treated or that they might not be so treated in the future.
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The Company agrees that any prospectus offering a contract that is a “modified endowment contract” as that term is defined in Section 7702A of the Code (or any successor or similar provision), shall identify such contract as a modified endowment contract.
ARTICLE VII. Potential Conflicts
7.1 The Board will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts investing in the Fund. An irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Portfolio are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners; or (f) a decision by an insurer to disregard the voting instructions of contract owners. The Board shall promptly inform the Company if it determines that an irreconcilable material conflict exists and the implications thereof.
7.2 The Company will report any potential or existing conflicts of which it is aware to the Board. The Company will assist the Board in carrying out its responsibilities under the Shared Funding Exemptive Order, by providing the Board with all information reasonably necessary for the Board to consider any issues raised. This includes, but is not limited to, an obligation by the Company to inform the Board whenever Contract owner voting instructions are disregarded.
7.3 If it is determined by a majority of the Board, or majority of its disinterested members, that a material irreconcilable conflict exists, the Company and other Participating Insurance Companies shall, at their expense and to the extent reasonably practicable (as determined by a majority of the disinterested Board members), take whatever steps are necessary to remedy or eliminate the irreconcilable material conflict, up to and including: (1), withdrawing the assets allocable to some or all of the separate accounts from the Fund or any Portfolio and reinvesting such assets in a different investment medium, including (but not limited to) another Portfolio of the Fund, or submitting the question whether such segregation should be implemented to a vote of all affected contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract owners, or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected contract owners the option of making such a change; and (2), establishing a new registered management investment company as managed separate account.
7.4 If a material irreconcilable conflict arises because of a decision by the Company to disregard contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Fund’s election, to withdraw the affected Account’s investment in the Fund and terminate this Agreement with respect to such Account provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Any such withdrawal and termination must take place within
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six (6) months after the Fund gives written notice that this provision is being implemented, and until the end of that six month period the Fund shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Fund.
7.5 If a material irreconcilable conflict arises because a particular state insurance regulator’s decision applicable to the Company conflicts with the majority of other state regulators, then the Company will withdraw the affected Account’s investment in the Fund and terminate this Agreement with respect to such Account within six months after the Board informs the Company in writing that it has determined that such decision has created an irreconcilable material conflict; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Until the end of the foregoing six month period, the Fund shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Fund.
7.6 For purposes of Section 7.3 through 7.6 of this Agreement, a majority of the disinterested members of the Board shall determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund be required to establish a new funding medium for the Contracts. The Company shall not be required by Section 7.3 to establish a new funding medium for the Contract if an offer to do so has been declined by vote of a majority of Contract owners materially adversely affected by the irreconcilable material conflict. In the event that the Board determines that any proposed action does not adequately remedy any irreconcilable material conflict, then the Company will withdraw the Account’s investment in the Fund and terminate this Agreement within six (6) months after the Board informs the Company in writing of the foregoing determination; provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested members of the Board.
7.7 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Shared Fund Exemptive Order) on terms and conditions materially different from those contained in the Shared Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.4, 3.5, 3.6, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1 Indemnification By the Company
8.1 (a). The Company agrees to indemnify and hold harmless the Fund and the Underwriter and each of their officers and directors and each person, if any, who controls the Fund or the Underwriter within the meaning of Section 15 of the 1933 Act (collectively, the “Indemnified Parties” for purposes of this Section 8.1) against any and all losses, claims, damages, liabilities
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(including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund’s shares or the Contracts and:
(i) | arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the Registration Statement, prospectus, or statement of additional information (“SAI”) for the Contracts or contained in the Contracts or sales literature or other promotional material for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or mission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Fund for use in the Registration Statement, prospectus or SAI for the Contracts or in the Contracts or sales literature or other promotional material (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or |
(ii) | arise out of or as a result of statements or representations (other than statements or representations contained in the Registration Statement, prospectus or sales literature or other promotional material of the Fund not supplied by the Company or persons under its control) or wrongful conduct of the Company or persons under its authorization or control, with respect to the sale or distribution of the Contracts or Fund Shares, or |
(iii) | arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, prospectus, SAI, or sales literature or other promotional material of the Fund or any amendment thereof or supplement thereto or the omission or alleged omission was made in reliance upon information furnished to the Fund by or on behalf of the Company, or |
(iv) | arise as a result of any material failure by the Company to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the qualification requirements specified in Article VI of this Agreement); or |
(v) | arise out of or result from any material breach of any representation and/or warranty made by the Company in this Agreement or arise out or result from any material breach of this Agreement by the Company, |
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as limited by and in accordance with the provisions of Section 8.1(b) and 8.1(c) hereof.
8.1(b) The Company shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party’s willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party’s duties or by reason of such Indemnified Party’s reckless disregard of its obligations or duties under this Agreement
8.1(c) The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against an Indemnified Party, the Company shall be entitled to participate, at its own expense, in the defense of such action. The Company also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action and to settle the claim at its own expense, provided, however, that no such settlement shall, without the Indemnified Parties’ written consent, include any factual stipulation referring to the Indemnified Parties or their conduct. After notice from the Company to such party of the Company’s election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Company will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the commencement of any litigation or proceedings against them in connection with the issuance or sale of the Fund Shares or the Contracts or the operation of the Fund.
8.2 Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the Company and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the “Indemnified Parties” for purposes of this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Underwriter) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund’s shares or the Contracts; and
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(i) | arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or prospectus or SAI or sales literature or other promotional material of the Fund (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Underwriter or Fund by or on behalf of the Company for use in the Registration Statement or prospectus for the Fund or in sales literature or other promotional material (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or |
(ii) | arise out of or as a result of statements or representations (other than statements or representations contained in the Registration Statement, prospectus or sales literature or other promotional material for the contracts not supplied by the Underwriter or persons under its control) or wrongful conduct of the Fund or Underwriter or persons under their control, with respect to the sale or distribution of the Contracts or Fund shares; or |
(iii) | arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, prospectus, SAI, or sales literature or other promotional material of the Contracts, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement or statements therein not misleading, if such statement or omission was made in reliance upon information furnished to the Company by or on behalf of the Fund; or |
(iv) | arise as a result of any material failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification and other qualification requirements specified in Article VI of this Agreement); or |
(v) | arise out of or result from any material breach of any representation and/or warranty made by the Underwriter in this Agreement or arise out of or result from any other material breach of this Agreement by the Underwriter; |
as limited by and in accordance with the provisions of Section 8.2(b) and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party’s willful misfeasance, bad faith, or
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gross negligence in the performance of such Indemnified Party’s duties or by reason of such Indemnified Party’s reckless disregard of obligations and duties under this Agreement or to the Company or the Account, whichever is applicable.
8.2(c) The Underwriter shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Underwriter in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Underwriter of any such claim shall not relieve the Underwriter from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Party, the Underwriter will be entitled to participate, at its own expense, in the defense thereof. The Underwriter also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action and to settle the claim at its own expense; provided, however, that no such settlement shall, without the Indemnified Parties’ written consent, include any factual stipulation referring to the Indemnified Parties or their conduct. After notice from the Underwriter to such party of the Underwriter’s election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Underwriter will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of the Contracts or the operation of the Account.
8.3 Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the “Indemnified Parties” for purposes of this Section 8.3) against any and all losses, claims, expenses, damages, liabilities (including amounts paid in settlement with the written consent of the Fund) or litigation (including legal and other expenses) to which the Indemnified Parties may be required to pay or may become subject under any statue or regulation, at common law or otherwise, insofar as such losses claims, expenses, damages, liabilities or expenses (or actions in respect thereof) or settlements, are related to the operations of the Fund and:
(i) | arise as a result of any material failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification and other qualification requirements specified in Article VI of this Agreement); or |
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(ii) | arise out of or result from any material breach of any representation and/or warranty made by the Fund in this Agreement or arise out of or result from any other material breach of this Agreement by the Fund; |
as limited by and in accordance with the provisions of Sections 8.3(b) and 8.3(c) hereof.
8.3(b) The Fund shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party’s willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party’s duties or by reason of such Indemnified Party’s reckless disregard of obligations and duties under this Agreement or to the Company, the Fund, the Underwriter or the Account, whichever is applicable.
8.3(c) The Fund shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Fund in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Fund of any such claim shall not relieve the Fund from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Fund will be entitled to participate, at its own expense, in the defense thereof. The Fund also shall be entitled to assume the expense thereof, with counsel satisfactory to the party named in the action and to settle the claim at its own expense; provided, however, that no such settlement shall, without the Indemnified Parties’ written consent, include any factual stipulation referring to the Indemnified Parties or their conduct. After notice from the Fund to such party of the Fund’s election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Fund will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the Fund of the commencement of any litigation or proceeding against it or any of its respective officers or directors in connection with the Agreement, the issuance or sale of the Contracts, the operation of the Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1 This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Maryland.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 Acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant (including, but not limited to, any Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith.
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ARTICLE X. Termination
10.1 This Agreement shall continue in full force and effect until the first to occur of:
(a) | termination by any party, for any reason with respect to some or all Designated Portfolios, by six (6) months’ advance written notice delivered to the other parties; or |
(b) | termination by the Company by written notice to the Fund and the Underwriter with respect to any Designated Portfolio based upon the Company’s determination that shares of the Fund are not reasonably available to meet the requirements of the Contracts; provided that such termination shall apply only to the Designated Portfolio not reasonably available; or |
(c) | termination by the Company by written notice to the Fund and the Underwriter in the event any of the Designated Portfolio’s shares are not registered issued or sold in accordance with applicable state and/or federal law or such law precludes the use of such shares as the underlying investment media of the Contracts issued or to be issued by the Company; or |
(d) | termination by the Fund or Underwriter in the event that formal administrative proceedings are instituted against the Company by the NASD, the SEC, the Insurance Commissioner or life official of any state or any other regulatory body regarding the Company’s duties under this Agreement or related to the sale of the contracts, the operation of any Account, or the purchase of the Fund shares; provided, however, that the Fund or Underwriter determines in it sole judgment exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Company to perform its obligations under this Agreement; or |
(e) | termination by the Company in the event that formal administrative proceedings are instituted against the Fund or Underwriter by the NASD, SEC, or any state securities or insurance department or any other regulatory body; provided, however, that the Company determines in its sold judgment exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Fund or Underwriter to perform its obligations under this Agreement; or |
(f) | termination by the Company by written notice to the Fund and the Underwriter with respect to any Designated Portfolio in the event that such Designated Portfolio ceases to qualify as a Regulated Investment |
17
Company under Subchapter M or fails to comply with the Section 817(h) diversification requirements specified in Article VI hereof, or if the Company reasonably believes that such Designated Portfolio may fail to so qualify or comply; or |
(g) | termination by the Fund or Underwriter by written notice to the Company in the event that the Contracts fail to meet the qualifications specified in Section 6.3 hereof, or if the Fund or Underwriter reasonably believes that such Contracts may fail to so qualify; or |
(h) | termination by either the Fund or the Underwriter by written notice to the Company, if either one or both of the Fund or the Underwriter respectively, shall determine, in their sole judgment exercised in good faith, that the Company has suffered a material adverse change in its business, operations financial condition, or prospects since the date of this Agreement or is the subject of material adverse publicity; or |
(i) | termination by the Company by written notice to the Fund and the Underwriter, if the Company shall determine, in its sole judgment exercised in good faith, that the Fund or the Underwriter has suffered a material adverse change in its business, operations, financial condition or prospects since the date of this Agreement or is the subject of material adverse publicity. |
10.2 Effect of Termination. Notwithstanding any termination of this Agreement, the Fund and the Underwriter shall, at the option of the Company, continue to make available additional shares of the Fund pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as “Existing Contracts”). Specifically, the owners of the Existing Contracts may be permitted to reallocate investments in the Fund, redeem investments in the Fund and/or invest in the Fund upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 10.2 shall not apply to any termination under Article VII and the effect of such Article VII termination shall be governed by Article VII of this Agreement. The parties further agree that this Section 10.2 shall not apply to any termination under Section 10.1(g) of this Agreement.
10.3 The Company shall not redeem Fund shares attributable to the Contracts (as opposed to Fund shares attributable to the Company’s assets held in the Account) except (i) as necessary to implement Contract owner initiated or approved transactions, (ii) as required by state and/or federal laws or regulations or judicial or other legal precedent of general application (hereinafter referred to as a “Legally Required Redemption”), or (iii) pursuant to the terms of a substitution order issued by the SEC pursuant to Section 26(b) of the 1940 Act. Upon request, the Company will promptly furnish to the Fund and the Underwriter the opinion of counsel for the Company (which counsel shall be reasonably satisfactory to the Fund and the Underwriter) to the effect that any redemption pursuant to clause (ii) above is a Legally Required Redemption. Furthermore, except in cases where
18
permitted under terms of the Contracts, the Company shall not prevent Contract owners from allocating payments to a Portfolio that was otherwise available under the Contracts without first giving the Fund or the Underwriter 90 days notice of its intention to do so.
10.4 Notwithstanding any termination of this Agreement, each party’s obligation under Article VIII to indemnify the other parties shall survive.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party.
If to the Fund:
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
Attention: Henry H. Hopkins, Esq.
If to the Company:
MML Bay State Insurance Company
Office of the General Counsel
1295 State Street
Springfield, MA 01111-0001
If to Underwriter:
T. Rowe Price Investment Services
100 East Pratt Street
Baltimore, Maryland 21202
Attention: Henry H. Hopkins, Esq.
ARTICLE XII Miscellaneous
12.1 All references herein to the Fund are to each of the undersigned Funds as if this agreement were between such individual Fund and the Underwriter and the Company. All references herein to the Adviser relate solely to the Adviser of such individual Funds, as appropriate. All persons dealing with a Fund must look solely to the property of such Fund, and in the case of a series company, the respective Designated Portfolio listed on Schedule A hereto as though such Designated Portfolio had separately contracted with the Company and the Underwriter for the enforcement of any claims against the Fund. The parties agree that neither the Board, officers, agents or shareholders assume any personal liability or responsibility for obligations entered into by or on behalf of the Fund.
19
12.2 Subject to the requirements of legal process and regulatory authority, each party hereto shall treat as confidential the names and addresses of the owners of the Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information without the express written consent of the affected party until such time as such information may come into the public domain.
12.3 The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument.
12.5 If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD, and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. Notwithstanding the generality of the foregoing, each party hereto further agrees to furnish the Connecticut Insurance Commissioner with any information or reports in connection with services provided under this Agreement which such Commissioner may request in order to ascertain whether the variable annuity operations of the Company are being conducted in a manner consistent with Connecticut variable annuity laws and regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies, and obligations at law or in equity, which the parties hereto are entitled to under state and federal laws.
12.8 This Agreement or any of the rights and obligations hereunder may not be assigned by any party without the prior written consent of all parties hereto.
12.9 The Company shall furnish or cause to be furnished, to the Fund or its designee copies of the following reports:
(a) | the Company’s annual statement (prepared under statutory accounting principles) and annual report (prepared under generally accepted account principles (“GAAP”), if any), as soon as practical and in any event within 90 days after the end of each fiscal year. |
(b) | the Company’s quarterly statements (statutory) (and GAAP, if any), as soon as practical and in any event with 45 days after the end of each quarterly period. |
20
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and on its behalf by its duly authorized representative and its seal to be hereunder affixed hereto as of the date specified below.
COMPANY: | MML BAY STATE INSURANCE COMPANY | |||
By its authorized officer | ||||
By: | /s/ Lawrence V. Burkett, Jr. | |||
Title: | President | |||
Date: | May 7, 1999 |
FUND: | T. ROWE PRICE EQUITY SERIES, INC. | |||
By its authorized officer | ||||
By: | /s/ Henry H. Hopkins | |||
Title: | Vice President | |||
Date: | April 28, 1999 |
UNDERWRITER: | T. ROWE PRICE INVESTMENT SERVICES, INC. | |||
By its authorized officer | ||||
By: | /s/ Darrell N. Braman | |||
Title: | Vice President | |||
Date: | April 28, 1999 |
21
SCHEDULE A
Name of Separate Account and |
Contracts Funded by Separate Account |
Designated Portfolio | ||
MML Bay State Variable Life Separate Account I Established July 13, 1982 |
Variable Life Select | T. Rowe Price Equity Series, Inc.:
• T. Rowe Price Mid-Cap Growth Portfolio |
Item 30. Exhibit (h) i. f. 1. i.
IN WITNESS WHEREOF, MML Bay State Insurance Company, T. Rowe Price Investment Services, Inc. and T. Rowe Price Equity Series, Inc. hereby amend this Schedule A in accordance with the Participation Agreement made and entered into as of the 28th day of April, 1999.
COMPANY: | MML BAY STATE INSURANCE COMPANY | |||
By its authorized officer | ||||
By: | /s/ James E. Miller | |||
Title: | EVP | |||
Date: | July 6, 2000 | |||
FUND: | T. ROWE PRICE EQUITY SERIES, INC. | |||
By its authorized officer | ||||
By: | /s/ Henry H. Hopkins | |||
Title: | Vice President | |||
Date: | June 28, 2000 | |||
UNDERWRITER: | T. ROWE PRICE INVESTMENT SERVICES, INC. | |||
By its authorized officer | ||||
By: | /s/ Darrell N. Braman | |||
Title: | Vice President | |||
Date: | June 28, 2000 |
JL\VIPFunds\Participation Agrmts\ScheduleA\MMLBayState-amd1
SCHEDULE A
Effective as of August 1, 2000, this Schedule A is hereby amended as follows:
Name of Separate Account and Date Established by Board of Directors |
Contracts Funded by Separate Account |
Designated Portfolio | ||
MML Bay State Variable Life Separate Account I Established July 13, 1982 |
Variable Life Select | T. Rowe Price Equity Series, Inc.:
• T. Rowe Price Mid-Cap Growth Portfolio | ||
Variable Life Plus | T. Rowe Price Equity Series, Inc.
• T. Rowe Price Mid-Cap Growth Portfolio |
JL\VIPFunds\Participation Agrmts\ScheduleA\MMLBayState-amd1
Item 30. Exhibit (h) i. f. 1. ii.
AMENDMENT TO PARTICIPATION AGREEMENT
Among
T. ROWE PRICE EQUITY SERIES, INC.
T. ROWE PRICE INVESTMENT SERVICES, INC.
And
MML BAY STATE LIFE INSURANCE COMPANY
This Amendment dated and effective this 21 day of March, 2013, amends the Participation Agreement among T. Rowe Price Equity Series, Inc. (“Fund”), T. Rowe Price Investment Services, Inc. (“Underwriter”) and MML Bay State Life Insurance Company, (“Company”) dated April 28, 1999, as amended, (“Agreement”). All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Agreement.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, and intending to be legally bound, the parties hereby agree to the following amendments to the Agreement:
The following Recitals are hereby added to the Agreement:
WHEREAS, the Securities and
Exchange Commission has adopted Rule 498 of the Securities Act of 1933, as amended
(“Rule 498” or the “Rule”),
and the Rule has become effective; and
WHEREAS, the parties wish to define their respective roles and responsibilities for complying with Rule 498;
Article III-A. Rule 498 Compliance is added to the Agreement:
ARTICLE III-A. Rule 498 Compliance
1. | For purposes of this Amendment, the terms “Summary Prospectus” and “Statutory Prospectus” shall have the same meaning as set forth in Rule 498. |
2. | Except as otherwise provided herein, if and to the extent that the Fund issues a Summary Prospectus for use by the Company in connection with the sale of shares of the Fund, the Fund shall be responsible for ensuring that any Summary Prospectus complies with the requirements of Rule 498 (b), (e) (for clarity, it is intended that the Fund will be entitled to the benefit of paragraph (e)(4) of the Rule), and (f)(3) and (4). |
3. | The Fund will promptly notify the Company in the event that any of the requirements of paragraph (e) of the Rule are not met for any reason, including due to any non-routine or extended interruption in the availability of the Web Site on which any documents of a nature referred to in paragraph (e) are posted by the Fund (“Fund Documents Web Site”). |
4. | The Fund will be responsible for compliance with the requirements of Rule 498(f)(1) to the extent of responding to contract owner requests for additional fund documents made directly to the Fund in accordance with the provisions of the Summary Prospectus in question, notwithstanding that the Company may, in its discretion, post a copy of the Fund’s Statutory Prospectuses and/or Summary Prospectuses, Statements of Additional Information, Supplements, Annual Reports, and Semi-Annual Reports on the Company’s Web site. |
5. | The Company will be responsible for compliance with the provisions of Rule 498(f)(1) to the extent of responding to contract owner requests for additional Fund documents made directly to the Company. The Company will be responsible for compliance with Rule 498(f)(2). |
6. | The Company will be responsible for ensuring compliance with the conditions set out in Rule 498(c) and (d) (other than conditions (3) and (4) of either such paragraph). |
7. | Any reference in the Agreement to a “prospectus” of the Fund shall be deemed to include reference to a Summary Prospectus, except where the context otherwise requires. |
8. | The parties agree that all other provisions of the Agreement, including the Indemnification provisions, will apply to the terms of this Amendment, as applicable. |
9. | The Fund shall provide the Company with a copy of the Summary Prospectus, in PDF or camera-ready form, electronic form, or a form otherwise suitable for printing or duplication. If the Summary Prospectus is not provided in a form suitable for printing or duplication, the Company reserves the right to use the Statutory Prospectus and the Fund shall bear the expense of printing and distributing the Statutory Prospectus as described in the Agreement. |
10. | The Fund or the Company may, in their discretion, determine not to make use of any one or more Summary Prospectuses. Until the Fund or the Company notifies the other to the contrary, each of the parties shall be entitled to assume that the other will make use of a Summary Prospectus in respect of each Fund. The Fund and the Company each agree that it will give the other party sufficient (and in any case at least 60 days) notice of its intention to cease use of any Summary Prospectus. The Company shall not change or alter in any way the content or appearance of any Summary Prospectus, except as may be necessary to comply with Rule 498(c)(2). |
11. | After the termination of any notice period provided to the Company, the Fund shall continue to maintain the Fund Documents Web Site in compliance with the requirements of this Amendment and Rule 498 for a minimum of 90 days, in order to comply with Rule 498(e)(1). |
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed in its name and on its behalf by its duly authorized officer.
MML BAY STATE LIFE INSURANCE COMPANY | T. ROWE PRICE EQUITY SERIES, INC. | |||||||
By its authorized officer | By its authorized officer | |||||||
By: | /s/ Richard J. Byrne |
By: | /s/ David Oestreicher | |||||
Print Name: | Richard J. Byrne |
Print Name: | David Oestreicher | |||||
Title: | Vice President |
Title: | Vice President | |||||
T. ROWE PRICE FIXED INCOME SERIES, INC. | ||||||||
By its authorized officer | ||||||||
By: | /s/ Fran Pollack-Mate | |||||||
Print Name: | Fran Pollack-Mate | |||||||
Title: | Vice President |
Item 30. Exhibit (k)
April 28, 2010
MML Bay State Life Insurance Company
100 Bright Meadow Blvd.
Enfield, CT 06082-1981
RE: | MML Bay State Life Insurance Company (MML Bay State) and its MML Bay State Variable Life Separate Account I | |
Registration Statement filed on Form N-6, File No. 033-82060, as amended (the Registration Statement) | ||
Prospectus Title: Variable Life Select |
Ladies and Gentlemen:
This opinion is furnished in connection with the above-referenced Registration Statement for the Variable Life Select Policy (Policy). MML Bay State Variable Life Separate Account I is the issuer of the Policy.
As an attorney for Massachusetts Mutual Life Insurance Company, the parent company for MML Bay State, I provide legal advice to MML Bay State in connection with the operation of its variable products. In such role, I am familiar with this Registration Statement for the Policy. In so acting, I have made such examination of the law and examined or supervised the examination of such records and documents as in my judgment are necessary or appropriate to enable me to render the opinion expressed below. For purposes of such examinations, I have assumed the genuineness of all signatures on original documents and the conformity to the original of all copies. On the basis of this examination, I am of the following opinion:
1. | MML Bay State is a corporation duly organized and validly existing under the laws of the State of Connecticut and is subject to regulation by the Connecticut Commissioner of Insurance. |
2. | MML Bay State Variable Life Separate Account I is a separate account duly created and validly existing in accordance with Connecticut law. |
3. | The Policy, when properly issued, is a legal and binding obligation of MML Bay State, enforceable in accordance with its terms. |
I hereby consent to the use of this opinion as an exhibit to this Registration Statement and any post-effective amendments thereto.
Very truly yours, | ||
/s/ John E. Deitelbaum | ||
John E. Deitelbaum | ||
Senior Vice President & Deputy General Counsel | ||
Massachusetts Mutual Life Insurance Company |
Item 30. Exhibit (n) i.
Consent of Independent Registered Public Accounting Firm
We consent to the use of our report dated February 25, 2022, with respect to the statutory financial statements of MML Bay State Life Insurance Company (the Company), included herein, and to the reference to our firm under the heading “Experts” in the registration statement No. 033-82060, Post-Effective Amendment No. 32, on Form N-6.
/s/ KPMG LLP
Hartford, Connecticut
April 25, 2022
Consent of Independent Registered Public Accounting Firm
We consent to the use of our report dated March 8, 2022, with respect to the financial statements of MML Bay State Variable Life Separate Account I, included herein, and to the reference to our firm under the heading “Experts” in the registration statement No. 033-82060, Post-Effective Amendment No. 32, on Form N-6.
/s/ KPMG LLP
Boston, Massachusetts
April 25, 2022
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