-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FIN7fVV+aMpT5uh7TgH9JwvRNDWrfsfO8cuAI+y/xLzQExPi2jkLSUBY2fuSLEgR crWaUGOwgJDQ/hIaqvObqQ== 0000950109-95-005223.txt : 19951214 0000950109-95-005223.hdr.sgml : 19951214 ACCESSION NUMBER: 0000950109-95-005223 CONFORMED SUBMISSION TYPE: S-1 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19951213 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANCOCK JOHN VARIABLE LIFE INSURANCE CO CENTRAL INDEX KEY: 0000755110 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 042664016 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1 SEC ACT: 1933 Act SEC FILE NUMBER: 033-64945 FILM NUMBER: 95601146 BUSINESS ADDRESS: STREET 1: 200 CLARENDON STREET STREET 2: JOHN HANCOCK PLACE P O BOX 111 CITY: BOSTON STATE: MA ZIP: 02117-0111 BUSINESS PHONE: 6175724390 MAIL ADDRESS: STREET 1: 200 CLARENDON ST STREET 2: P O BOX 111 CITY: BOSTON STATE: MA ZIP: 02117-0111 S-1 1 FORM S-1 As filed with the Securities and Exchange Commission on December 12, 1995 Registration No. 33- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) --------------- MASSACHUSETTS 6311 04-2664016 (STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I. R. S. EMPLOYER OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
200 CLARENDON STREET BOSTON, MASSACHUSETTS 02117 (617) 572-4390 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) --------------- FRANCIS C. CLEARY, JR., ESQUIRE JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY JOHN HANCOCK PLACE BOSTON, MASSACHUSETTS 02117 (NAME, ADDRESS INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) --------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: [X]
CALCULATION OF REGISTRATION FEE =============================================================================================================== PROPOSED TITLE OF EACH PROPOSED MAXIMUM CLASS OF SECURITIES AMOUNT TO BE MAXIMUM AGGREGATE AMOUNT OF TO BE REGISTERED REGISTERED OFFERING PRICE PER OFFERING PRICE/*/ REGISTRATION FEE UNIT/*/ - --------------------------------------------------------------------------------------------------------------- Interests under deferred annuity contracts........... $290,000 Not Applicable $290,000 $100 ===============================================================================================================
/*/The proposed maximum offering price per unit is not applicable as these securities are not issued in predetermined amounts or units. The maximum aggregate offering price is estimated solely for the purpose of determining the registration fee. --------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A) MAY DETERMINE. JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY CROSS REFERENCE SHEET
Form S-1 Item Prospectus Caption ------------- ------------------ 1. Forepart of the Registration Statement and Outside Front Cover Page of Prospectus.............................Outside Front Cover Page 2. Inside Front and Outside Back Cover Pages of Prospectus..................................Inside Front Cover 3. Summary Information, Risk Factors and Ratio of Earnings to Fixed Charges....................................Summary Information; The MVA Fixed Account; Financial Statements of the Company 4. Use of Proceeds.........................................The MVA Fixed Account 5. Determination of Offering Price................................Not Applicable 6. Dilution.......................................................Not Applicable 7. Selling Security Holders.......................................Not Applicable 8. Plan of Distribution............................Distribution of the Contracts 9. Description of Securities to be Registered....................................The Contracts; The Accumulation Period; The Annuity Period 10. Interests of Named Experts and Counsel........................................................Not Applicable 11. Information with Respect to the Registrant..............................Further Information About the Company 12. Disclosure of Commission Position on Indemnification for Securities Act Liabilities................................................Not Applicable
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY DEFERRED COMBINATION FIXED AND VARIABLE ANNUITY CONTRACTS JOHN HANCOCK VARIABLE ANNUITY ACCOUNT JF PROSPECTUS - MARCH __, 1996 The deferred annuity contracts ("Contracts") described in this prospectus may be funded by any one or more of the ten subaccounts ("Subaccounts") of John Hancock Variable Annuity Account JF ("Separate Account"), and by the Market Value Adjustment Fixed Account ("MVA Fixed Account"), which is part of the General Account of John Hancock Variable Life Insurance Company ("Company"). The Contracts are issued as group or individual Contracts. An individual's interest in a group Contract is evidenced by the issuance of a separate Certificate. In some states, Contracts are offered on an individual basis, with the issuance of an individual Contract. The Certificates and individual Contracts are collectively referred to herein as the "Contracts." The Contracts are designed to provide retirement benefits under tax qualified plans, as well as under non-qualified arrangements. All funds accumulate on a tax-deferred basis under the Contracts. You may elect a variable return investment option through the Separate Account or a guaranteed interest investment option through the MVA Fixed Account, or a combination of these two options. Under the variable return investment option, you can choose among one or more of the following Subaccounts of the Separate Account: International, Emerging Equities, Discovery, Diversified Core Equity, Sovereign Investors, 500 Index, Sovereign Bond, Strategic Income, Global Income, and Money Market. The assets of each Subaccount will be invested in a corresponding series, or "Fund," of the John Hancock Declaration Trust ("Trust"), a mutual fund advised by John Hancock Advisers, Inc. ("Adviser"). The prospectus for the Trust accompanies this prospectus, and describes the investment objectives, policies and risks of the Trust. Under the MVA Fixed Account guaranteed interest investment option, you can choose among various available Guarantee Periods, each of which has its own interest rate and expiration date. Amounts allocated to the MVA Fixed Account are credited with interest at a fixed rate for the entire Guarantee Period. A Market Value Adjustment, or "MVA," positive or negative, may be made upon annuitization or any withdrawal, surrender or transfer prior to the last day of any Guarantee Period. Currently, the number of investment options that may be selected to fund the Contracts is limited to 18. This prospectus sets forth information about the Separate Account and the MVA Fixed Account that a prospective investor ought to know before investing. A statement of additional information ("SAI") for the Separate Account, dated March __, 1996, has been filed with the Securities and Exchange Commission ("Commission") and is incorporated herein by reference. The SAI, the table of contents of which appears at page ___ of this prospectus, is available without charge upon written or oral request made to the Company's Servicing Office at the address or telephone number below. THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. IT IS NOT VALID UNLESS ACCOMPANIED BY THE CURRENT PROSPECTUS FOR THE TRUST. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. INTERESTS IN THE SEPARATE ACCOUNT AND THE MVA FIXED ACCOUNT ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED, ENDORSED, OR GUARANTEED BY THE U.S. GOVERNMENT, ANY BANK, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, ENTITY OR PERSON, AND INVOLVE INVESTMENT RISKS INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. Servicing Office JOHN HANCOCK INVESTORS SERVICES CORPORATION P.O. BOX 9298 BOSTON, MASSACHUSETTS 02205-9298 TELEPHONE 800-225-5291 [FAX 800-225-0000] TABLE OF CONTENTS
Page SPECIAL TERMS..................................................... 4 SYNOPSIS OF EXPENSE INFORMATION................................... 6 SUMMARY INFORMATION............................................... 10 THE COMPANY AND JOHN HANCOCK...................................... 15 SEPARATE ACCOUNT FINANCIAL INFORMATION............................ 15 THE SEPARATE ACCOUNT.............................................. 15 THE TRUST......................................................... 16 THE MVA FIXED ACCOUNT............................................. 17 Guaranteed Rates/Guarantee Periods............................... 17 Market Value Adjustment.......................................... 18 Investments by the Company....................................... 19 CHARGES UNDER THE CONTRACTS....................................... 20 Charges For Mortality And Expense Risks.......................... 20 Charges for Administrative Services.............................. 20 Contingent Deferred Sales Load................................... 20 Nursing Home Waiver of CDSL Charge............................... 22 Optional Death Benefit Charges................................... 22 Variations in Charges............................................ 23 Premium or Similar Taxes......................................... 23 THE CONTRACTS..................................................... 24 Purchase of Contracts............................................ 24 Premium Payments by Wire......................................... 24 THE ACCUMULATION PERIOD........................................... 25 Allocation of Premium Payments................................... 25 Value of Accumulation Units...................................... 25 Determination of MVA Fixed Account Value......................... 25 Transfers Among Subaccounts and Guarantee Periods................ 25 Dollar-Cost Averaging............................................ 26 Surrender of Contract; Partial Withdrawals....................... 26 Systematic Withdrawal............................................ 27 Standard Death Benefit........................................... 27 Optional One Year Stepped-Up Death Benefit....................... 28 Optional Accidental Death Benefit................................ 28 Payment of Death Benefits........................................ 28 THE ANNUITY PERIOD................................................ 29 Variable Monthly Annuity Payments................................ 30 Fixed Monthly Annuity Payments................................... 30 Annuity Options.................................................. 31 Transfers........................................................ 31 Other Conditions................................................. 31 VARIABLE ACCOUNT VALUATION PROCEDURES............................. 32 MISCELLANEOUS PROVISIONS.......................................... 32 Restriction on Assignment........................................ 32 Deferment of Payment............................................. 33 Reservation of Rights............................................ 33 Owner and Beneficiary............................................ 33
2 FEDERAL INCOME TAXES.............................................. 34 The Separate Account, the MVA Fixed Account, and the Company..... 34 Contracts Purchased Other Than to Fund a Tax Qualified Plan...... 34 Diversification Requirements..................................... 35 Contracts Purchased to Fund a Tax Qualified Plan................. 35 Withholding of Taxes............................................. 38 See Your Own Tax Adviser......................................... 38 FURTHER INFORMATION ABOUT THE COMPANY............................. 38 Business of the Company.......................................... 38 Selected Financial Data.......................................... 39 Recent Accounting Developments................................... 40 Management's Discussion and Analysis of Financial Condition and Results of Operations........................................... 40 Competition...................................................... 45 Employees and Facilities......................................... 45 Transactions with John Hancock................................... 45 Regulation....................................................... 45 Directors - Executive Officers................................... 47 Executive Compensation........................................... 48 SEPARATE ACCOUNT PERFORMANCE...................................... 48 REPORTS........................................................... 49 VOTING PRIVILEGES................................................. 49 CHANGES IN APPLICABLE LAW - FUNDING AND OTHERWISE................. 49 LEGAL PROCEEDINGS................................................. 50 DISTRIBUTION OF THE CONTRACTS..................................... 50 AVAILABLE INFORMATION............................................. 50 EXPERTS AND FINANCIAL STATEMENTS.................................. 51 TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.......... 51 FINANCIAL STATEMENTS OF THE COMPANY............................... F-1 APPENDIX A - SAMPLE MARKET VALUE ADJUSTMENT CALCULATIONS.......... APPENDIX B - VARIABLE ANNUITY INFORMATION FOR INDIVIDUAL RETIREMENT ANNUITIES.............................................
THE CONTRACTS OFFERED BY THIS PROSPECTUS MAY NOT BE AVAILABLE IN ALL STATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE OR SOLICIT AN OFFER IN THAT STATE. 3 SPECIAL TERMS As used in this prospectus, the following terms have the indicated meanings: ACCUMULATION PERIOD: the period referred to in the term "Accumulation Unit." ACCUMULATION UNIT: a unit of measurement used in determining the value of an Owner's interest in a Subaccount during the period prior to the commencement of annuity payments or, if earlier, the surrender of the Contract. The value of an Accumulation Unit will reflect the investment performance of the Subaccount and vary in dollar amount. ACCUMULATED VALUE: accumulated value of all Subaccounts and the MVA Fixed Account Value under a Contract. DATE OF MATURITY: the date elected by the Owner as of which annuity payments will commence. The election is subject to certain conditions described in "The Annuity Period". The Contract specifies a "Provisional Date of Maturity" as discussed under "The Annuity Period." ANNUITANT: the person designated in the Contract as such. ANNUITY OPTION: the provisions under which a series of annuity payments is made to the Annuitant or other payee, such as the Life Annuity with Ten Years Certain. ANNUITY UNIT: a unit of measurement used in determining the amount of any variable annuity payment. The value of an Annuity Unit for each Subaccount will depend upon the assumed investment rate and the investment performance of that Subaccount, and will vary in dollar amount. CONTRACT YEAR: the 12 month period following the date of issue of the Contract and each 12 month period thereafter. In Certificates issued under group Contracts, these periods are the "Certificate Year." FIXED ANNUITY OPTION: an annuity option under which the Company promises to pay the Annuitant, or any other payee designated by the Owner, fixed payments. GENERAL ACCOUNT: comprises all assets of the Company other than those in the Separate Account, and other than those in any other legally segregated separate account established by the Company. GUARANTEE PERIOD: the period for which a Guaranteed Rate is credited. GUARANTEED RATE: the rate of interest credited during any Guarantee Period, on an effective annual basis. MARKET VALUE ADJUSTMENT: positive or negative adjustment to MVA Fixed Account Value that is paid out at a time other than the last day of a Guarantee Period. MVA FIXED ACCOUNT: comprises all of the Guarantee Periods in which amounts are held under a Contract. MVA FIXED ACCOUNT VALUE: the amount of premium payments allocated to Guarantee Periods, plus interest, less any withdrawals and deductions for Contract Fees, optional benefit rider charges and any premium or similar taxes. NET PREMIUM PAYMENT: the amount of any premium payment reduced by any premium or similar taxes. 4 OWNER: the person or entity, usually the one to whom the Contract is issued, who has the sole right to exercise all rights and privileges under the Contract except as otherwise provided in the Contract. As used in this prospectus, Owner includes the "Participant" referred to in Certificates under Contracts issued on a group basis. SURRENDER VALUE: the amount that is payable upon a surrender of the Contract prior to the Date of Maturity. Surrender Value is equal to the Accumulated Value of a Contract after all applicable adjustments and deduction of all applicable charges. VARIABLE ANNUITY OPTION: an annuity option under which the Company makes to the Annuitant, or any other payee designated by the Owner, payments which vary in amount in accordance with the net investment experience of the Subaccounts selected by the Owner. Not all of the Subaccounts are available under the Contracts during the annuity period. WE, US, OUR: mean the Company. YOU, YOUR: mean the Owner. 5 SYNOPSIS OF EXPENSE INFORMATION The purpose of this synopsis is to provide an understanding of the various costs and expenses that the Owner will bear directly or indirectly. The synopsis includes expenses of the Separate Account and the Trust. For a more complete description of the fees and charges applicable under the Contracts, see "Charges Under the Contracts." The management fees charged the Funds and their annual operating expenses are more fully described in the prospectus for the Trust. CONTRACT OWNER TRANSACTION EXPENSES CONTINGENT DEFERRED SALES LOAD (or "CDSL," as a percentage of premium payments withdrawn in excess of the Free Withdrawal Value) /1/
YEARS FROM DATE OF PREMIUM PAYMENT TO CDSL DATE OF SURRENDER OR WITHDRAWAL PERCENTAGE ------------------------------- ---------- 7 or more ....................................................................... 0% 6 but less than 7 ............................................................... 2% 5 but less than 6 ............................................................... 3% 4 but less than 5 ............................................................... 4% 3 but less than 4 ............................................................... 5% 2 but less than 3 ............................................................... 5% less than 2 ..................................................................... 6% ANNUAL CONTRACT FEE /2/ ............................................................ $30
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of Account Value)
Initial Premium Payment ----------------------- Less than $250,000 $250,000 or More -------- -------- Mortality and Expense Risk Charge ................................... 0.90% 0.90% Administration Charge ............................................... 0.35% 0.10% ----- ----- Total 1.25% 1.00% ==== ====
__________________________________ /1/In any Contract Year an Owner may withdraw, without a CDSL, an amount equal to 10% of the Accumulated Value as of the beginning of the Contract Year less any prior withdrawals, including prior CDSLs, during the Contract Year. This is the "Free Withdrawal Value." /2/The annual Contract Fee is deducted on Contracts having an Accumulated Value of less than $10,000. The Contract Fee is deducted at the beginning of each Contract Year after the first and at a full surrender during a Contract Year. The Contract Fee is assessed only during the Accumulation Period, and is referred to as the "Certificate Fee" in Certificates issued under group Contracts. 6 TRUST ANNUAL EXPENSES (as a percentage of average net assets)
MANAGEMENT OTHER TOTAL FUND FUND FEES EXPENSES/3/ EXPENSES ---- ------- -------- -------- John Hancock V.A. International Fund 0.90% 0.25% 1.15% John Hancock V.A. Emerging Equities Fund 0.75% 0.25% 1.00% John Hancock V.A. Discovery Fund 0.75% 0.25% 1.00% John Hancock V.A. Diversified Core Equity Fund 0.70% 0.25% 0.95% John Hancock V.A. Sovereign Investors Fund 0.60% 0.25% 0.85% John Hancock V.A. 500 Index Fund 0.35% 0.25% .60% John Hancock V.A. Sovereign Bond Fund 0.50% 0.25% .75% John Hancock V.A. Strategic Income Fund 0.60% 0.25% .85% John Hancock V.A. Global Income Fund 0.75% 0.25% 1.00% John Hancock V.A. Money Market Fund 0.50% 0.25% 0.75%
_____________________ /3/ Other Fund expenses are based on estimates for the current fiscal year. EXAMPLES If you surrender your Contract at the end of the applicable time period, you would pay the following current expenses on a $1,000 investment allocated to one of the Subaccounts listed, assuming 5% annual return on assets:
1 YEAR 3 YEARS ------ ------- INTERNATIONAL............................................... $79 $123 EMERGING EQUITIES........................................... 78 118 DISCOVERY................................................... 78 118 DIVERSIFIED CORE EQUITY..................................... 77 117 SOVEREIGN INVESTORS......................................... 76 114 500 INDEX................................................... 74 106 SOVEREIGN BOND.............................................. 75 110 STRATEGIC INCOME............................................ 76 114 GLOBAL INCOME............................................... 78 118 MONEY MARKET................................................ 75 110
7 If you annuitize at the end of the applicable time period, or if you do not surrender your Contract, you would pay the following current expenses on a $1,000 investment allocated to one of the Subaccounts listed, assuming 5% annual return on assets:
1 YEAR 3 YEARS ------ ------- INTERNATIONAL.................................................. $25 $78 EMERGING EQUITIES.............................................. 24 73 DISCOVERY...................................................... 24 73 DIVERSIFIED CORE EQUITY........................................ 23 72 SOVEREIGN INVESTORS............................................ 22 69 500 INDEX...................................................... 20 61 SOVEREIGN BOND................................................. 21 65 STRATEGIC INCOME............................................... 22 69 GLOBAL INCOME.................................................. 24 73 MONEY MARKET................................................... 21 65
________________ The annual Contract Fee reflected in the examples has been expressed as an annual percentage of assets based on the Company's experience with other variable annuity contracts using the same contract fee provision. The examples do not give effect to any premium taxes that may be applicable, or to any of the charges described under "Optional Benefit Riders," below. The examples should not be considered representations of past or future expenses; actual expenses may be greater than or less than those shown above. OPTIONAL BENEFIT RIDERS The Company offers, subject to state availability, three optional benefit riders that may be elected by the Owner. A separate monthly charge is made for each rider selected. The charge, as applicable, is made pro-rata based on relative values through a reduction in Accumulation Units of the Subaccounts and dollar amounts in the Guarantee Periods under a Contract. The applicable charge is equal to the Accumulated Value at the beginning of each month multiplied by 1/12th of the following annual percentage rates: ONE YEAR STEPPED-UP DEATH BENEFIT RIDER ............................................. 0.15% ACCIDENTAL DEATH BENEFIT RIDER (terminates at age 80) ............................... 0.10% NURSING HOME WAIVER OF CDSL RIDER ................................................... 0.05%
For a description of these riders, see "One Year Stepped-Up Death Benefit Rider" and "Accidental Death Benefit Rider" under "The Accumulation Period," and "Nursing Home Waiver of CDSL Rider" under "Charges Under the Contracts." 8 MARKET VALUE ADJUSTMENT AND CHARGES APPLICABLE TO THE MVA FIXED ACCOUNT Except when effected on the last day of a Guarantee Period, surrenders, transfers or partial withdrawals from the MVA Fixed Account, including amounts withdrawn to provide an annuity, are subject to a Market Value Adjustment that may increase or reduce the amount of MVA Fixed Account Value paid out by the Company. The Market Value Adjustment is computed pursuant to a formula that is described under "The MVA Fixed Account-Market Value Adjustment." Of the expenses summarized above, only the "Contingent Deferred Sales Load," "Annual Contract Fee," and "Optional Benefit Riders" charges are applicable to the MVA Fixed Account. 9 SUMMARY INFORMATION The Contracts are designed for purchase by individuals doing their own retirement planning, including plans and trusts that do not qualify for special tax treatment under the Internal Revenue Code of 1986, as amended ("Code"), and for purchase in connection with (1) pension and profit-sharing plans qualified under Section 401(c) of the Code, known as "H.R. 10 plans," (2) pension or profit-sharing plans qualified under Sections 401(a) or 403(a) of the Code, known as "corporate plans," (3) plans qualifying under Section 401(k) of the Code, (4) annuity purchase plans adopted under the provisions of Section 403(b) of the Code by public school systems and certain other tax-exempt organizations, (5) individual retirement annuity plans satisfying the requirements of Section 408 of the Code, and (6) deferred compensation plans maintained by a state or political subdivision or tax exempt organizations under Section 457 of the Code. For additional information pertaining to the purchase of a Contract as an Individual Retirement Annuity, see "Appendix B - Variable Annuity Information for Individual Retirement Annuities". The Company has appointed its affiliated company, John Hancock Investors Services Corporation ("JHISC"), as its Servicing Agent for the purpose of facilitating various administrative, processing, servicing and similar functions related to the Contracts. JHISC may be reached at the address, telephone and fax numbers shown on the cover page of this prospectus. In order to accommodate "employer-related" plans funded by the Contracts, Contract forms using "unisex" purchase rates, i.e., rates the same for males and females, are available. Any questions you have as to whether you are participating in an employer-related plan should be directed to your employer. Any other question you or your employer may have with respect to this topic can be directed to JHISC. THE CONTRACTS The Contracts offered are "flexible premium" deferred annuity Contracts under which premium payments may be made in a single sum or at intervals until the Date of Maturity. At that time annuity payments by the Company will commence unless the Owner elects to surrender the Contract, in which case, the Surrender Value will be paid. An application for a Contract is available from broker-dealers and certain financial institutions who are participating in the distribution of the Contracts. Applications are also available directly from the Company by contacting JHISC. Upon completion, the application is transmitted, along with the premium payment, to JHISC for processing. See "The Contracts." JOHN HANCOCK VARIABLE ANNUITY ACCOUNT JF The Separate Account is a separate investment account of the Company. It is operated as a unit investment trust and supports the variable benefits payable under the Contracts. There are currently ten Subaccounts within the Separate Account: International, Emerging Equities, Discovery, Diversified Core Equity, Sovereign Investors, 500 Index, Sovereign Bond, Strategic Income, Global Income, and Money Market. Each Subaccount invests in a corresponding Fund of the Trust. The Trust is a "series" type mutual fund. Each Fund has a different investment objective. The Adviser provides investment management services to the Funds for which it receives a fee from the Trust. The Adviser utilizes sub-advisers for three of the Funds. John Hancock Advisers International Limited ("JHAI") provides sub-investment management services for the International Fund; Independence Investment Associates, Inc. ("IIA") provides sub-advisory services for the Diversified Core Equity Fund; and Sovereign Asset Management Corporation ("SAMC") together with JHAI and IIA, the "Sub-advisers") provides sub-advisory services for the Sovereign Investors Fund. The Sub-advisers are indirect, wholly-owned subsidiaries of John Hancock Mutual Life Insurance Company ("John Hancock"). Each 10 Sub-adviser receives a fee from the Adviser for these services which in no way increases the costs borne by the Trust, the Account, or the Owners. For a more detailed description of the Trust, see its prospectus which accompanies this prospectus. MVA FIXED ACCOUNT INVESTMENT OPTIONS Any amount allocated by the Owner to the MVA Fixed Account earns interest at a Guaranteed Rate. The level of the Guaranteed Rate depends on the length of the Guarantee Period selected by the Owner. We currently make available various Guarantee Periods with durations of up to ten years. If amounts are transferred, surrendered or otherwise paid out at any time other than the last day of the applicable Guarantee Period, a Market Value Adjustment will be applied that will increase or decrease the amount of MVA Fixed Account Value paid out. Accordingly, the Market Value Adjustment can result in gains or losses. For a more complete discussion of the MVA Fixed Account investment options and Market Value Adjustment, see "The MVA Fixed Account." PRINCIPAL UNDERWRITER AND DISTRIBUTOR John Hancock, a registered broker-dealer, acts as the principal underwriter of the Account. John Hancock Funds, Inc. ("JHFI"), a registered broker-dealer affiliate of John Hancock, acts as principal distributor of the Contracts. The Contracts are offered through broker-dealers and financial institutions unaffiliated with the Company, and through John Hancock's own sales agents. INVESTMENT OF PREMIUM PAYMENTS Premium payments received under Contracts, after deduction of any premium or similar taxes, are allocated to one or more of the Subaccounts and/or one or more of the Guarantee Periods in the MVA Fixed Account, as directed by the Owner. Premium payments may be mailed to JHISC, P. O. Box 9298, Boston, MA 02205- 9298. All checks or other money orders should be made payable to John Hancock Variable Life Insurance Company. Procedures also have been established for the receipt of premium payments by wire order. See "Payments by Wire" under "The Contracts." MINIMUM AND MAXIMUM PREMIUM PAYMENTS Each premium payment must be at least $500. No premium payment may exceed $1,000,000 in any Contract Year. No premium payments may be made within six months prior to the Annuitant's 85th birthday or thereafter. These limits may be waived by the Company. 11 FEES AND CHARGES ACCOUNT CHARGES Charges made directly to the Account include daily charges aggregating 0.90% annually for mortality and expense risks, and daily charges at the annual rate of 0.35% and 0.10% under Contracts with initial premium payments of less than $250,000 and $250,000 or more, respectively. These charges are based on the average daily net asset value of each Subaccount, and reduce the unit values of the Subaccounts. TRUST CHARGES Management fees at annual rates ranging from 0.35% to 0.95% of average daily net assets are paid by the Funds to the Adviser. The Funds also incur charges for other expenses incurred in their operations. Management fees and other expenses are reflected in the net asset value of each Fund's shares. WITHDRAWAL CHARGES A withdrawal charge, or contingent deferred sales load (the CDSL), if applicable, is deducted from the amount of any premium payment withdrawn from the Accumulated Value under a Contract, including any partial withdrawal or any full withdrawal upon a surrender of the Contract. The charge will not apply to premium payments withdrawn after seven years from the date the payments were received by the Company. In any Contract Year, up to 10% of the Accumulated Value as of the beginning of the Contract Year, less any prior withdrawals, including prior CDSLs, during the Contract Year, may be withdrawn without a CDSL. The CDSL also does not apply to a withdrawal made to provide an annuity or a death benefit or, if necessary, to meet minimum distribution requirements under qualified plans, or under the waiver described in the next paragraph. NURSING HOME WAIVER OF CDSL CHARGE An optional "Nursing Home Waiver of CDSL" rider may be elected at the time the Owner applies for a Contract. Under this benefit, the CDSL, if otherwise applicable, will be waived on any withdrawals if beginning at least 30 days after the date of issue, the Owner becomes confined to a long term care facility ("LTCF") for at least 90 consecutive days, subject to certain conditions. At the beginning of each month, we make a charge for this rider equal to 1/12th of 0.05% (annual percentage rate) of the Accumulated Value of the Contract at that time. The benefit is not available for applicants over age 75. CONTRACT FEE AND CERTAIN OTHER CHARGES An annual Contract Fee of $30 is deducted during the Accumulation Period under Contracts having an Accumulated Value of less than $10,000. The Company reserves the right to increase the Contract Fee up to $50, subject to applicable state regulations. No Contract Fee will be deducted if the Accumulated Value is $10,000 or more. Charges also may be made for any taxes or interest expense attributable to the Contracts or the Account. Deductions are also made for any applicable premium or similar taxes based on the amount of a premium payment. Currently, such taxes in certain states are up to 5% of each premium payment. In addition, separate monthly charges are made for the optional death benefit riders described under "Death Benefits" below. A more detailed description of all fees and charges applicable under the Contracts appears under "Charges 12 Under the Contracts." Fees and charges of the Trust are described in its prospectus which is attached to this prospectus. WITHDRAWAL PRIOR TO DATE OF MATURITY At any time before annuity payments begin, if the Annuitant is living, a Contract may be surrendered in full for its Surrender Value or a portion of the Accumulated Value may be withdrawn, subject to applicable charges and certain limits. See "Surrender of Contract; Partial Withdrawals" under "The Contracts." A 10% tax penalty may be applicable to withdrawals before the Owner attains age 59 1/2. A Market Value Adjustment may also be applied. See "The MVA Fixed Account." SYSTEMATIC WITHDRAWAL The Accumulated Value of a Contract may be systematically withdrawn on a monthly, quarterly, semi-annual or annual basis, as elected by the Owner. Systematic withdrawals in any Contract Year may not exceed 10% of the Accumulated Value at the beginning of the Contract Year. A minimum Accumulated Value of $15,000 is required to start the program and certain other conditions apply. See "Systematic Withdrawal" under "The Accumulation Period." DOLLAR COST AVERAGING The Owner may elect to have amounts automatically transferred from the Money Market Subaccount into one or more of the other Subaccounts of the Account. Transfers of $250 or more may be made monthly, quarterly, semi-annually or annually. A minimum Accumulated Value of $15,000 in the Money Market Subaccount is required to start the program. See "Dollar Cost Averaging" under "The accumulation Period." DEATH BENEFITS STANDARD DEATH BENEFIT The Contracts include a standard death benefit payable upon the death of the Annuitant prior to the Date of Maturity. The beneficiary will receive the greater of (a) the Accumulated Value, adjusted by any Market Value Adjustment, and (b) the aggregate amount of the premium payments made under the Contract, less any prior withdrawals and CDSLs. OPTIONAL ONE YEAR STEPPED-UP DEATH BENEFIT At the time a Contract is applied for, the Owner may elect a one year stepped-up death benefit rider designed to enhance the death benefit payable to the beneficiary. Under this rider the benefit payable will be the greater of (a) the standard death benefit, and (b) the highest Accumulated Value, adjusted by a Market Value Adjustment, of the Contract as of any Contract anniversary preceding the anniversary nearest the Annuitant's 81st birthday, plus any premium payments, less any withdrawals and CDSLs, since such Contract anniversary. At the beginning of each month, we make a charge for this rider equal to 1/12th of 0.15% (annual percentage rate) of the Accumulated Value of the Contract at that time. 13 OPTIONAL ACCIDENTAL DEATH BENEFIT At the option of the Owner, an accidental death benefit rider may be elected. Under this rider, upon the accidental death of the Annuitant prior to the Date of Maturity, the beneficiary will receive, in addition to any other death benefit, an amount equal to the Accumulated Value of the Contract, as of the date of receipt of proof of the Annuitant's death, up to a maximum of $200,000. The benefit is available to age 80, and only may be elected at the time the Contract is applied for. At the beginning of each month, we make a charge for this rider equal to 1/12th of 0.10% (annual percentage rate) of the Accumulated Value of the Contract at that time. 10 DAY FREE-LOOK PROVISION An Owner may return an individual Contract for any reason within 10 days after its receipt and receive in cash the Accumulated Value, plus any deductions previously made from premium payments for premium or similar taxes. Owners returning individual Contracts issued in North Carolina, South Carolina, Washington, West Virginia, and Utah, and all individual Contracts issued under an individual retirement account, will receive gross premium payments made. If the individual Contract is issued in California to an Owner 60 years of age or older, the Owner may return the individual Contract within 30 days after its receipt, and, in that event, the gross premium payments made will be refunded to the Owner. In most states, the rights to return Contracts described in the preceding paragraph apply only to Contracts issued in individual form. In some states, however, such rights may also apply to certificates under Contracts issued in group form. 14 SEPARATE ACCOUNT FINANCIAL INFORMATION The Separate Account has not yet commenced operations and therefore has no assets or liabilities. Accordingly, neither this prospectus nor the SAI contains any financial statements for the Separate Account. THE COMPANY AND JOHN HANCOCK The Company was organized under the laws of the Commonwealth of Massachusetts in 1979 and commenced insurance operations in 1980. It is a wholly-owned subsidiary of John Hancock, a mutual life insurance company organized under the laws of the Commonwealth of Massachusetts in 1862. The Company's Home Office is located at 200 Clarendon Street, Boston, Massachusetts 02117. See "Further Information About the Company." John Hancock is a major financial services company. As the Company's parent, it is anticipated that John Hancock will from time to time make capital contributions to the Company to enable it to meet its reserve requirements and expenses in connection with its business. John Hancock is committed to make additional capital contributions if necessary to ensure that the Company maintains a positive net worth. THE SEPARATE ACCOUNT The Separate Account is a separate account of the Company established under Massachusetts law on November 13, 1995. The Separate Account, although an integral part of the Company, meets the definition of a "separate account" under the Federal securities laws and is registered as a unit investment trust under the Investment Company Act of 1940, as amended ("1940 Act"). The Separate Account's assets are the property of the Company and the obligations under the Contracts are the obligations of the Company. Each Contract provides that the portion of the Separate Account's assets equal to the reserves and other liabilities under the Contract with respect to the Separate Account shall not be chargeable with liabilities arising out of any other business the Company may conduct. In addition to the net assets and other liabilities for Contracts, the Separate Account's assets include assets derived from charges made by the Company and, possibly, funds contributed by the Company to commence operation of the Subaccounts. From time to time these additional assets may be transferred in cash by the Company to its general account. Before making any such transfer, the Company will consider any possible adverse impact the transfer might have on any Subaccount. Income, gains and losses, whether or not realized, from assets allocated to the Separate Account are, in accordance with the Contracts, credited to or charged against the Separate Account without regard to other income, gains or losses of the Company. There currently are ten Subaccounts in the Separate Account: the International, Emerging Equities, Discovery, Diversified Core Equity, Sovereign Investors, 500 Index, Sovereign Bond, Strategic Income, Global Income, and Money Market Subaccounts. The assets in each Subaccount are invested in shares of a corresponding Fund of the Trust. The assets of one Subaccount are not necessarily legally insulated from liabilities associated with another Subaccount. New subaccounts may be added and made available to Owners. Prior to the date of this prospectus, the Separate Account had no operations. 15 THE TRUST The Trust is a "series" type of mutual fund that is registered under the 1940 Act as an open-end diversified management investment company and organized as a Massachusetts business trust. The Trust serves as an investment medium for the Account. In the future, other unit investment trust separate accounts established by John Hancock and by the Company for variable life insurance policies and variable annuity contracts may also invest in the Trust. A full description of the Trust, its investment objectives, policies and restrictions, its charges and expenses, and all other aspects of its operation is contained in its attached prospectus (which should be read carefully before investing) and the SAI referred to therein, which should be read together with this prospectus. Among other items, the description of the need to monitor events on the part of the Trust's Board of Trustees for possible conflicts between separate accounts and other consequences should be noted. The following is a brief summary of the investment objectives of each Fund of the Trust. JOHN HANCOCK V.A. INTERNATIONAL FUND - seeks long-term growth of capital. The Fund invests primarily in equity securities of foreign companies and governments. JOHN HANCOCK V.A. EMERGING EQUITIES FUND - seeks long-term growth of capital. The potential for growth of capital is the sole basis for selection of portfolio securities. Current income is not a factor in this selection. JOHN HANCOCK V.A. DISCOVERY FUND - seeks long-term growth of capital. The Fund invests primarily in common stocks of companies of all levels of capitalization which are believed by the Fund's managers to offer superior prospects for growth. Current income is not a factor of consequence in the selection of stocks for the Fund. JOHN HANCOCK V.A. DIVERSIFIED CORE EQUITY FUND - seeks above-average total return, consisting of capital appreciation and income. The Fund will diversify its investments to create a portfolio focused on stocks of companies that management believes are undervalued and have improving fundamentals over both the intermediate and long term. JOHN HANCOCK V.A. SOVEREIGN INVESTORS FUND - seeks long-term growth of capital and income without assuming undue market risks. At times, however, because of market conditions, the Fund may find it advantageous to invest primarily for current income. The Fund invests primarily in common stocks of seasoned companies in sound financial condition with a long record of paying increasing dividends. JOHN HANCOCK V.A. 500 INDEX FUND - seeks to replicate the aggregate price and yield performance of the Standard & Poor's 500 Stock Price Index ("S&P 500 Index"), although there can be no assurance that the Fund will do so. The Fund invests in all 500 stocks in the S&P 500 Index in approximately the same proportions as they are represented in the Index. JOHN HANCOCK V.A. SOVEREIGN BOND FUND - seeks a high level of current income consistent with prudent investment risk. The Fund invests primarily in a diversified portfolio of investment grade fixed income securities of U.S. and foreign issuers, although the Fund may invest up to 25% of its total assets in lower-rated high-yield, high-risk fixed income securities. 16 JOHN HANCOCK V.A. STRATEGIC INCOME FUND - seeks a high level of current income. The Fund invests primarily in foreign government and corporate fixed income securities, U.S. Government securities and lower-rated high-yield, high- risk fixed income securities of U.S. issuers. JOHN HANCOCK V.A. GLOBAL INCOME FUND - seeks competitive total investment return, consisting of current income and capital appreciation. The Fund invests primarily in a global portfolio of high-grade, fixed income securities. JOHN HANCOCK V.A. MONEY MARKET FUND - seeks maximum current income consistent with capital preservation and liquidity. The Fund invests only in high-quality money market instruments. _______________________________________ Prospective investors should carefully read the risk disclosures contained in the Trust prospectus with regard to the investment risks of the high-yield, high-risk fixed income securities invested in by the John Hancock V.A. Sovereign Bond Fund and the John Hancock V.A. Strategic Income Fund. The Company will purchase and redeem shares of the Trust for the Separate Account at their net asset value without any sales or redemption charges. The shares of the Trust represent an interest in the Funds that correspond to the Subaccounts of the Separate Account. Any dividend or capital gains distributions received by the Separate Account will be reinvested in shares of the respective Funds at their net asset value as of the dates paid. Any such distribution will result in a reduction in the value of the shares of the Fund from which the distribution was made. However, the total net asset value of the Separate Account, or of any Fund, will not change because of such distribution. On each Valuation Date, shares of each Fund are purchased or redeemed by the Company for each Subaccount based on, among other things, the amount of net premium payments allocated to the Subaccount, dividends and distributions reinvested, transfers to, from and among Subaccounts, all to be effected as of that date. Such purchases and redemptions are effected at the net asset value per share for each Fund determined on that same Valuation Date. THE MVA FIXED ACCOUNT GUARANTEED RATES/GUARANTEE PERIODS Amounts allocated by the Owner to the MVA Fixed Separate Account earn interest at a Guaranteed Rate commencing with the date of allocation. The Guaranteed Rate continues for a number of years, i.e., the Guarantee Period, selected by the Owner. At the end of the Guarantee Period, the Accumulated Value in that Guarantee Period, including interest accrued thereon, will be automatically transferred to the Money Market Subaccount unless the Owner elects to: (a) withdraw such Accumulated Value from the Contract, (b) allocate all or a portion of the Accumulated Value to a new Guarantee Period of the same duration as the expiring Guarantee Period, or (c) allocate the Accumulated Value to a different Guarantee Period or periods or to one or more of the Subaccounts. The Company must be notified of any election by the Owner at JHISC's office in a form satisfactory to it within 30 days prior to the end of the expiring Guarantee Period. The first day of any new Guarantee Period or other reallocation will be the day after the end of the prior Guarantee Period. The Company will notify the Owner at least 30 days prior to the end of any Guarantee Period. A Guarantee Period will generally not be available if it extends beyond the Date of Maturity. The Company currently makes available Guarantee Periods of various durations. At any time, the Guarantee Periods may be one year and multiple year periods of up to ten years. The Company reserves the right to add or delete Guarantee Periods from those that are available at any time for new allocations. Each 17 Guarantee Period has its own Guaranteed Rate, which may differ from those for other Guarantee Periods. We may, at our discretion, change the Guaranteed Rate for future Guarantee Periods. These changes will not affect the Guaranteed Rates being paid on Guarantee Periods that have already commenced. Each allocation or transfer of an amount to a Guarantee Period commences the running of a new Guarantee Period with respect to that amount, which will earn a Guaranteed Rate that will continue unchanged until the end of that period. A minimum guaranteed interest rate of 3% applies to all Contracts issued on an individual basis. Contracts issued on a group basis do not provide for any minimum interest rate. The Company declares the Guaranteed Rates from time to time as market conditions and other factors dictate. The Company advises an Owner of the Guaranteed Rate for a chosen Guarantee Period at the time a premium payment is received, a transfer is effectuated or a Guarantee Period is renewed. The Company has no specific formula for establishing the Guaranteed Rates for the Guarantee Periods. The rates may be influenced by, but not necessarily correspond to, interest rates generally available on the types of investments acquired with amounts allocated to the Guarantee Period. See "Investments by the Company," below. The Company, in determining Guaranteed Rates, may also consider, among other factors, the duration of a Guarantee Period, regulatory and tax requirements, sales and administrative expenses borne by the Company, risks assumed by the Company, the Company's profitability objectives, and general economic trends. THE COMPANY'S MANAGEMENT MAKES THE FINAL DETERMINATION OF THE GUARANTEED RATES TO BE DECLARED. THE COMPANY CANNOT PREDICT OR ASSURE THE LEVEL OF ANY FUTURE GUARANTEED RATES IN EXCESS OF ANY APPLICABLE MINIMUM RATE. Information concerning the Guaranteed Rates applicable to the various Guarantee Periods, and the durations of the Guarantee Periods offered, at any time may be obtained from the Company by calling JHISC at the telephone number indicated on the cover page of this prospectus. MARKET VALUE ADJUSTMENT If any MVA Fixed Account Value is withdrawn, transferred or otherwise paid out before the end of the Guarantee Period in which it is being held, a Market Value Adjustment will be applied. This generally includes amounts that are paid out as death benefits pursuant to the Contract, amounts applied to an annuity option, and amounts paid as a single sum in lieu of an annuity. No Market Value Adjustment will be applied to amounts that are paid out on the last day of a Guarantee Period. The Market Value Adjustment may increase or decrease the amount of MVA Fixed Account Value being withdrawn, transferred or otherwise paid out. The comparison of two Guaranteed Rates determines whether the Market Value Adjustment produces an increase or a decrease. The first rate to compare is the Guaranteed Rate for the existing Guarantee Period from which amounts are being transferred or withdrawn. The second rate is the Guaranteed Rate then being offered for new Guarantee Periods of the same duration as that remaining in the existing Guarantee Period. If the first rate exceeds the second by more than 1/2%, the Market Value Adjustment produces an increase. If the first rate does not exceed the second by at least 1/2%, the Market Value Adjustment produces a decrease. Sample calculations are shown in Appendix A. The Market Value Adjustment will be determined by multiplying the amount being withdrawn or transferred from the Guarantee Period (before deduction of any applicable CDSL) by the following factor: [((1+g)/(1+c+.005)) circumflex n/12]-1 where, 18 . g is the Guaranteed Rate in effect for the current Guarantee Period (in decimal form). . c is the current Guaranteed Rate (in decimal form) in effect for new Guarantee Periods with durations equal to the number of years remaining in the current Guarantee Period (rounded up to the nearest whole number of years). If not available, the Company will declare a Guaranteed Rate solely for this purpose that is consistent with interest rates for Guarantee Periods that are currently available. . n is the number of complete months from the date of withdrawal to the end of the current Guarantee Period. (Where less than one complete month remains, n will equal one unless the withdrawal is made on the last day of the Guarantee Period, in which case no adjustment will apply.) INVESTMENTS BY THE COMPANY The Company's obligations with respect to the MVA Fixed Account are supported by its General Account assets, which also support obligations incurred by the Company under other insurance and annuity contracts. Investments purchased with amounts allocated to the MVA Fixed Account are the property of the Company and Owners have no legal rights in, or participation in the performance of, such investments. Subject to applicable law, the Company has sole discretion over the investment of assets in the General Account, including the MVA Fixed Account, and neither account is subject to registration under the 1940 Act. Amounts in the Company's General Account and the MVA Fixed Account will be invested in compliance with applicable state insurance laws and regulations concerning the nature and quality of investments for the General Account. See the Company's Financial Statements for information on the Company's investments. Investment management for amounts in the General Account and in the MVA Fixed Account is provided to the Company by John Hancock. The Company intends to consider the return available on the instruments in which it intends to invest amounts allocated to the MVA Fixed Account when it establishes Guaranteed Interest Rates. Such return is only one of the factors considered in establishing the Guaranteed Interest Rates. See "Guaranteed Interest Rates/Guarantee Periods," above. The Company expects that amounts allocated to the MVA Fixed Account will be invested according to its detailed investment policy and guidelines, in fixed income obligations, including corporate bonds, mortgages, mortgage-backed and asset-backed securities and government and agency issues having durations in the aggregate consistent with those of the Guarantee Periods. JHVLICO intends to invest proceeds from the Contracts attributable to the MVA Fixed Account primarily in domestic investment-grade securities. In addition, derivative contracts will be used only for hedging purposes, to reduce the ordinary business risk of the Contracts associated with changes in interest rates, and not for speculating on future changes in the financial markets. Notwithstanding the foregoing, the Company is not obligated to invest amounts allocated to the MVA Fixed Account according to any particular strategy. See "Management Discussion and Analysis of Financial Condition and Results of Operations- Reserves and Obligations" under "Further Information About the Company." 19 CHARGES UNDER THE CONTRACTS CHARGES FOR MORTALITY AND EXPENSE RISKS While variable annuity payments to Annuitants will vary in accordance with the investment performance of the Separate Account, the amount of such payments will not be decreased because of adverse mortality experience of Annuitants as a class or because of an increase in actual expenses of the Company over the expense charges provided for in the Contracts. The Company assumes the risk that Annuitants as a class may live longer than expected (necessitating a greater number of annuity payments) and that its expenses may be higher than the deductions for such expenses. The Company also provides a standard death benefit and waives any CDSL upon the death of the Annuitant. In return for the assumption of these mortality and expense risks, the Company makes a daily charge to the assets of the Separate Account. The daily charge is at the rate of 0.002466%, or 0.90% annually, of which 0.45% is for mortality risks and 0.45%, for expense risks. The Company reserves the right to revise the amounts of the charge as between mortality risks and expense risks, should estimates change, but the aggregate charge will not exceed 0.90% on an annual basis. CHARGES FOR ADMINISTRATIVE SERVICES The Company maintains an account for each Owner and Annuitant and makes all disbursements of benefits. The Company also furnishes such administrative and clerical services, including the calculation of Accumulation Unit values and the values and interests determined thereby, as are required for each Subaccount. The Company makes disbursements from Separate Account funds to pay obligations chargeable to the Separate Account and maintains the accounts, records, and other documents relating to the business of the Separate Account required by regulatory authorities. These administrative services may be performed by the Company, by JHISC, or by one or more of the Company's other affiliates. For these and other administrative services, the Company makes a daily charge to the assets of the Separate Account and assesses, during the Accumulation Period, a Contract Fee of $30 on all Contracts having an Accumulated Value of less than $10,000. The Contract Fee will be deducted at the beginning of each Contract Year after the first and at a full surrender during a Contract Year. The Company reserves the right to increase this fee up to a maximum of $50 subject to state regulations. No Contract Fee will be deducted if the Accumulated Value is $10,000 or more. The Contract Fee will be deducted from each Subaccount and each Guarantee Period in the same proportion that the Accumulated Value in that Subaccount or Guarantee Period bears to the full Accumulated Value. The daily administrative charge is 0.000959%, or 0.35% on an annual basis, under Contracts with an initial premium payment of less than $250,000; and 0.000274%, or 0.10% on an annual basis, under Contracts with an initial premium payment of $250,000 or more. The different charges reflect the greater cost of administering smaller Contracts and lower amounts realized by the Company from its expense risk charges under such Contracts. The administrative services charges are not designed, nor are they expected, to exceed the Company's cost in providing these services. CONTINGENT DEFERRED SALES LOAD A contingent deferred sales load, or CDSL, may be assessed whenever a Contract is surrendered for cash prior to the Date of Maturity ("total withdrawal" or "surrender") or whenever an amount less than the total Accumulated Value is withdrawn from a Contract prior to the Date of Maturity ("partial withdrawal"). This charge is used to help defray expenses relating to the sales of the Contracts, including commissions paid and other distribution costs. 20 An Owner may withdraw in any Contract Year up to 10% of the Accumulated Value as of the beginning of the Contract Year without the assessment of any CDSL. This is the Free Withdrawal Value. If, in any Contract Year, the Owner withdraws an aggregate amount in excess of 10% of the Accumulated Value as of the beginning of the Contract Year, the amount withdrawn in excess of 10% is subject to a CDSL to the extent that the excess is attributable to premium payments made within seven years of the date of withdrawal or surrender. No CDSL is assessed on amounts applied to provide an annuity or to pay a death benefit. Also, no CDSL will apply to certain withdrawals if an Owner has elected the nursing home waiver of CDSL rider described under "Nursing Home Waiver of CDSL" below. Amounts withdrawn to satisfy the minimum distribution requirements for tax qualified plans funded by Contract are not subject to a CDSL in any Contract Year. Amounts above the minimum distribution requirements are subject to a CDSL if otherwise applicable. The CDSL percentage charge depends upon the number of years that have elapsed from the date of premium payment to the date of its withdrawal, as follows:
Years from Date of Premium Payment to CDSL Date of Surrender or Withdrawal Percentage ------------------------------- ----------- 7 or more ................................... 0% 6 but less than 7 ........................... 2% 5 but less than 6 ........................... 3% 4 but less than 5 ........................... 4% 3 but less than 4 ........................... 5% 2 but less than 3 ........................... 5% less than 2 ................................. 6%
Whenever a CDSL is imposed, it is deducted from each Subaccount of the Separate Account and each Guarantee Period of the MVA Fixed Account in the proportion that the amount subject to the CDSL in each bears to the total amount subject to the CDSL. In calculating the CDSL, all amounts withdrawn plus all Contract Fees and CDSLs are assumed to be deducted first from the earliest purchase payment, and then from the next earliest purchase payment, and so forth until all payments have been exhausted, satisfying the first-in first out, or "FIFO," method of accounting. The CDSL only applies to premium payments, not to any earnings or appreciation. For a discussion of the taxation of partial withdrawals, see "Contracts Purchased Other Than to Fund a Tax Qualified Plan" under "Federal Income Taxes." To the extent that any CDSL is applicable, the Accumulated Value will generally be reduced by the amount of the CDSL, as well as by the actual dollar amount of the withdrawal request. Any positive MVA will reduce the amount deducted from the Accumulated Value by the amount of the positive MVA. Any negative MVA will increase the amount deducted by the amount of the negative MVA. The CDSL is calculated based upon the full amount by which the Accumulated Value is reduced, adjusted for any MVA, and subject to the conditions noted above. For example, assume a Contract is issued on January 1, 1996, that the Owner makes premium payments of $5,000 on January 1, 1996, $1,000 on January 1, 1997, and $1,000 on January 1, 1998. Assume that the Accumulated Value on January 1, 1999, is $9,000 and that a partial withdrawal is made by the Owner in the amount of $6,000 (no tax withholding) on June 1, 1999. The CDSL in this case, assuming no prior partial withdrawals, would equal $272.23. In calculating the CDSL under the FIFO method, the January 1, 1996, $5,000 premium payment is first reduced by the three $30 Contract Fees assessed on January 1, 1997, 1998, and 1999, i.e., to $4,910. Ten percent of the Accumulated Value on January 1, 1999, i.e., $900, the free withdrawal 21 amount, is then deducted leaving $4,010. The remaining balance of the $5,000 January 1, 1996, premium payment, i.e., $4,010, is then withdrawn in its entirety and is assessed a CDSL of $200.50 (.05 x $4,010). All of the $1,000 January 1, 1997, premium payment is to be withdrawn and is assessed a CDSL of $50 (.05 x $1,000). To make up the remainder of the $6,000 paid to the Owner, $362.23 is withdrawn from the January 1, 1998, premium payment. This is assessed a CDSL of $21.73 (.06 x $362.23). Therefore, the total amount paid to the Owner is $6,000 and the total CDSL is $272.23. The above example assumes all amounts withdrawn are after the application of any Market Value Adjustment. Withdrawals made prior to the Owner attaining age 59 1/2 may be subject to certain adverse tax consequences. A Federal penalty of 10% is generally applicable to the taxable portion (earnings) of a premature withdrawal from the Contract. See "Penalty for Premature Withdrawals" under "Federal Income Taxes." To the extent that the proceeds from the CDSLs may be insufficient to cover distribution costs, the Company may recover them from its General Account assets which may consist of, among other things, proceeds derived from mortality and expense risk charges deducted from the Separate Account. NURSING HOME WAIVER OF CDSL An optional Nursing Home Waiver of CDSL rider may be elected when the Contract is applied for. Under this benefit, the CDSL, if otherwise applicable, will be waived as to any withdrawals if, beginning at least 30 days after the Contract date of issue, the Owner becomes confined to an LTCF (long term care facility) for at least 90 consecutive days. The Company must receive a request for a withdrawal and adequate proof of confinement no later than 90 days after discharge from an LTCF, and the confinement must be prescribed by a physician and medically necessary. At the beginning of each month, a charge equal to 1/12th of .05% (annual percentage rate) is made against the Accumulated Value at that time. The charge is made through a pro-rata reduction in Accumulation Units of the Subaccounts and dollar amounts in the Guarantee Periods, based on relative values. OPTIONAL DEATH BENEFIT CHARGES Separate monthly charges are made for the optional One Year Stepped-Up Death Benefit and Accidental Death Benefit riders offered by the Company. In each case, the charge for the rider is made through a pro-rata reduction in Accumulation Units of the Subaccounts and dollar amounts in the Guarantee Periods, based on relative values. The charge, made at the beginning of each month, is equal to the Accumulated Value at that time multiplied by 1/12th of the following applicable annual percentage rates: One Year Stepped-Up Death Benefit rider - 0.15%; Accidental Death Benefit rider - 0.10%. See "Optional One Year Stepped-Up Death Benefit Rider" and "Optional Accidental Death Benefit Rider" under "The Accumulation Period." VARIATIONS IN CHARGES In the future, the Company may allow a reduction in or the elimination of the CDSL, the charge for the Nursing Home Waiver of CDSL rider, the charge for mortality and expense risks, the administrative services charge, or the annual Contract Fee, or the charge for the One Year Stepped-Up Death Benefit rider or 22 Accidental Death Benefit rider, under Contracts sold to groups or classes of individuals in a manner resulting in a reduction in the expenses associated with the sale of such Contracts and the benefits offered, or the costs associated with administering or maintaining the Contracts. The entitlement to such a reduction in or elimination of charges and fees will be determined by the Company based upon factors such as the following: (1) the size of the initial premium payment, (2) the size of the group or class, (3) the total amount of premium payments expected to be received from the group or class and the manner in which premium payments are remitted, (4) the nature of the group or class for which the Contracts are being purchased and the persistency expected from that group or class as well as the mortality risks associated with that group or class, (5) the purpose for which the Contracts are being purchased and whether that purpose makes it likely that costs and expenses will be reduced, or (6) the level of commissions paid to selling broker-dealers or certain financial institutions with respect to Contracts within the same group or class. The Company will make any reduction in charges or fees according to its own rules in effect at the time an application for a Contract is approved. The Company reserves the right to change these rules from time to time. Any variation in charges or fees will reflect differences in costs and services, will apply uniformly to all prospective Contract purchasers in the group or class, and will not be unfairly discriminatory to the interests of any Owner. PREMIUM OR SIMILAR TAXES Several states and local governments impose a premium or similar tax on annuities. Currently, such taxes range up to 5% of the Accumulated Value applied to an Annuity Option. Ordinarily, any state-imposed premium or similar tax will be deducted from the Accumulated Value only at the time of annuitization. The Company will deduct a charge for these taxes from the Accumulated Value at the time of annuitization, death, surrender, or withdrawal. Such a charge is equal to the applicable premium tax percentage times the amount of Accumulated Value that is applied to an Annuity Option, surrendered, withdrawn, or at death. The net economic effect of this procedure is not significantly different than if the Company deducted the premium tax from each premium payment when received. For Contracts issued in South Dakota the Company pays a tax on each premium payment at the time it is made. ________________________________ The charges described above (exclusive of taxes) and the Contracts' annuity purchase rates will apply for the duration of each Contract and, except as noted above, will not be increased by the Company. However, these charges do not include all of the expenses which may be incurred for the account of Owners and Annuitants. Additional charges will be made directly to the Separate Account for taxes, if any, based on the income of, capital gains of, assets in, or the existence of, the Separate Account and interest on funds borrowed. In addition, the Company reserves the right to deduct premium taxes from premiums when paid. Moreover, the Separate Account purchases and redeems shares of the Trust at net asset value, Trust which reflects the deduction from the assets of the Trust of the applicable investment management fees and of certain operating expenses listed under "Synopsis of Expense Information." 23 THE CONTRACTS The descriptions herein are based on certain provisions of the Contracts. Reference should be made to the actual Contracts and to the terms and limitations of any tax qualified plan which is to be funded by such Contracts. Tax qualified plans are subject to several requirements and limitations which may affect the terms of any particular Contract or the advisability of taking certain action permitted thereby. PURCHASE OF CONTRACTS Authorized representatives of the broker-dealer or financial institution participating in the distribution of the Contracts will assist in the completion of the application or the placing of an order for a Contract and will be responsible for its transmittal, together with the necessary premium payment, to the Company's Servicing Agent, JHISC. If the application or order is complete and the Contract applied for is suitable, the Contract will be issued and delivered to the Owner. If the completed application or order is received in proper form, the initial premium payment accompanying the completed application is applied within two business days after receipt. If an initial premium payment is not applied within five business days after receipt, it will be refunded unless the applicant consents to the retention of the premium payment until receipt of information necessary to allow the issuance of the Contract. Each premium payment must be at least $500 in amount. The maximum premium payment in any Contract Year is $1,000,000. The maximum dollar amount of transfers and payments to any one Subaccount in a Contract Year is $1,000,000. While the Annuitant is living and the Contract is in force, premium payments may be made at any time before the Date of Maturity, except that no new premium payments may be made after the Annuitant reaches age 84 1/2 under Contracts funding non-qualified arrangements, or age 70 1/2 under tax qualified plans. A Contract will not be issued if the proposed Annuitant is older than age 84 1/2. The foregoing limits may be waived by the Company. All checks or other forms of premium payment must be made payable to John Hancock Variable Life Insurance Company. PREMIUM PAYMENTS BY WIRE The initial premium payment may be transmitted by wire order from broker- dealers and financial institutions participating in the distribution of the Contracts. Wire orders accepted by the Company will be invested in the investment options selected by the prospective Owner at the value next determined following receipt in good order. Wire orders must include information necessary to allocate the payment among the investment options selected by the prospective Owner. Wire orders not accompanied by complete information may be held for up to five business days in order to obtain the missing information. If that information is not obtained within the five business day period, JHISC will so advise the broker-dealer or financial institution involved and return the premium payment immediately to the prospective Owner, unless he or she consents to the retention of the premium payment by the Company until JHISC has received the information not provided. A Contract will, nevertheless, not be issued, until the Company receives and accepts a properly completed application. Until a signed application is received and accepted, no further premium payments or other transactions will be allowed. If within ten days of the receipt of the initial premium payment by wire a completed application is not received or an incomplete application received cannot be completed, the initial premium payment will be returned to the prospective Owner. After a Contract has been issued, subsequent premium payments may be transmitted by wire through the Owner's bank. Information as to the name of the Company's bank, our account number and the ABA routing number may be obtained by calling JHISC at the telephone number on the cover page of this prospectus. The 24 wire order must identify the Subaccounts and Guarantee Periods to which the premium payment is to be allocated, and the dollar amount to be allocated to each Subaccount and Guarantee Period. Banks may charge a fee for wire services. THE ACCUMULATION PERIOD ALLOCATION OF PREMIUM PAYMENTS Net premium payments are allocated by the Company to one or more of the Subaccounts or Guarantee Periods, or among the Subaccounts and Guarantee Periods, as specified by the Owner at the time of purchasing the Contract, and as directed by the Owner from time to time thereafter. Any change in the allocations will be effective as to premium payments made after the receipt by JHISC of notice in form satisfactory to the Company. Each net premium payment allocated to a Subaccount purchases Accumulation Units of that Subaccount at the value of such units next determined after the receipt of such net premium payment at JHISC. See "Variable Account Valuation Procedures." Currently, premium payments may be allocated to a maximum of 18 Subaccounts and Guarantee Periods. VALUE OF ACCUMULATION UNITS The number of Accumulation Units of a Subaccount purchased with a specific premium payment will be determined by dividing the net premium payment by the value of an Accumulation Unit in that Subaccount when the net premium payment is applied. The value of the Accumulation Units so purchased will vary in amount thereafter, depending upon the investment performance of the Subaccount and the charges and deductions made against the Subaccount. At any date prior to the Date of Maturity, the total value of the Accumulation Units in a Subaccount which have been credited to a Contract can be computed by multiplying the number of such Accumulation Units by the appropriate Accumulation Unit Value in effect for such date. DETERMINATION OF MVA FIXED ACCOUNT VALUE A Contract's MVA Fixed Account Value is guaranteed by the Company. The Company bears the investment risk with respect to amounts allocated to the MVA Fixed Account, except that (a) the Company may vary the Guaranteed Rate for future Guarantee Periods (subject to the 3% effective annual minimum guaranteed rate applicable to all Contracts issued on an individual basis) and (b) the Market Value Adjustment imposes investment risks on the Owner. The Contract's MVA Fixed Account Value is the sum of the MVA Fixed Account Values in each Guarantee Period on any date. The MVA Fixed Account Value in a Guarantee Period is equal to the following amounts, in each case increased by accrued interest at the applicable Guaranteed Rate: . The amount of net premium payments or transferred amounts allocated to the Guarantee Period; less . The amount of any withdrawals or transfers out of the Guarantee Period; less . The amount of any charges deducted from that Guarantee Period. 25 TRANSFERS AMONG SUBACCOUNTS AND GUARANTEE PERIODS Not more than 12 times in each Contract Year the Owner may (a) transfer all or any part of the Accumulation Units credited under a Contract from one Subaccount to another Subaccount, or into a Guarantee Period or (b) transfer all or any part of the dollar amount in one Guarantee Period to another Guarantee Period, or to a Subaccount. However, transfers may not be made within 30 days of the Date of Maturity, and transfers from one Subaccount to another may not exceed $1,000,000 in value in any Contract Year. A transfer pursuant to the dollar cost averaging feature discussed below counts toward the limitation of 12 transfers per Contract Year. Transfers involving the Subaccounts will result in the redemption and/or purchase of Accumulation Units on the basis of the respective unit values next determined after receipt of notice satisfactory to the Company at JHISC. Transfers from a Guarantee Period before its expiration date are subject to a Market Value Adjustment. The amount of any positive or negative Market Value Adjustment will be added to or deducted from the transferred amount. An Owner may request a transfer in writing or, if a telephone transfer authorization is in effect, by telephoning 800-824-0335. The Owner may send a written request to JHISC at P.O. Box 9298, Boston, Massachusetts 02205-9298. Any written request should include the Owner's name, daytime telephone number, and Contract number, and identify the Subaccounts or Guarantee Periods from which and to which transfers are to be made. Transfers will be effective on the date of receipt at our Servicing Office, JHISC, of a request in form satisfactory to us. The Company reserves the right to modify, suspend, or terminate telephone transfers at any time without notice to the Owners. An Owner who authorizes telephone transfers will be liable for any loss, expense or cost arising out of any unauthorized or fraudulent telephone transfer instructions which the Company and/or JHISC reasonably believes to be genuine, unless such loss, expense or cost is the result of the Company's and/or JHISC's mistake or negligence. The Company and JHISC employ procedures which provide adequate safeguards against the execution of unauthorized transfers, and which are reasonably designed to confirm that transfer instructions received by telephone are genuine. These procedures include requiring personal identification, tape recording calls, and providing written confirmation to the Owner. DOLLAR COST AVERAGING The Owner may elect to have automatically transferred on a monthly, quarterly, semi-annual or annual basis, at no cost, Accumulation Units credited to the Money Market Subaccount into one or more of the other Subaccounts. The minimum amount of each transfer is $250. To begin the program, the Accumulated Value in the Money Market Subaccount must be at least $15,000. The program continues until the earlier of 12, 24, or 36 (as chosen by the Owner) months and full liquidation of the Money Market Subaccount. Changes in your dollar cost averaging instructions may be made by telephone or in writing provided the telephone authorization option has been elected by the Owner. The Company reserves the right to terminate the dollar cost averaging program at any time. Automatic transfers into the Guarantee Periods are not permitted. SURRENDER OF CONTRACT; PARTIAL WITHDRAWALS Prior to the Date of Maturity, if the Annuitant is living, a Contract may be surrendered for a cash payment of its Surrender Value, or a partial withdrawal of the Accumulated Value may be made. The Surrender Value of a Contract is the Accumulated Value, after any Market Value Adjustment, less any applicable charges, including any CDSL. Accumulation Units will be redeemed at their value next determined after the receipt by JHISC of notice of surrender or partial withdrawal in form satisfactory to the Company. The amount of MVA Fixed Account Value will be determined on the date of receipt by JHISC of such notice. The value of any 26 Accumulation Units redeemed may be more or less than the net premium payments applied under the Contract, depending upon the value of the Trust's shares held in a Subaccount at the time. Similarly, the MVA Fixed Account Value, as adjusted by any applicable Market Value Adjustment, may be more or less than the net premium payments applied to the MVA Fixed Account. The resulting cash payment upon a surrender will be reduced by any applicable CDSL and any unpaid Contract Fees or other charges. Unless directed otherwise by the Owner, that portion of the Accumulated Value of the Contract redeemed in a partial withdrawal will be redeemed in each Subaccount and each Guarantee Period in the same proportion as the Accumulated Value of the Contract is then allocated among the Subaccounts and the Guarantee Periods. The Company will redeem Accumulation Units and/or withdraw dollar amounts from the MVA Fixed Account so that the total amount of a partial withdrawal (after any Market Value Adjustment) equals the dollar amount of the partial withdrawal request. Any applicable CDSL will be determined after any Market Value Adjustment and will reduce the remaining Accumulated Value in the Separate Account and MVA Fixed Account, as the case may be. The CDSL, if any, will not reduce the partial withdrawal payment made to the owner so long as the Accumulated Value is sufficient to cover the CDSL. Payments of Surrender Value, in a single sum, and partial withdrawal payments, ordinarily will be made within seven days after receipt of the above notice by JHISC. As described under "Miscellaneous Provisions-Deferment of Payment," however, redemptions and payments may be delayed under certain circumstances. See "Federal Income Taxes" for possible adverse tax consequences of certain surrenders and partial withdrawals. Any request for a surrender or partial withdrawal should be mailed to JHISC, P. O. Box 9298, Boston, MA 02205-9298. Without our approval, a partial withdrawal is not permitted for an amount less than $100, nor may a partial withdrawal be made if the total remaining Accumulated Value would be less than $1,000. If the CDSL Free Withdrawal Value is at any time less than $100, then that amount must be withdrawn in full, in a single withdrawal, before any further partial withdrawal is made. The Contract may be terminated by the Company if the Accumulated Value of the Contract at any time becomes zero. SYSTEMATIC WITHDRAWAL An optional systematic withdrawal plan enables the Owner to pre-authorize periodic withdrawals. Owners electing the plan instruct the Company to withdraw a percentage or a level dollar amount from the Contract on a monthly, quarterly, semi-annual, or annual basis. The amount withdrawn will result in the cancellation of Accumulation Units from each applicable Subaccount in the Separate Account, and the deduction of dollar amounts from each applicable Guarantee Period in the MVA Fixed Account, in the ratio that the value of each bears to the total Accumulated Value. Currently, systematic withdrawal is available to Owners who have an Accumulated Value of $15,000 or more. The Company reserves the right to modify the eligibility rules or other terms and conditions of this program at any time, without notice. The total systematic withdrawal in a Contract Year is limited to 10% of the Accumulated Value as of the beginning of the Contract Year. The minimum systematic withdrawal is $100. In the event that the modal amount of the withdrawal drops below $100 or the Accumulated Value becomes less than $5,000, the plan will be suspended by the Company and the Owner will be notified. The systematic withdrawal will terminate upon cancellation by the Owner. Systematic withdrawal is not available to Contracts participating in the dollar cost averaging program. Systematic withdrawals are subject to the CDSL and Market Value Adjustment described above. There may be tax consequences associated with the systematic withdrawal plan. See "Federal Income Taxes." 27 STANDARD DEATH BENEFIT If the Annuitant dies before the Date of Maturity, a standard death benefit is payable. The death benefit will be the greater of (a) the Accumulated Value, adjusted by any Market Value Adjustment, next determined following receipt by JHISC of due proof of death together with any required instructions as to method of settlement, and (b) the aggregate amount of the premium payments made under the Contract, less any partial withdrawals and CDSLs. Payment of the death benefit will be made in a single sum to the beneficiary designated by the Owner prior to the Annuitant's death unless an optional method of settlement has been elected by the Owner. If an optional method of settlement has not been elected by the Owner, the beneficiary may elect an optional method of settlement in lieu of a single sum. No deduction is made for sales or other expenses upon such election. Payment will be made in a single sum in any event if the death benefit is less than $5000. See "Annuity Options" under "The Annuity Period". If there is no surviving beneficiary, the Owner, or his or her estate is the beneficiary. OPTIONAL ONE YEAR STEPPED-UP DEATH BENEFIT The Owner may elect a one year stepped-up death benefit rider that is designed to enhance the standard death benefit payable to the beneficiary. Under this rider, upon the death of the Annuitant before the Date of Maturity, the benefit payable will be the greater of (a) the standard death benefit, and (b) the highest Accumulated Value, adjusted by any Market Value Adjustment, of the Contract as of any Contract anniversary preceding the anniversary nearest the Annuitant's 81st birthday, plus any premium payments, less any withdrawals and CDSLs, since such Contract anniversary. The rider is elected at the time a Contract is applied for. A monthly charge is made for this benefit, so long as the rider is in effect. See "Charges Under the Contracts." OPTIONAL ACCIDENTAL DEATH BENEFIT At the option of the Owner, an accidental death benefit may be elected at the time the Contract is applied for. Under this rider, upon the death of the Annuitant prior to the Date of Maturity, the beneficiary will receive in addition to any other death benefit, an amount equal to the Accumulated Value of the Contract, as of the date of receipt of due proof of the Annuitant's death together with any required instructions as to method of settlement, up to a maximum of $200,000. The benefit is available to issue age 80. A monthly charge is made for this rider as described under "Charges Under the Contracts." PAYMENT OF DEATH BENEFITS Distribution Requirements Following Death of Owner The Code requires certain distribution provisions to be included in any Contract used to fund other than a tax qualified plan. See "Federal Income Taxes". Failure to include the required distribution provisions results in the Contract not being treated as an annuity for Federal tax purposes. The Code imposes comparable distribution requirements for Contracts used to fund tax qualified plans. These required provisions for tax qualified plans will be reflected by means of separate disclosures and endorsements furnished to Owners. The Code distribution requirements are expected to present few practical problems when the Annuitant and Owner are the same person. Nevertheless, all Owners of Contracts not used to fund a tax qualified plan and IRA Contract Owners should be aware that the following distribution requirements are applicable notwithstanding any provision to the contrary in the Contract (or in this prospectus) relating to payment of the death benefit or death of the Annuitant. If the Owner dies before annuity payments have begun: (a) if the beneficiary is the surviving spouse of the 28 Owner, the beneficiary may continue the Contract in force as Owner; or (b) if the beneficiary is not the surviving spouse of the Owner, or if the beneficiary is the surviving spouse of the Owner but does not choose to continue the Contract, the entire interest in the Contract on the date of death of the Owner must be: (i) paid out in full within five years of the Owner's death, or (ii) applied in full towards the purchase of a life annuity on the beneficiary with payments commencing within one year of the Owner's death. If the Owner dies on or after annuity payments have begun, any remaining benefit must be paid out at least as rapidly as under the method of making annuity payments then in effect. The Code imposes comparable distribution requirements on tax qualified plans. If the Owner is not the Annuitant, "the entire interest in the Contract on the date of death of the Owner" is equal to the Surrender Value if paid out in full within five years of the Owner's death, or is equal to the Accumulated Value if applied in full towards the purchase of a life annuity on the beneficiary with payments commencing within one year of the Owner's death. Note that "the entire interest in the Contract on the date of death of the Owner" which is payable if the Owner dies before annuity payments have begun may be an amount less than the death benefit which would have been payable if the Annuitant had died instead. Notice should be furnished promptly to JHISC upon the death of the Owner. THE ANNUITY PERIOD During the annuity period, the total value of a Contract may be allocated among no more than four "Accounts." For this purpose, all Guarantee Periods comprising the MVA Fixed Account are counted as one Account; each of the Subaccounts is counted as one Account. Amounts allocated to the MVA Fixed Account will provide annuity payments on a fixed basis; amounts allocated to the Subaccounts will provide annuity payments on a variable basis. If more than four Accounts are being used on the Date of Maturity, the Company will divide the total Accumulated Value proportionately among the four Accounts with the largest Accumulated Values. Any Accumulated Value in the MVA Fixed Account at the Date of Maturity will be subject to any positive or negative Market Value Adjustment that is applicable at that time, before such amount is applied to provide annuity payments. Annuity payments will begin on the Date of Maturity if the Annuitant is then living and the Contract has been in force for at least six months. Each Contract will provide at the time of its issuance for a Life Annuity with Ten Years Certain. Under this form of annuity, annuity payments are made monthly to the Annuitant for life and, if the Annuitant dies within ten years after the Date of Maturity, the payments remaining in the ten-year period will be made to the contingent payee, subject to the terms of any supplementary agreement issued. A different form of annuity may be elected by the Owner, as described in "Annuity Options," below, prior to the Date of Maturity. However, the minimum Accumlated Value that may be applied to an annuity form, other than a Life Annuity with Ten Years Certain, is $5,000. Once a given form of annuity takes effect, it may not be changed. If the initial monthly annuity payment under a Contract would be less than $50, the Company may make a single sum payment equal to the total Surrender Value of the Contract on the date the initial payment would be payable, in place of all other benefits. Each Contract specifies a Provisional Date of Maturity at the time of its issuance, which may be no earlier than six months after the date the first payment is applied to the Contract. The Owner may subsequently elect a different Date of Maturity, however. Unless otherwise permitted by the Company, such subsequent date may be any earlier date provided it is no earlier than six months after the date the first payment is applied to the Contract, nor later than the maximum age specified in the Contract, generally age 85. The election is made by 29 written notice received by JHISC before the Provisional Date of Maturity and at least 31 days prior to the Date of Maturity. If a Date of Maturity different from the Provisional Date of Maturity is not elected by the Owner, the Provisional Date of Maturity shall be the Date of Maturity of the Contract. Particular care should be taken in electing the Date of Maturity for Contracts issued under tax qualified plans. See "Federal Income Taxes." VARIABLE MONTHLY ANNUITY PAYMENTS Variable monthly annuity payments under a Contract are determined by converting each Subaccount's Accumulation Units credited to the Contract (less any applicable premium tax) into the respective Annuity Units of each applicable Subaccount on the Date of Maturity or some other date elected for commencement of variable annuity payments. The amount of each variable annuity payment after the first payment will depend on the investment performance of the Subaccounts being used. If the actual net investment return (after deducting all charges) of a Subaccount during the period between the dates for determining two monthly payments based on that Subaccount exceeds the "assumed investment rate" (explained below), the latter monthly payment will be larger than the former. On the other hand, if the actual net investment return is less than the assumed investment rate, the latter monthly payment will be smaller than the former. Assumed Investment Rate The assumed investment rate for the variable annuity portion of the Contracts will be 3 1/2% per year except as provided below. The assumed investment rate is significant in determining the amount of the initial variable monthly annuity payment and the amount by which subsequent variable monthly payments are more or less than the initial variable monthly payment. Where applicable state law so provides, an Owner may elect a Variable Annuity Option with assumed investment rates of 5% or 6%, if such a rate is available in the Owner's state. Election of a higher assumed investment rate produces a larger initial annuity payment but also means that eventually the monthly annuity payments would be smaller than if a lower assumed investment rate had been elected. Calculation of Annuity Units Accumulation Units are converted into Annuity Units by first multiplying the number of each Subaccount's Accumulation Units credited to the Contract on the date of conversion by the appropriate Accumulation Unit Value as of ten calendar days prior to the date the initial variable monthly annuity payment is due. For each Subaccount the resulting value (less any applicable premium tax) is then multiplied by the applicable annuity purchase rate, which reflects the age and, possibly, sex of the Annuitant and the assumed investment rate, specified in the Contract. This computation determines the amount of each Subaccount's initial monthly variable annuity payment to the Annuitant. The number of each Subaccount's Annuity Units to be credited to the Contract is then determined by dividing the amount of each Subaccount's initial variable monthly annuity payment by each Subaccount's Annuity Unit Value as of ten calendar days prior to the date the initial payment is due. FIXED MONTHLY ANNUITY PAYMENTS The dollar amount of each fixed monthly annuity payment, specified during the entire period of annuity payments according to the provisions of the annuity form selected, will be determined by dividing the amount 30 applied under the Fixed Annuity Option (net of any applicable premium taxes) by $1,000 and multiplying the result by the greater of: (a) the applicable factor shown in the appropriate table in the Contract; or (b) the factor currently offered by the Company at the time of annuitization. This current factor may be based on the sex of the payee unless prohibited by law. ANNUITY OPTIONS The Owner may elect an Annuity Option during the lifetime of the Annuitant by written notice received by JHISC prior to the Date of Maturity of the Contract. If no option is selected, Option A with Ten Years Certain will be used. A beneficiary entitled to payment of a death benefit in a single sum may, if no election has been made by the Owner prior to the Annuitant's death, elect an Annuity Option by written notice received by JHISC prior to the date the proceeds become payable. No option may be elected, other than the Life Annuity with Ten Years Certain, if the Accumulated Value to be applied is less than $5000, in which case we will make a payment equal to the total Surrender Value on the date the initial payment would be payable in place of all other benefits. Among the options available are the following two Annuity Options, available for variable annuity payments and fixed annuity payments. Option A: Life Annuity with Payments for a Guaranteed Period Monthly payments will be made for a guaranteed period of years, which may be any number from three to 30, as selected by the Owner or Beneficiary, if the Contract has been in force for five years or more; or from ten to 30 years if the Contract has been in force for at least six months but less than five years. The payments continue after the end of the guarantee period as long as the payee lives, with the guarantee that if the payee dies prior to the end of the guarantee period selected, payments will continue for the remainder of the guaranteed period to a contingent payee, subject to the terms of any supplementary agreement issued. Option B: Life Annuity Without Further Payment on Death of Payee Monthly payments will be made to the payee as long as he or she lives. No minimum number of payments is guaranteed. ___________________ The Option A life annuity with five years guaranteed and Option B life annuity without further payment on the death of payee are not available if the Annuitant is more than 85 years of age on the Date of Maturity. TRANSFERS The procedures for and terms and conditions of transfers by an Annuitant among Subaccounts during the annuity period are the same as for transfers by Owners among Subaccounts during the Accumulation Period. See "Accumulation Period --Transfers Among Subaccounts and Guarantee Periods." Such transactions involve the redemption and purchase of Annuity Units in the same manner that transfers during the Accumulation Period involve the redemption and purchase of Accumulation Units. No transfers to or from a Fixed Annuity Option are permitted. 31 OTHER CONDITIONS The Company reserves the right at its sole discretion to make available to Owners and other payees optional methods of payment in addition to the Annuity Options described in this prospectus and the applicable Contract. Federal income tax requirements currently applicable to H.R. 10 and individual retirement annuity plans provide that the period of years guaranteed under Option A cannot be any greater than the joint life expectancies of the payee and his or her designated beneficiary. If the Owner dies on or after annuity payments have begun, any remaining benefit must be paid out at least as rapidly as under the method of making annuity payments then in effect. The Code imposes a comparable distribution requirement for Contracts used to fund tax qualified plans. VARIABLE ACCOUNT VALUATION PROCEDURES VALUATION DATE. A Valuation Date is any date on which the New York Stock Exchange is open for trading and on which the Trust values its shares. On any date other than a Valuation Date, the Accumulation Unit Value or Annuity Unit Value will be the same as that on the next following Valuation Date. VALUATION PERIOD. A Valuation Period is that period of time from the beginning of the day following a Valuation Date to the end of the next following Valuation Date. ACCUMULATION UNIT VALUE. The Accumulation Unit Value is calculated separately for each Subaccount. The value of one Accumulation Unit on any Valuation Date is determined for each Subaccount by multiplying the immediately preceding Accumulation Unit Value by the applicable Net Investment Factor for the Valuation Period ending on such Valuation Date. ANNUITY UNIT VALUE. The Annuity Unit Value is calculated separately for each Subaccount. The value of one Annuity Unit on any Valuation Date is determined for each Subaccount by first multiplying the immediately preceding Annuity Unit Value by the applicable Net Investment Factor for the Valuation Period ending on such date and then multiplying this product by an adjustment factor which will neutralize the assumed investment rate used in determining the amounts of annuity payable. The adjustment factor for a Valuation Period of one day for Contracts with an assumed investment rate of 3 1/2% per year is 0.99990575. The assumed investment rate is neutralized by applying the adjustment factor so that the variable annuity payments will increase only if the actual net investment rate of the Subaccount exceeds 3 1/2% per year and will decrease only if it is less than 3 1/2% per year. NET INVESTMENT FACTOR. The Net Investment Factor for each Subaccount for any Valuation Period is equal to 1 plus the applicable net investment rate for such Valuation Period. A Net Investment Factor may be more or less than 1. The net investment rate for each Subaccount for any Valuation Period is equal to (a) the accrued investment income and capital gains and losses, whether realized or unrealized, of the Subaccount for such Valuation Period less (b) the sum of a deduction for any applicable income taxes and, for each calendar day in the Valuation Period, a deduction of 0.003425% or 0.002740% (depending on whether the total asset-based charge for mortality and expense risks and for administration is 1.25% or 1.00%, respectively, on an annual basis) of the value of each Subaccount at the beginning of the Valuation Period, the result then being divided by (c) the value of the total net assets of each Subaccount at the beginning of the Valuation Period. ADJUSTMENT OF UNITS AND VALUES. The Company reserves the right to change the number and value of the Accumulation Units or Annuity Units or both credited to any Contract, without the consent of the Owner or any other person, provided strict equity is preserved and the change does not otherwise affect the benefits, provisions or investment return of the Contract. 32 MISCELLANEOUS PROVISIONS RESTRICTION ON ASSIGNMENT In order to qualify for favorable tax treatment, certain Contracts may not be sold, assigned, discounted or pledged as collateral for a loan or as security for the performance of an obligation or for any other purpose, to any person, unless the Owner is the trustee of a trust described in Section 401(a) of the Code. Because an assignment, pledge or other transfer may be a taxable event an Owner should consult a competent tax adviser before taking any such action. DEFERMENT OF PAYMENT The Company may defer for up to 15 days the payment of any amount attributable to a premium payment made by check to allow the check reasonable time to clear. Payment of the value of any Accumulation Units in a single sum upon a surrender or partial withdrawal will ordinarily be made within seven days after receipt of the written request therefor by JHISC. However, redemption may be suspended and payment may be postponed at times (a) when the New York Stock Exchange is closed, other than customary weekend and holiday closings, (b) when trading on that Exchange is restricted, (c) when an emergency exists as a result of which disposal of securities in a Subaccount is not reasonably practicable or it is not reasonably practicable to determine the value of the net assets of a Subaccount or (d) when a governmental body having jurisdiction over the Separate Account by order permits such suspension. Rules and regulations of the Commission, if any are applicable, will govern as to whether conditions described in (b) or (c) exist. The Company may also defer payment of surrender proceeds payable out of the MVA Fixed Account for a period of up to six months. RESERVATION OF RIGHTS The Company reserves the right to add or delete Subaccounts, to change the underlying investments of any Subaccount, to operate the Separate Account in any form permitted by law and to terminate the Separate Account's registration under the 1940 Act if such registration should no longer be legally required. Certain changes may, under applicable laws and regulations, require notice to or approval of Owners. Otherwise, changes do not require such notice or approval. OWNER AND BENEFICIARY The Owner has the sole and absolute power to exercise all rights and privileges under the Contract, except as otherwise provided by the Contract or by written notice of the Owner. The Owner and the beneficiary are designated in the application and may be changed by the Owner, effective upon receipt of written notice at JHISC, subject to the rights of any assignee of record, any action taken prior to receipt of the notice and certain other conditions. While the Annuitant is alive, the Owner may be changed by written notice. The beneficiary may be changed by written notice no later than receipt of due proof of the death of the Annuitant. The change will take effect whether or not the Owner or the Annuitant is then alive. 33 FEDERAL INCOME TAXES THE SEPARATE ACCOUNT, THE MVA FIXED ACCOUNT, AND THE COMPANY The Company is taxed as a life insurance company under the Code. The Separate Account is part of the Company's total operations and is not taxed separately as a "regulated investment company" or otherwise. The Contracts permit the Company to charge against the Separate Account and the MVA Fixed Account any taxes, or provisions for taxes, attributable to the operation or existence of the Contracts or the Separate Account. Currently, the Company does not anticipate making a charge for income and other taxes because of the level of such taxes. If the level of current tax is increased, or is expected to increase in the future, the Company reserves the right to make a charge in the future. The Company assumes no responsibility for determining whether a particular retirement plan satisfies the applicable requirements of the Code or whether a particular employee is eligible for inclusion under a plan. CONTRACTS PURCHASED OTHER THAN TO FUND A TAX QUALIFIED PLAN The Owner or Other Payee The Contracts are considered annuity contracts under Section 72 of the Code. Currently no Federal income tax is payable on increases in Accumulated Value until payments are made to the Owner or other payee under such Contract. However, a Contract owned other than by a natural person is not generally an annuity for tax purposes and any increase in value thereunder is taxable as ordinary income as accrued. When payments under a Contract are made in the form of an annuity, the amount of each payment is taxed to the Owner or other payee as ordinary income to the extent that such payment exceeds an allocable portion of the Owner's "investment in the contract" (as defined in the Code). In general, an Owner's "investment in the contract" is the aggregate amount of premium payments made by him, reduced by any amounts previously distributed under the Contract that were not subject to tax. The portion of each variable annuity payment to be excluded from income is determined by dividing the "investment in the contract," adjusted by any refund feature, by the number of periodic payments anticipated during the time that periodic payments are to be made. In the case of a fixed annuity payment, the amount to be excluded in each year is determined by dividing the "investment in the contract," adjusted by any refund feature, by the amount of "expected return" during the time that periodic payments are to be made, and then multiplying by the amount of the payment." After the entire "investment in the contract" has been distributed, any remaining payment is fully taxable. When a payment under a Contract is made in a single sum, the amount of the payment is taxed as ordinary income to the Owner or other payee to the extent it exceeds the Owner's "investment in the contract." For purposes of determining the amount of taxable income resulting from a partial or complete withdrawal, all Contracts and other annuity contracts issued by the Company or its affiliates to the Owner within the same calendar year will be treated as if they were a single contract. Partial Withdrawals Before Date of Maturity When a payment under a Contract, including a payment under a systematic withdrawal plan, is less than the amount that would be paid upon the Contract's complete surrender and such payment is made prior to the commencement of annuity payments under the Contract, part or all of the payment (the partial withdrawal) may be taxed to the Owner or other payee as ordinary income. On the date of the partial withdrawal, if the cash value of the Contract is greater than the investment in the Contract, any part of such excess value so withdrawn is subject to tax as ordinary income. If an individual assigns or pledges any part of the value of a Contract, the value so pledged or assigned is taxed as ordinary income to the same extent as a partial withdrawal. 34 Penalty for Premature Withdrawals In addition to being included in ordinary income, the taxable portion of any withdrawal may be subject to a 10-percent penalty tax. The penalty tax does not apply to payments made to the Owner or other payee after the Owner attains age 59 1/2, or on account of the Owner's death or disability. If the withdrawal is made in substantially equal periodic payments over the life of the Annuitant or other payee or over the joint lives of the Annuitant and the Annuitant's beneficiary the penalty will also not apply. DIVERSIFICATION REQUIREMENTS Each of the Funds of the Series Fund intends to qualify as a regulated investment company under Subchapter M of the Code and will have to meet the investment diversification tests of Section 817(h) of the Code and the underlying regulations. The Treasury Department and the Internal Revenue Service may, at some future time, issue a ruling or a regulation presenting situations in which it will deem "investor control" to be present over the assets of the Funds of the Series Fund, causing the Owner to be taxed currently on income credited to the Contracts. In such a case, the Company reserves the right to amend the Contract or the choice of investment options to avoid current taxation to the Owners. CONTRACTS PURCHASED TO FUND A TAX QUALIFIED PLAN Withholding on Eligible Rollover Distributions Recent legislation requires 20% withholding on certain distributions from tax qualified plans. An Owner wishing to rollover his entire distribution should have it paid directly to the successor plan. Otherwise, the Owner's distribution will be reduced by the 20% mandatory income tax. Consult a qualified tax adviser before taking such a distribution. Contracts Purchased under Individual Retirement Annuity Plans (IRA) The maximum amount of premium payments deductible each year with respect to an individual retirement annuity contract (as defined in Section 408 of the Code) issued on the life of an eligible purchaser is the lesser of $2,000 or 100% of compensation includible in gross income. A person may also purchase a contract for the benefit of his or her non-working spouse. Where an individual elects to deduct amounts contributed on his or her own behalf and on behalf of a spouse, the maximum amount of premium payments deductible is the lesser of $2,250 or 100% of the compensation included in the gross income of the working spouse; provided, however, not more than $2,000 can be allocated to either person's account. Taxpayers who are active participants in an employer-sponsored retirement plan are permitted to make a deductible premium payment only if their adjusted gross incomes are below certain amounts. No deduction is allowed for premium payments made in or after the taxable year in which the Owner has attained the age of 70 1/2 years nor is a deduction allowed for a "rollover contribution" as defined in the Code. When payments under a Contract are made in the form of an annuity, or in a single sum such as on surrender of the Contract or by partial withdrawal, the payment is taxed as ordinary income. IRS required minimum distributions must begin no later than April 1 of the year following the year in which the Owner attains age 70 1/2. The Owner may incur adverse tax consequences if a distribution on surrender of the Contract or by partial withdrawal is made prior to his attaining age 59 1/2, except in the event of his death or total disability. 35 Contracts Purchased under Section 403(b) Plans (TSA) Premium payments made by an employer which is a public school system or a tax-exempt organization described in Section 501(c)(3) of the Code under annuity purchase arrangements described in Section 403(b) of the Code are not taxable currently to the Owner, to the extent that the aggregate of such amounts does not exceed the Owner's "exclusion allowance" (as defined in the Code). In general, an Owner's "exclusion allowance" is determined by multiplying 20% of his "includible compensation" (as defined in the Code) by the number of years of his service with the employer and then subtracting from that product the aggregate amount of premium payments previously excluded from income and certain other employer payments to retirement plans in which the Owner is a participant. Additional limitations applicable to premium payments are described in Section 415 of the Code. Deferrals under all plans made at the election of the Owner generally are limited to an aggregate of $9500 annually. When payments under a Contract are made in the form of an annuity, such payments are taxed to the Owner or other payee under the same rules that apply to such payments under corporate plans (discussed below) except that five-year averaging and capital gain phase-out are not available. When payment under a Contract is made in a single sum, such as on surrender of the contract or by partial withdrawal, the taxable portion of the payment is taxed as ordinary income and the penalty for premature withdrawals may be applicable. Ordinarily an Owner in a Section 403(b) plan does not have any "investment in the contract" and, thus, any distribution is fully taxed as ordinary income. Distributions are prohibited before the Owner is age 59 1/2, except on the Owner's separation from service, death, or disability and except with respect to distributions attributable to assets held as of December 31, 1988. This prohibition does not (1) preclude transfers and exchanges to other products that qualify under Section 403(b) or (2) restrict withdrawals of certain amounts attributable to pre-January 1, 1989, premium payments. Contracts Purchased under Corporate Plans In general, premium payments made by a corporation under a qualified pension or profit-sharing plan described in Section 401(a) of the Code or a qualified annuity plan described in Section 403(a) of the Code are deductible by the corporation and are not taxable currently to the employees. When payments under a Contract are made in the form of an annuity, the amount of each payment is taxed to the Annuitant or other payee as ordinary income except in those cases where the Annuitant has an "investment in the contract" (as defined in the Code). In general, an Annuitant's "investment in the contract" is the aggregate amount of premium payments made by him. If an Annuitant has an "investment in the contract," a portion of each annuity payment is excluded from income until the investment in the contract is recovered. The amount to be excluded in each year, in the case of a variable annuity payment, is determined by dividing the "investment in the contract," adjusted by any refund feature, by the number of periodic payments anticipated during the time that periodic payments are to be made. The calculation for fixed annuity payments is somewhat different. For fixed annuity payments, in general, prior to recovery of the "investment in the Contract," there is no tax on the amount of each payment which bears the same ration to that payment as the "investment on the Contract" bears to the total expected value of the annuity payments for the term of the payments. However, the remainder of each annuity payment is taxable. The taxable portion of a distribution (in the form of an annuity or a single sum payment) is taxed as ordinary income. When payment under a Contract is made in a single sum or a total distribution is made within one taxable year of the Annuitant or other payee, the amount of the payment is taxed to the Annuitant or other payee to the extent it exceeds the Annuitant's "investment in the contract." If such payment is made after the Annuitant 36 has attained age 59 1/2, or on account of his death, retirement or other termination of employment or on account of his death after termination of employment, five year averaging and a phase-out of capital gains treatment for pre-1974 contributions may be available with respect to one distribution. Other rules may be available to taxpayers who have attained age 50 prior to January 1, 1986. IRS required minimum distributions must begin no later than April 1 of the year following the year in which the Annuitant attains age 70 1/2 even if the Annuitant has not retired. Contracts Purchased under H.R. 10 Plans (Self-Employed) Self-employed persons, including partnerships, may establish tax qualified pension and profit-sharing plans and annuity plans for themselves and for their employees. Generally, the maximum amount of premium payments deductible each year with respect to variable annuity contracts issued on the life of self- employed persons under such plans is $30,000 or 25% of "earned income" (as defined in the Code), whichever is less. Self-employed persons must also make premium payments for their employees (who have met certain eligibility requirements) at least at the same rate as they do for themselves. In general, such premium payments are deductible in full and are not taxable currently to such employees. Tax qualified plans may permit self-employed persons and their employees to make additional premium payments themselves (which are not deductible) of up to 10% of earned income or compensation. When payments under a Contract are made in the form of an annuity, such payments are taxed to the Annuitant or other payee under the same rules that apply to such payments under corporate plans (discussed earlier). The tax treatment of single sum payments is also the same as under corporate plans except that five year averaging may be unavailable to a self- employed Annuitant on termination of service for reasons other than disability. The same rules that apply to commencement of annuity payments under corporate plans apply to H.R. 10 plans. Contracts Purchased By Top-Heavy Plans Certain corporate and H.R. 10 plans may be characterized under Section 416 of the Code as "top-heavy plans" if a significant portion of the plan assets is held for the benefit of the "key employees" (as defined in the Code). Care must be taken to consider the special limitations applicable to top-heavy plans and the potentially adverse tax consequences to key employees. Contracts Purchased Under Government Deferred Compensation Plans (Section 457) Participants in certain deferred compensation plans maintained by a state, a political subdivision of a state, or their agencies or instrumentalities or by tax-exempt organizations are permitted to exclude a portion of their compensation from gross income. Amounts so deferred (including any income thereon) shall be includible in gross income only for the taxable year in which such amounts are paid or otherwise made available to the Annuitant or other payee. In general, the maximum amount of compensation which may be deferred under such tax-favored plans is the lesser of $7500 or 33 1/3% of the participant's "includible compensation" (as defined in the Code). The deferred compensation plan itself must satisfy several conditions, among which are that the plan must not permit 37 distributions prior to the participant's separation from service (except in the case of an unforeseen emergency), and that all compensation deferred under the plan shall remain solely the employer's property and may be subject to the claims of its creditors. When payment under a Contract is made in the form of an annuity, or in a single sum such as on surrender of the Contract or by partial withdrawal, the payment is taxed as ordinary income. WITHHOLDING OF TAXES The Company is obligated to withhold taxes from certain payments unless the recipient elects otherwise. The withholding rate varies depending upon the nature and the amount of the distribution. The Company will notify the Owner or other payee in advance of the first payment of his or her right to elect out of withholding and furnish a form on which the election may be made. Any election must be received by JHISC in advance of the payment in order to avoid withholding. SEE YOUR OWN TAX ADVISER The above description of Federal income tax consequences of owning a Contract and of the different kinds of tax qualified plans which may be funded by the Contracts is only a brief summary and is not intended as tax advice. The rules governing the provisions of tax qualified plans are extremely complex and often difficult to understand. Anything less than full compliance with the applicable rules, all of which are subject to change from time to time, can have adverse tax consequences. For example, premature withdrawals are generally subject to a 10-percent penalty tax. The taxation of an Annuitant or other payee has become so complex and confusing that great care must be taken to avoid pitfalls. For further information a prospective purchaser should consult a qualified tax adviser. FURTHER INFORMATION ABOUT THE COMPANY BUSINESS OF THE COMPANY The Company is principally engaged in the writing of variable and universal life insurance policies. The Company's policies are primarily marketed through John Hancock's sales organization, which includes a proprietary sales force employed at John Hancock's own agencies and a network of independent general agencies. Policies also are sold through various unaffiliated securities broker- dealers and certain financial institutions with which John Hancock and the Company have sales agreements. Currently, the Company writes business in all states except New York. At December 31, 1994, the Company had $30.0 billion of life insurance in force, net of reinsurance ceded of $4.3 billion. In 1993, the Company acquired Colonial Penn Annuity and Life Insurance Company and changed its name to John Hancock Life Insurance Company of America. The subsidiary's principal business activity at December 31, 1994, is the run- off of a block of single premium whole life insurance. For additional discussion of this acquisition, see Note 3 of Notes to Financial Statements. SELECTED FINANCIAL DATA The following financial data for the Company and its subsidiary should be read in conjunction with the financial statements and notes thereto, included elsewhere in this Prospectus. The results for past accounting periods are not necessarily indicative of the results to be expected in the future. The selected financial data and 38 financial statements have been prepared on the basis of accounting practices prescribed or permitted by the Commonwealth of Massachusetts Division of Insurance and in conformity with the practices of the National Association of Insurance Commissioners ("NAIC") (statutory accounting practices) which are currently considered generally-accepted accounting principles for a stock life insurance company wholly-owned by a mutual life insurance company. See "Recent Accounting Developments," below, for additional discussion, regarding generally accepted accounting standards for mutual life insurance companies. The information presented below should be read in conjunction with, and is qualified in its entirety by, Managements Discussion and Analysis of Financial Condition and Results of Operations, below, and the financial statements and other information included elsewhere in this prospectus.
Nine months ended and at September 30 Years ended and at December 31 ------------------- ---------------------------------------- 1995 1994 1994 1993/*/ 1992 1991 1990 ---- ---- ---- ---- ---- ---- ---- SELECTED FINANCIAL DATA (In millions) INCOME STATEMENT DATA Premiums $378.9 $345.2 $430.5 $398.8 $416.4 $377.6 $348.2 Net investment income 47.1 43.1 57.6 61.3 62.0 59.5 51.2 Other income, net 57.7 1.1 95.5 (4.0) (3.9) (1.7) 4.1 TOTAL REVENUES $483.7 $389.4 $583.6 $456.1 $474.5 $435.4 $403.5 Total benefits and expenses 449.3 399.2 556.0 456.6 440.8 389.4 376.4 Income tax expense (benefit) 19.9 (1.4) 15.0 6.5 20.5 25.9 11.9 Net realized capital gains (losses) (0.6) 1.2 0.4 (2.6) (1.4) (1.4) 0.1 Net gain (loss) 13.9 (7.2) 13.0 (9.6) 11.8 18.7 15.3 BALANCE SHEET DATA Total assets $3,107 $2,502 $2,627 $2,379 $2,348 $2,118 $1,773 Total obligations 2,873 2,307 2,409 2,176 2,108 1,893 1,576 Total stockholder's equity 234 195 218 203 240 225 197
. On October 1, 1993, JHVLICO entered into an assumption reinsurance agreement with JHMLICO to cede a block of variable life, universal life and flexible variable life insurance policies to JHMLICO representing substantially all of such policies written by JHVLICO in the State of New York. In connection with this agreement, general account assets consisting of bonds, mortgage loans, policy loans, cash, investment income due and accrued and deferred and uncollected premiums totaling $72.2 million were transferred by JHVLICO to JHMLICO, along with policy reserves, unearned premiums and dividend liabilities totaling $47.7 million and surplus totaling $24.5 million. Separate account assets consisting of common stock and policy loans totaling $200.8 million were transferred to John Hancock's separate accounts along with $200.8 million in separate account policyholder obligations. RECENT ACCOUNTING DEVELOPMENTS In January 1995, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 120, "Accounting and Reporting by Mutual Life Insurance Enterprises and by Insurance Enterprises for Certain Long-Duration Participating Contracts." This Statement extends the requirements of Statements No. 60, 97, and 113 to mutual life insurance enterprises, and amends FASB 39 Interpretation No. 40, "Applicability of Generally Accepted Accounting Principles to Mutual Life Insurance and Other Enterprises." SFAS No. 120 and Interpretation No. 40, as amended, require mutual life insurance companies to adopt certain accounting principles in their financial statements in order to continue to be considered in accordance with generally accepted accounting principles, effective for 1996 financial statements. The manner in which policy reserves, new business acquisition costs, asset valuation, and the related tax effects are recorded will change. The modifications to existing accounting practices which may be necessary have been defined by the American Institute of Certified Public Accountants in Statement of Position ("SOP") 95-1, "Accounting for Certain Insurance Activities of Mutual Life Insurance Enterprises." The effects of such modifications on JHVLICOs general purpose financial statements have not yet been determined. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Financial Condition As of September 30, 1995, total assets grew by 18.3% to $3,107.7 million, from $2,626.9 million at December 31, 1994. This increase is principally due to the growth in the separate accounts where assets increased by 28.4% during 1995 from $1,721.0 million at December 31, 1994, to $2,210.0 million at September 30, 1995. Total obligations grew by 19.3% to $2,873.3 million from $2,409.0 million at December 31, 1994. As with assets, most of this growth was in the separate accounts, which grew by 28.4% during 1995, from $1,717.7 million at December 31, 1994, to $2,206.2 million at September 30, 1995. Separate account assets and liabilities consist primarily of the fund balances associated with variable life business. The asset holdings include fixed income, equity growth, total return real estate, and global mutual funds, with liabilities representing amounts due to policyholders. Total stockholder's equity grew by 7.6% from $217.9 million at December 31, 1994, to $234.4 million at September 30, 1995. As of December 31, 1994, total assets grew by 10.4%, to $2,626.9 million, from $2,378.6 million at December 31, 1993. Much of this growth was also attributable to an increase in separate account assets, which grew by 9.7% during 1994, from $1,568.6 million at December 31, 1993, to $1,721.0 million at December 31, 1994. Total obligations grew by 10.7% during 1994, from $2,175.8 million at December 31, 1993, to $2,409.0 million at December 31, 1994. As with assets, most of this growth was in separate accounts, which grew by 9.7% during 1994, from $1,565.3 million at December 31, 1993, to $1,717.7 million at December 31, 1994. Total stockholder's equity grew by 7.4%, from $202.8 million at December 31, 1993, to $217.9 million, at December 31, 1994. Investments The Company continues to address industry wide issues of asset quality and liquidity that have emerged in recent years. The Company's bond portfolio is highly diversified. It is not concentrated by geographic region, industry group, or individual investment. In 1995, 1994, and 1993, the Company invested new money predominantly in long term investment grade corporate bonds as a means of lowering the relative proportion of assets invested in commercial mortgages. As a result, the Company's holdings in investment (NAIC SVO classes 1 and 2) and medium (NAIC SVO class 3) grade bonds are 89.8% and 7.5%, respectively, of total general account bonds at September 30, 1995. The corresponding percentages at December 31, 1994 were 90.1% and 7.1%, respectively. Most of the medium grade bonds are private placements that provide long-term financing for medium size companies. These bonds typically are protected by individually negotiated financial covenants and/or collateral. At September 30, 1995, the balance (NAIC SVO classes 4, 5, and 6) of 2.7% of total general account bonds consists of lower grade bonds and bonds in default. Bonds in default represent 0.7% of total general account bonds. Management believes the Company's commercial mortgage lending philosophy and practices are sound. The Company generally makes mortgage loans against properties with proven track records and high occupancy 40 levels, and typically does not make construction or condominium loans nor lend more than 75% of the property's value at the time of the loan. To assist in the management of its mortgage loans, the Company uses a computer based mortgage risk analysis system. The Company has outstanding commitments to purchase long-term bonds and issue real estate mortgages totaling $9.0 million and $9.3 million, respectively at September 30, 1995. The corresponding amounts at December 31, 1994 were $6.7 million and $5.0 million, respectively. If funded, the mortgage loans will be fully collateralized by the related properties. The Company monitors the creditworthiness of borrowers under long term bond commitments and requires collateral as deemed necessary. The majority of these commitments expire in 1996. Reserves and Obligations The Company's obligations principally consist of aggregate reserves for life policies and contracts of $658.1 million in the general account and obligations of $2,206.2 million in the separate accounts at September 30, 1995. The corresponding amounts at December 31, 1994 were $638.6 million and $1,717.7 million, respectively. These liabilities are computed in accordance with commonly accepted actuarial standards and are based on actuarial assumptions which are in accordance with, or more conservative than, those called for in state regulations. All reserves meet the requirements of the insurance laws of the Commonwealth of Massachusetts. Intensive asset adequacy testing was performed in 1994 for all reserves. As a result of that testing, no additional reserves were established. Adequacy testing is done annually and generally performed in the fourth quarter. The Company's investment reserves include the Asset Valuation Reserve ("AVR") required by the NAIC and state insurance regulatory authorities. Prior to December 31, 1992, the investment reserves included the Mandatory Securities Valuation Reserve and a voluntary investment reserve called the Mortgage and Real Estate Valuation Reserve, which were replaced by the AVR. The AVR is included in the Company's obligations. At September 30, 1995, the AVR was $14.1 million, compared to $12.6 million at December 31, 1994 and $10.4 million at December 31, 1993. The AVR contained voluntary contributions of $1.1 million in 1994, $1.7 million in 1993, and $2.5 million in 1992. There were no voluntary contribution made during the nine months ended September 30, 1995. Management believes the Company's level of reserve is adequate and is made more conservative by the voluntary contributions. The AVR was established to stabilize statutory surplus from non interest related fluctuations in the market value of bonds, stocks, mortgage loans, real estate and other invested assets. The AVR generally captures realized and unrealized capital gains or losses on such assets, other than those resulting from changes in interest rates. Each year, the amount of an insurer's AVR will fluctuate as capital gains or losses are absorbed by the reserve. To adjust for such changes over time, an annual contribution must be made to the AVR equal to 20% of the difference between the maximum AVR (as determined annually according to the type and quality of an insurer's assets) and the actual AVR. The AVR provisions permitted a phase-in period whereby the required contribution was 10% in 1992, 15% in 1993, and the full 20% factor thereafter. Such contributions may result in a slower rate of growth of, or a reduction to, surplus. Changes in the AVR are accounted for as direct increases or decreases in surplus. The impact of the AVR on the surplus position of John Hancock in the future will depend in part on the composition of the Company's investment portfolio. The Interest Maintenance Reserve ("IMR") captures realized capital gains and losses (net of taxes) on fixed income investments (primarily bonds and mortgage loans) resulting from changes in interest rate levels. These amounts are not reflected in the Company's capital account and are amortized into net investment income over the estimated remaining lives of the investments disposed. At September 30, 1995, December 31, 1994 and December 31, 1993, the balance of the IMR was $6.5 million, $7.6 million and $7.1 million, respectively. The 41 IMR provisions permitted a phase-in period so that in 1992, 50% of realized capital gains and losses on United States government securities were recognized in net income and were not captured by the IMR. In 1993, the provisions allowed 25% of these capital gains and losses to flow to net income with the remainder being captured in the IMR. In 1994, all capital gains and losses on United States government securities were captured by the IMR. The impact of the IMR on the surplus of the Company depends upon the amount of future interest related capital gains and losses on fixed income investments. Results of Operations Nine Months Ended September 30, 1995 and 1994 Net gain from operations was $14.5 million for the nine months ended September 30, 1995, $22.9 million higher than the same period during 1994. Operating gain was positively impacted by the effects of a modified coinsurance reinsurance agreement between John Hancock and the Company entered into during 1994. Under the agreement, John Hancock reinsured 50% of the 1995 and 1994 sales of the Company's flexible premium variable life and scheduled premium variable life insurance policies. The 1995 increase in operating gain attributable to this reinsurance agreement was $13.6 million. The balance of the increase was due to gains from the inforce block of business which was partially offset by acquisition expenses of new sales and an increase in the federal income tax expense. Total revenues increased by 24.2%, or $94.3 million to $483.7 million during 1995 as compared to the same period during 1994. Premiums, net of premium ceded to reinsurers, increased by 9.8% or $33.7 million for the nine months ended September 30, 1995. This increase was primarily due to the sale of a new variable annuity product. Net investment income increased by 9.3% or $4.0 million to $47.1 million during 1995. The increase was comprised of $1.9 million from short term bonds; $1.1 million from long term bonds; and $1.2 million from policy loans. The increase in income on short term bonds was the result of a larger holding coupled with an upward trend in the average yield. The increase in long term bond income was the result of an increased asset base. Other income increased by $56.6 million which was entirely attributable to the increase in commission and expense allowances and reserve adjustments on reinsurance ceded. Total benefits and expenses increased by 12.6% or $50.1 million to $449.3 million during the nine months ended September 30, 1995 as compared to the same period during 1994. Benefit payments and additions to reserves increased by 24.1% or $63.5 million to $326.6 million. This increase was partially offset by a decrease of $14.0 million in insurance expenses. 1994 Compared to 1993 Net gain from operations was $12.6 million in 1994, $19.6 million higher than the net loss of $7.0 million in 1993. This increase in operating gain was primarily attributable to the effects of the modified coinsurance reinsurance agreement between John Hancock and the Company which was previously described. The 1994 increase in net operating gain attributable to this reinsurance agreement was $26.9 million. Total revenues increased by 28.0%, or $127.5 million, to $583.6 million, during 1994. Premiums increased by 7.9%, or $31.7 million, to $430.5 million during 1994, reflecting growth in premium revenues from the universal life insurance line, as well as the introduction in late 1993 and 1994 of three new products: the Medallion variable universal product, a variable COLI product, and a variable survivorship product. Net investment income decreased by 6.0%, or $3.7 million to $57.6 million, during 1994, due largely to a 16.8%, or $3.3 million decrease in gross income on mortgages and real estate, which contributed to an overall decrease of 4.9%, or $3.2 million, in gross investment income. Net investment income was further dampened in 1994 by a 13.3%, or $0.5 million, increase in investment expenses. Other income improved by $99.5 million during 1994, primarily due to the increase in commission and expense allowances and reserve adjustments on reinsurance 42 ceded, as described above. Total benefits and expenses increased by 21.8%, or $99.4 million, to $556.0 million, during 1994. Benefit payments and additions to reserves increased by 23.3%, or $70.5 million, to $372.8 million, during 1994. The increase primarily was due to $73.8 million or 66.2% increase in additions to reserves, most of which occurred in both the universal life and flexible variable life insurance lines, offset by a 1.7% or $3.3 million decrease in benefit payments. Insurance expenses, which included a $3.0 million charge for restructuring during 1994, increased by 19.0%, or $27.4 million, to $171.9 million, during 1994. This growth in expenses was attributable largely to the cost of growth in new business. 1993 Compared to 1992 Net loss from operations was $7.0 million in 1993, which was $20.2 million lower than the net gain of $13.2 million in 1992. This resulted from a decrease of $34.2 million in the 1993 pre-tax gain from the prior year and a decrease of $14.0 million in federal income tax expense during 1993. During 1993, the Company entered into an assumption reinsurance agreement with John Hancock, ceding a block of variable life, universal life, and flexible variable life insurance policies representing essentially all of such policies written by the Company in the State of New York. In connection with this agreement, $72.2 million of general account assets, $47.7 million of reserves and obligations, and $24.5 million of surplus were transferred to John Hancock, along with $200.8 million of separate account assets and obligations. Total revenues decreased by 3.9%, or $18.4 million, to $456.1 million, during 1993. Premiums decreased 4.2%, or $17.6 million, to $398.8 million during 1993, resulting partly from sluggish sales growth and the discontinuance during 1993, of the Company's sales in New York, as described in the paragraph above. Net investment income decreased by 1.1%, or $0.7 million, to $61.3 million, during 1993. This decrease was due to a 0.6%, or $0.4 million, decrease in gross investment income, and an increase of 8.9%, or $0.3 million, in investment expenses. Other income decreased by 2.6%, or $0.1 million, to a negative $4.0 million during 1993, primarily due to changes in amounts for reserve adjustment on reinsurance ceded. Partially offsetting this decrease were increases in expense allowances on reinsurance ceded, IMR amortization and miscellaneous income. Total benefits and expenses increased by 3.6%, or $15.8 million to $456.6 million, during 1993. Of this $15.8 million increase, benefit payments and additions to reserves decreased by 5.5%, or $17.6 million, to $302.3 million, during 1993. The decrease in benefits and additions to reserves was more than offset by an increase in insurance expenses during 1993 of 29.7%, or $33.1 million, to $144.5 million. Liquidity and Capital Resources The Company's liquidity resources at September 30, 1995, include cash and short term investments of $52.4 million, public bonds of $170.1 million, and investment grade private placement bonds of $305.5 million. The corresponding amounts at December 31, 1994 were $76.0 million, $106.6 million, and $304.1 million, respectively. In addition, the Company's separate accounts are highly liquid and are available to meet most outflow needs for variable life insurance. Management believes the liquidity resources above of $528.0 million as of September 30, 1995, strongly position the Company to meet all its obligations to policyholders and others. Generally, the Company's financing needs are met by means of funds provided by normal operations. As of September 30, 1995 and year end 1994, the Company had no outstanding borrowings from sources outside its affiliated group. Total surplus, or stockholder's equity, including the AVR, is $248.5 million as of September 30, 1995, compared to $230.5 million as of December 31, 1994, and $213.2 million as of December 31, 1993. The current 43 statutory accounting treatment of deferred acquisition cost ("DAC") taxes results in an understatement of the Company's surplus, which will persist during periods of growth in new business written. These taxes result from federal income tax law that approximates acquisition expenses and then spreads the corresponding tax deduction over a period of years. The result is a DAC tax which is collected immediately and subsequently returned through tax deduction in later years. Since it began its operations, the Company has received a total of $381.8 million in capital contributions from John Hancock, of which $377.5 million is credited to paid-in capital and $2.5 million is credited to capital stock as of September 30, 1995. In 1993, $1.8 million of capital was returned to John Hancock. To support the Company's operations, for the indefinite future, John Hancock is committed to make additional capital contributions if necessary to ensure that the Company maintains a positive net worth. The Company's stockholder's equity, net of unassigned deficit, was $234.4 million at September 30, 1995 and $217.9 million at December 31, 1994. For additional discussion of the Company's capitalization, see Note 2 of the Notes to Financial Statements. In December 1992, the NAIC approved risk-based capital ("RBC") standards for life insurance companies as well as a Model Act (the "RBC Model Act") to apply such standards at the state level. The RBC Model Act provides that life insurance companies must submit an annual RBC Report which compares a company's total adjusted capital (statutory surplus plus AVR, voluntary investment reserves, and one-half the apportioned dividend liability) with its risk-based capital as calculated by an RBC formula, where the formula takes into account the risk characteristics of the company's investments and products. The formula is to be used by insurance regulators as an early warning tool to identify possible weakly capitalized companies for purposes of initiating further regulatory action. The formula is not intended as a means to rank insurers. The RBC Model Act gives state insurance commissioners explicit regulatory authority to require various actions by, or take various actions against, insurance companies whose total adjusted capital does not meet the RBC standards. The RBC Model Act imposes broad confidentiality requirements on those engaged in the insurance business (including insurers, agents, brokers and others) as to the use and publication of RBC data. As of December 31, 1994, the Company's total adjusted capital as defined by the NAIC was well in excess of RBC standards. Reinsurance To reduce its exposure to large losses under its insurance policies, the Company enters into reinsurance arrangements with its parent, John Hancock, and other non-affiliated insurance companies. For further discussion of the Company's reinsurance arrangements, including business ceded to John Hancock, see Notes 6 and 8 of the Notes to Financial Statements. Separate Accounts Under applicable state insurance laws, insurers are permitted to establish separate investment accounts in which assets backing certain policies or contracts, including variable life policies and certain individual and group annuity contracts, are held. The investments in each separate investment account (which may be pooled or customer specific) are maintained separately from other separate investment accounts and the general investment account. The investment results of the separate investment account assets are passed through directly to separate investment account policyholders and contractholders, so that an insurer derives certain fees from, but bears no investment risk on, these assets, except the risk on a small number of products that the investment results of the separate account assets will not meet the minimum rate guaranteed on these products. Other than amounts derived from or otherwise attributable to the Company's general investment account, assets of separate investment accounts are not available to fund the liabilities of the general investment account. 44 COMPETITION The Company is engaged in a highly competitive business due to the large number of stock and mutual life insurance companies and other entities marketing insurance products. There are approximately 2,000 stock, mutual, and other types of insurers in the life insurance business in the United States. According to the July 1995, issue of Best's Review Life/Health, the Company ranks 154th in terms of net premiums written during 1994. The Company's parent, John Hancock, ranks 6th, and ranks as the 5th largest mutual life insurer in the U.S., based on total admitted assets at December 31, 1994, according to BestWeek Life/Health Supplement, dated April 10, 1995. Best's Company Report, dated May 25, 1995, affirms the Company's financial stability rating from A.M. Best Company, Inc. of A++, its highest, based on the strength of its parent company and the capital guarantee discussed above. Standard & Poor's Corporation and Duff & Phelps Credit Rating Company have assigned insurance claims-paying ability ratings to the Company of AA+ and AAA, respectively, which place the Company in the second highest and highest categories, respectively, by these rating agencies. Moody's Investors Service, Inc. has assigned the Company a financial strength rating of Aa2, which is its third highest rating. EMPLOYEES AND FACILITIES John Hancock provides the Company with personnel, property, and facilities for the performance of certain of the Company's corporate functions. John Hancock annually determines a fee for these services and facilities based on a number of criteria which were revised in 1994 and 1993 to reflect continuing changes in the Company's operations. The amount of service fee charged to the Company was $117.0 million and $98.2 million in 1994 and 1993, respectively. Approximately 1,400 of John Hancock's field office employees and agents are members of a labor union. The current agreement with union employees and agents is subject to renewal in June 1996. TRANSACTIONS WITH JOHN HANCOCK As indicated, property, personnel and facilities are provided, at a service fee, by John Hancock for purposes of the Company's operations, and the two companies have entered into certain reinsurance arrangements. In addition, John Hancock has contributed all of the Company's capital, of which $1.8 million of paid-in capital was returned to John Hancock during 1993. It is expected that arrangements and transactions such as the foregoing will continue in the future to an indeterminate extent. See Notes 2 and 6 of the Notes to Financial Statements. John Hancock receives no additional compensation for its services in connection with the distribution of the Contracts issued by the Company. REGULATION The Company is subject to extensive state regulatory oversight in jurisdictions in which it does business. This regulatory oversight, increasing scrutiny upon the insurance regulatory framework and proposals to adopt a federal regulatory framework may in the future adversely affect the Company's ability to sustain adequate returns. The Company's business also could be adversely affected by changes in state law relating to asset and reserve valuation requirements, limitations on investments and risk-based capital requirements, and, at the federal level, by laws and regulations that may affect certain aspects of the insurance industry. Assessments also are levied against John Hancock companies as a result of participation in various types of state guaranty associations, state insurance pools for the uninsured or other arrangements. 45 Regulators have the discretionary authority, in connection with the continual licensing of the Company, to limit or prohibit new issuances of business to policyholders when, in their judgment, such regulators determine that such insurer is not maintaining minimum statutory surplus or capital or if further transaction of business will be hazardous to its policyholders. The Company does not believe the current or anticipated levels of statutory surplus of the Company or any member of its affiliated group, and the volume of their sales of new life and annuity policies, present a material risk that the amount of new insurance that the Company or any of such insurance affiliates may issue will be limited. Although the federal government does not directly regulate the business of insurance, federal initiatives often have an impact on the business in a variety of ways. Current and proposed federal measures which may significantly affect the insurance business include removal of barriers preventing banks from engaging in the insurance business, limits to medical testing for insurability, tax law changes affecting the taxation of insurance companies, the tax treatment of insurance products and its impact on the relative desirability of various personal investment vehicles and proposed legislation to prohibit the use of gender in determining insurance and pension rates and benefits. 46 DIRECTORS AND EXECUTIVE OFFICERS The directors and executive officers of the Company are as follows:
POSITION OTHER BUSINESS EXPERIENCE NAME AGE WITH THE COMPANY WITHIN PAST 5 YEARS ---- --- ---------------- -------------------------- David F. D'Alessandro, Director................. 44 Chairman Senior Executive Vice President- Retail Sector, John Hancock Henry D. Shaw, Director................. 61 Vice Chairman & Senior Vice President, Retail Products & President Markets, John Hancock Robert S. Paster, Director................. 43 Vice President & Second Vice President, Valuation & Actuary Financial Systems, John Hancock Michele G. Van Leer, Director................. 37 Vice President Vice President, Life & Annuity Products, John Hancock Joseph A. Tomlinson, Director................. 48 Vice President Vice President, Alternative Distribution, John Hancock Robert R. Reitano, Director................. 45 Vice President Second Vice President, Investment Policy & Research, John Hancock Francis C. Cleary, Jr., Director................. 63 Vice President & Vice President & Counsel, Equity & Counsel Pension Law, John Hancock Barbara L. Luddy, Director................. 43 Vice President Second Vice President, Financial Reporting & Analysis, John Hancock Daniel L. Ouellette...... 46 Vice President - Vice President, Marketing & Sales Marketing Support, John Hancock Thomas J. Lee............ 41 Vice President - Vice President, Life & Annuity Services, Claims Policyholder John Hancock Services Edward P. Dowd........... 52 Vice President - Senior Vice President, Real Estate Investments Investment Group, John Hancock Roger G. Nastou.......... 53 Vice President - Vice President, Bond & Corporate Investment Finance, John Hancock Laura L. Mangan.......... 33 Vice President & Assistant Regulatory/Compliance Secretary Officer, Staff & Corporate Secretarial, John Hancock Patrick F. Smith......... 53 Controller Senior Associate Controller, Controller's Department, John Hancock Leonard C. Bassett....... 57 Treasurer Financial Officer, Financial Sector Management, John Hancock
47 EXECUTIVE COMPENSATION Executive officers of the Company also serve one or more of the affiliated companies of John Hancock. Allocations have been made as to each individual's time devoted to his or her duties as an executive officer of the Company. The following table provides information on the allocated compensation paid to the chief executive officer. There were no executive officers of the Company whose allocated compensation exceeded $100,000 during 1994. Directors of the Company receive no compensation in addition to their compensation as employees of John Hancock.
Long Term Annual Compensation Compensation ------------------- ------------ Name Title Salary Bonus Other LTIP All Other ---- ----- ------ ----- ----- ---- --------- David F. D'Alessandro Chairman $40,670 $20,903 $3,815 $21,965 $ 0
SEPARATE ACCOUNT PERFORMANCE The Subaccounts may include total return in advertisements. When a Subaccount advertises its total return, it will usually be calculated for one year, five years, and ten years or for the life of the applicable Fund. Total return is the percentage change between the value of a hypothetical investment in the Subaccount at the beginning of the relevant period to the value of the investment at the end of the period, assuming the deduction of any CDSL which would be payable if the Contract Owner surrendered the Contract at the end of the period indicated. Total return at the Separate Account level will reflect the CDSL, mortality and expense risk charges, administrative charge, and the annual Contract Fee. The total return figures will not reflect any premium tax charge or any charges for optional benefits, including the Nursing Home Waiver of CDSL, One Year Stepped-Up Death Benefit and Accidental Death Benefit riders. The total return for the Separate Account will be lower than total return at the Trust level where comparable charges are not deducted. The Subaccounts may also advertise total returns in a non-standard format in conjunction with the standard format described above. The non-standard format will be the same as the standard format except that it will not reflect any CDSL. The Money Market Subaccount may advertise "current yield" and "effective yield." Current yield refers to the income earned by the Subaccount over a seven-day period and then annualized; i.e., the income earned in the period is assumed to be earned every seven days over a 52-week period and stated as a percentage of the investment. Effective yield is calculated similarly but, when annualized, the income earned by the investment is assumed to be reinvested in the Subaccount and thus compounded in the course of a 52-week period. The effective yield will be slightly higher than the current yield because of this compounding effect of the assumed reinvestment. The other Subaccounts may also advertise current yield. For these Subaccounts, the current yield will be calculated by dividing the annualization of the income earned by the Subaccount during a recent thirty-day period by the maximum offering price per unit at the end of such period. In all cases, current yield and effective yield will reflect the recurring charges at the Separate Account level including the annual Contract Fee, but will not reflect any premium tax charge, any CDSL, or any charges for optional benefit riders. Performance information for the Subaccounts may be compared to other variable annuity separate accounts or other investment products surveyed by Lipper Analytical Services, Inc., an independent service which monitors and ranks the performance of investment companies, or tracked by other rating services, companies, publications, or persons who independently monitor and rank investment company performance. Performance figures are 48 calculated in accordance with standardized methods established by each reporting service. REPORTS The Company intends to deliver to Owners of outstanding Contracts annual account statements and such other periodic reports as may be required by law, but it is not anticipated that any such reports will include periodic financial statements or information concerning the Company. VOTING PRIVILEGES All of the assets in the Subaccounts of the Separate Account are invested in shares of the corresponding Funds of the Trust. The Company will vote the shares of each Fund which are deemed attributable to the Contracts at meetings of the Trust's shareholders in accordance with instructions received from Owners of the Contracts. Units of the Trust held in the Separate Account which are not attributable to the Contracts and those for which instructions from owners are not received will be represented by the Company at the meeting and will be voted for and against each matter in the same proportion as the votes based upon the instructions received from the owners of all annuity contracts funded through the Separate Account's corresponding variable Subaccounts. The number of shares of a Fund held in each Subaccount deemed attributable to each Owner is determined by dividing a Contract's Accumulation Unit Value (or for a Contract under which annuity payments have commenced, the equivalent) in the Subaccount by the net asset value of one share in the corresponding Fund in which the assets of that Subaccount are invested. Fractional votes will be counted. The number of shares as to which the Owner may give instructions will be determined as of the record date for the Trust's meeting. Owners of Contracts may give instructions regarding the election of the Board of Trustees of the Trust, ratification of the selection of independent auditors, approval of the Trust investment management agreements and other matters requiring a vote under the 1940 Act. Owners will be furnished information and forms by the Company in order that voting instructions may be given. CHANGES IN APPLICABLE LAW-FUNDING AND OTHERWISE The voting privileges described in this prospectus are afforded based on the Company's understanding of applicable Federal securities law requirements. To the extent that applicable law, regulations or interpretations change to eliminate or restrict the need for such voting privileges, the Company reserves the right to proceed in accordance with any such revised requirements. The Company also reserves the right, subject to compliance with applicable law, including approval of Owners if so required, to transfer assets determined by the Company to be associated with the class of contracts to which the Contracts belong from the Account to another separate account or Subaccount by withdrawing the same percentage of each investment in the Separate Account with appropriate adjustments to avoid odd lots and fractions. 49 LEGAL PROCEEDINGS There are no legal proceedings to which the Separate Account or the Company is a party other than routine litigation which the Company believes is not relevant or material to the Contracts being offered. DISTRIBUTION OF THE CONTRACTS John Hancock is registered as a broker-dealer under the Securities Exchange Act of 1934 and is a member of the National Association of Securities Dealers, Inc. John Hancock acts as principal underwriter of the Contracts and has entered into a distribution agreement with JHFI which is the principal distributor of the Contracts. The Contracts may be purchased through broker- dealers and certain financial institutions who have entered into selling agreements with JHFI and the Company, and whose representatives are authorized by applicable law to sell annuity products. The compensation paid to such broker-dealers and financial institutions is not expected to exceed 5.5% of premium payments. The offering of the Contracts is intended to be continuous, but neither John Hancock nor JHFI is obligated to sell any particular amount of Contracts. The Company reimburses John Hancock for direct and indirect expenses actually incurred in connection with the marketing and sale of the Contracts. In addition, on behalf of the Company, John Hancock performs certain insurance underwriting and determines whether to accept or reject the application for a Contract. AVAILABLE INFORMATION The Company is subject to the informational requirements of the 1934 Act, and in accordance therewith files reports and other information with the Commission. Such reports and other information can be inspected and copied at the public reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C., and at the Commission's Regional Offices located at 7 World Trade Center, Suite 1300, New York, New York, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois. Copies of such materials also can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Company has filed registration statements ("Registration Statements") with the Commission under the Securities Act of 1933 relating to the Contracts offered by this prospectus. This prospectus has been filed as a part of the Registration Statements and does not contain all of the information set forth in the Registration Statements and exhibits thereto, and reference is hereby made to such Registration Statements and exhibits for further information relating to the Company and the Contracts. The Registration Statements and the exhibits thereto may be inspected and copied, and copies can be obtained at prescribed rates, in the manner set forth in the preceding paragraph. 50 EXPERTS AND FINANCIAL STATEMENTS The annual financial statements of the Company that are included in this prospectus have been audited by , independent auditors, whose report has been relied upon given their authority as experts in accounting and auditing. There are no financial statements for the Separate Account, as the Separate Account has not yet commenced operations and has no assets or liabilities. TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
CROSS REFERENCE TO PAGE PAGE IN PROSPECTUS ---- ------------------ The Separate Account ............................... Services Agreement ................................. Calculation of Performance Data .................... Calculation of Annuity Payments .................... Separate Account Financial Statements ..............
51 Report of Independent Auditors Board of Directors John Hancock Variable Life Insurance Company [to be added by amendment] F-1 JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY STATEMENTS OF FINANCIAL POSITION
(Unaudited) September 30 December 31 ------------- ----------- 1995 1994 1993 (In millions) Assets Bonds--Note 7 $ 466.8 $ 458.3 $ 433.0 Preferred stocks 5.2 5.3 6.4 Common stocks 2.3 1.9 2.4 Investment in affiliate 64.9 59.9 57.6 Mortgage loans on real estate--Note 7 138.0 148.5 163.1 Real estate 43.0 27.8 16.7 Policy loans 58.4 47.3 36.9 Cash items: Cash in banks 0.0 29.3 5.7 Temporary cash investments 52.4 46.7 17.6 52.4 76.0 23.3 Premiums due and deferred 38.6 43.9 47.3 Investment income due and accrued 16.0 14.7 14.4 Other general account assets 12.1 22.3 8.9 Assets held in separate accounts 2,210.0 1,721.0 1,568.6 TOTAL ASSETS $3,107.7 $2,626.9 $2,378.6 Obligations and Stockholder's Equity Obligations Policy reserves $ 658.1 $ 638.6 $ 600.3 Federal income and other taxes payable--Note 1 9.8 17.3 (1.2) Other accrued expenses (14.9) 22.8 1.0 Asset valuation reserve--Note 1 14.1 12.6 10.4 Obligations related to separate accounts 2,206.2 1,717.7 1,565.3 TOTAL OBLIGATIONS 2,873.3 2,409.0 2,175.8 Stockholder's equity--Notes 2 and 6 Common Stock, $50 par value; authorized 50,000 shares; issued and outstanding 50,000 shares--1995; 20,000 shares--1994 and 1993 2.5 25.0 25.0 Paid-in capital 377.5 355.0 355.0 Unassigned deficit (145.6) (162.1) (177.2) TOTAL STOCKHOLDER'S EQUITY 234.4 217.9 202.8 TOTAL OBLIGATIONS AND STOCKHOLDER'S EQUITY $3,107.7 $2,626.9 $2,378.6
The accompanying notes are an integral part of the financial statements. F-2 JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT
(Unaudited) Nine months ended September 30 Year ended December 31 1995 1994 1994 1993 1992 ---- ---- ---- ---- ---- (In millions) INCOME Premiums $ 378.9 $ 345.2 $ 430.5 $ 398.8 $ 416.4 Net investment income-Note 4 47.1 43.1 57.6 61.3 62.0 Other, net 57.7 1.1 95.5 (4.0) (3.9) 483.7 389.4 583.6 456.1 474.5 BENEFITS AND EXPENSES Payments to policyholders and beneficiaries 161.3 138.7 187.5 190.8 199.0 Additions to reserves to provide for future payments to policyholders and beneficiaries 165.3 124.4 185.3 111.5 120.9 Expenses of providing service to policyholders and obtaining new insurance-Note 6 113.9 127.9 168.9 144.5 111.4 Cost of restructuring 0.0 0.0 3.0 0.0 0.0 State and miscellaneous taxes 8.8 8.2 11.3 9.8 9.5 449.3 399.2 556.0 456.6 440.8 GAIN (LOSS) FROM OPERATIONS BEFORE FEDERAL INCOME TAXES AND AND NET REALIZED CAPITAL GAINS (LOSSES) 34.4 (9.8) 27.6 (0.5) 33.7 Federal income taxes (benefit)-Note 1 19.9 (1.4) 15.0 6.5 20.5 GAIN (LOSS) FROM OPERATIONS BEFORE NET REALIZED CAPITAL GAINS (LOSSES) 14.5 (8.4) 12.6 (7.0) 13.2 Net realized capital gains (losses)-Note 5 (0.6) 1.2 0.4 (2.6) (1.4) NET GAIN (LOSS) 13.9 (7.2) 13.0 (9.6) 11.8 Unassigned deficit at beginning of year (162.1) (177.2) (177.2) (142.3) (157.1) Net unrealized capital gains (losses) and other adjustments-Note 5 2.0 (3.7) (1.5) (3.2) (2.2) Valuation reserve changes-Note 1 0.0 2.5 2.7 2.3 9.0 Change in separate account surplus 0.5 0.0 0.0 0.5 0.2 Other reserves and adjustments 0.1 0.4 0.9 (24.9) (4.0) UNASSIGNED DEFICIT AT END OF YEAR $(145.6) $(185.2) $(162.1) $(177.2) $(142.3)
The accompany notes are an integral part of the financial statements F-3 JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY STATEMENTS OF CASH FLOWS
(Unaudited) Nine months ended September 30 Year ended December 31 1995 1994 1994 1993 1992 ---- ---- ---- ---- ---- (In millions) CASH PROVIDED Insurance premiums $383.3 $352.3 $517.2 $411.4 $425.4 Net investment income 46.1 43.2 57.9 63.0 62.0 Other, net 66.2 0.4 (0.3) (0.6) (2.6) 495.6 395.9 574.8 473.8 484.8 Benefits to policyholders and beneficiaries 150.3 132.6 175.3 176.6 186.4 Dividends paid to policyholders 9.5 8.9 11.9 14.8 12.2 Insurance expenses and other taxes 122.5 135.5 180.6 148.4 118.9 Net transfers to separate accounts 149.4 96.4 146.6 91.9 65.9 Other, net 37.8 6.0 7.7 22.1 33.1 469.5 379.4 522.1 453.8 416.5 NET CASH PROVIDED FROM OPERATIONS 26.1 16.5 52.7 20.0 68.3 Proceeds from the disposition, redemption and prepayment of: Bonds 44.9 44.5 70.1 103.0 49.1 Stocks 0.7 1.0 1.2 9.4 4.5 Real estate 0.0 4.2 22.1 3.6 1.7 Other invested assets 0.0 0.0 1.3 0.1 0.0 Mortgage loan repayments 16.3 26.0 35.2 80.1 13.9 Other sources 0.0 11.2 21.8 0.0 0.0 TOTAL CASH PROVIDED 88.0 103.4 204.4 216.2 137.5 CASH APPLIED Purchase of: Bonds 53.3 81.0 94.1 92.3 132.5 Stocks 1.7 1.5 1.5 59.8 1.4 Real estate 15.5 0.0 18.4 0.5 0.3 Other invested assets 0.0 0.9 0.9 4.2 0.2 Mortgage loans issued 6.5 28.7 37.9 32.4 16.8 Return of paid-in capital to John Hancock 0.0 0.0 0.0 1.8 0.0 Other applications 34.6 0.0 (1.1) 43.8 (0.3) TOTAL CASH APPLIED 111.6 112.1 151.7 234.8 150.9 INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS (23.6) (8.7) 52.7 (18.6) (13.4) Cash and temporary cash investments at beginning of year 76.0 23.3 23.3 41.9 55.3 CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR $ 52.4 $ 14.6 $ 76.0 $ 23.3 $ 41.9
The accompanying notes are an integral part of the financial statements F-4 JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY STATEMENTS OF STOCKHOLDER'S EQUITY
Additional Common Paid-in Unassigned Stock Capital Deficit Total (In millions) Balance at January 1, 1992 $ 25.0 $356.8 $(157.1) $224.7 1992 Transactions: Net gain 11.8 11.8 Net unrealized capital losses and other adjustments (2.2) (2.2) Valuation reserve changes 9.0 9.0 Change in separate account surplus 0.2 0.2 Other reserves and adjustments (4.0) (4.0) Balance at December 31, 1992 25.0 356.8 (142.3) 239.5 1993 Transactions: Net loss (9.6) (9.6) Net unrealized capital losses and other adjustments (3.2) (3.2) Valuation reserve changes 2.3 2.3 Change in separate account surplus 0.5 0.5 Other reserves and adjustments (24.9) (24.9) Return of capital (1.8) (1.8) Balance at December 31, 1993 25.0 355.0 (177.2) 202.8 1994 Transactions: Net gain 13.0 13.0 Net unrealized capital losses and other adjustments (1.5) (1.5) Valuation reserve changes 2.7 2.7 Change in separate account surplus 0.0 0.0 Other reserves and adjustments 0.9 0.9 Balance at December 31, 1994 $ 25.0 $355.0 $(162.1) $217.9 For the nine months ended September 30, 1994 (unaudited) Balance at December 31, 1993 $ 25.0 $355.0 $(177.2) $202.8 1994 Transactions: Net loss (7.2) (7.2) Net unrealized capital losses and other adjustments (3.7) (3.7) Valuation reserve changes 2.5 2.5 Change in separate account surplus 0.0 0.0 Other reserves and adjustments 0.4 0.4 Balance at September 30, 1994 $ 25.0 $355.0 $(185.2) $194.8 For the nine months ended September 30, 1995 (unaudited) Balance at December 31, 1994 $ 25.0 $355.0 $(162.1) $217.9 1995 Transactions: Net gain 13.9 13.9 Net unrealized capital gains and other adjustments 2.0 2.0 Valuation reserves changes 0.0 0.0 Change in separate account surplus 0.5 0.5 Other reserves and adjustments 0.1 0.1 Reclassification of paid-in capital (22.5) 22.5 0.0 Balance at September 30, 1995 $ 2.5 $377.5 $(145.6) $234.4
F-5 NOTES TO FINANCIAL STATEMENTS JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (Information as of, and for the periods ended September 30, 1995 and 1994 is unaudited) NOTE 1--ACCOUNTING PRACTICES John Hancock Variable Life Insurance Company (the Company) is a wholly-owned subsidiary of John Hancock Mutual Life Insurance Company (John Hancock). The financial statements have been prepared on the basis of accounting practices prescribed or permitted by the Commonwealth of Massachusetts Division of Insurance and in conformity with the practices of the National Association of Insurance Commissioners which are currently considered generally accepted accounting principles for a stock life insurance company wholly-owned by a mutual life insurance company. Accordingly, the assets in the statements of financial position are "admitted assets" as defined by regulatory authorities. In January, 1995, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 120, "Accounting and Reporting by Mutual Life Insurance Enterprises and by Insurance Enterprises for Certain Long-Duration Participating Contracts." This Statement extends the requirements of Statements No. 60, 97 and 113 to mutual life insurance enterprises and amends FASB Interpretation No. 40, "Applicability of Generally Accepted Accounting Principles to Mutual Life Insurance and Other Enterprises." SFAS No. 120 and Interpretation No. 40, as amended, require life insurance companies to adopt certain accounting principles in their financial statements in order to continue to be considered in accordance with generally accepted accounting principles, effective for 1996 financial statements. The manner in which policy reserves, new business acquisition costs, asset valuation and the related tax effects are recorded will change. The modifications to existing accounting practices which may be necessary have been defined by the American Institute of Certified Public Accountants in Statement of Position (SOP) 95-1, "Accounting for Certain Insurance Activities of Mutual Life Insurance Enterprises." The Company has not yet determined the effects of such modifications on its general purpose financial statements. The significant accounting practices of the Company are as follows: Revenues and Expenses: Premium revenues are recognized over the premium- --------------------- paying period of the policies whereas expenses, including the acquisition costs of new business, are charged to operations as incurred and policyholder dividends are provided as paid or accrued. Cash and Temporary Cash Investments: Cash includes currency on hand and ----------------------------------- demand deposits with financial institutions. Temporary cash investments are short-term, highly-liquid investments both readily convertible to known amounts of cash and so near maturity that there is insignificant risk of changes in value because of changes in interest rates. Valuation of Assets: General account investments are carried at amounts ------------------- determined on the following bases: Bonds and stock values are carried as prescribed by the National Association of Insurance Commissioners (NAIC): bonds generally at amortized amounts or cost, preferred stocks NOTES TO FINANCIAL STATEMENTS JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (Information as of, and for the periods ended September 30, 1995 and 1994 is unaudited) F-6 NOTE 1--ACCOUNTING PRACTICES--CONTINUED generally at cost and common stocks at market. The discount or premium on bonds is amortized using the interest method. Investments in affiliates are included on the statutory equity method. Goodwill is amortized on a straight line basis over a ten year period. Mortgage loans are carried at outstanding principal balance or amortized cost. Investment real estate is carried at depreciated cost, less encumbrances. Depreciation on investment real estate is recorded on a straight line basis. Real estate acquired in satisfaction of debt and held for sale is carried at the lower of cost or market as of the date of foreclosure. Policy loans are carried at outstanding principal balance, not in excess of policy cash surrender value. Asset Valuation and Interest Maintenance Reserves: Beginning in 1992, the ------------------------------------------------- Company adopted the Asset Valuation Reserve (AVR) prescribed by the NAIC to replace the Mandatory Securities Valuation Reserve (MSVR) previously required by the NAIC and the additional Mortgage and Real Estate Valuation Reserve (MSVR) provided by the Company. The AVR is computed in accordance with the prescribed NAIC formula and represents a provision for possible fluctuations in the value of bonds, equity securities, mortgage loans, real estate and other invested assets. Changes to the AVR are charged or credited directly to the unassigned deficit. The Company also records the NAIC prescribed Interest Maintenance Reserve (IMR) that represents the after tax net accumulated unamortized realized capital gains and losses attributable to changes in the general level of interest rates on sales of fixed income securities, principally bonds and mortgage loans. Such gains and losses are deferred and amortized into income over the remaining expected lives of the investments sold. At September 30, 1995, the IMR, net of 1995 amortization of $0.8 million, amounted to $6.5 million which is included in policy reserves. The corresponding amounts at September 30, 1994 were $0.8 million and $7.4 million, respectively. At December 31, 1994, the IMR, net of 1994 amortization of $1.1 million, amounted to $7.1 million, which is included in policy reserves. The corresponding 1993 amounts were $0.5 million and $7.6 million, respectively. Separate Accounts: Separate account assets (unit investment trusts valued at ----------------- market) and separate account obligations (principally policyholder account values) are included as separate captions in the statements of financial position. In 1995 and 1994, the change in separate account surplus is recognized through direct charges or credits to unassigned deficit. In 1993 and 1992 separate NOTES TO FINANCIAL STATEMENTS JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (Information as of, and for the periods ended September 30, 1995 and 1994 is unaudited) F-7 account business was combined with the general account under the appropriate captions in the consolidated summary of operations. The 1993 and 1992 presentation was reclassified to permit comparison with the corresponding 1995 and 1994 amounts. The presentation has no effect on unassigned deficit. Fair Values of Financial Instruments: SFAS No. 107, "Disclosure about Fair ------------------------------------ Value of Financial Instruments," requires disclosure of fair value information about financial instruments, whether or not recognized in the statement of financial position, for which it is practicable to estimate the value. In situations where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. SFAS No. 107 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Therefore, the aggregate fair value amounts presented do not represent the underlying value of the Company. F-8 NOTES TO FINANCIAL STATEMENTS JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (Information as of, and for the periods ended September 30, 1995 and 1994 is unaudited) NOTE 1--ACCOUNTING PRACTICES--CONTINUED The methods and assumptions utilized by the Company in estimating its fair value disclosures for financial instruments are as follows: The carrying amounts reported in the statement of financial position for cash and temporary cash investments approximate their fair values. Fair values for public bonds are obtained from an independent pricing service. Fair values for private placement securities and publicly traded bonds not provided by the independent pricing service are estimated by the Company by discounting expected future cash flows using current market rates applicable to the yield, credit quality and maturity of the investments. The fair values for common and preferred stocks, other than its subsidiary investments which are carried at equity values are based on quoted market prices. The fair value for mortgage loans is estimated using discounted cash flow analyses using interest rates adjusted to reflect the credit characteristics of the loans. Mortgage loans with similar characteristics and credit risks are aggregated into qualitative categories for purposes of the fair value calculations. The carrying amount in the statement of financial position for policy loans approximates its fair value. The fair value for outstanding commitments to purchase long-term bonds is estimated using a discounted cash flow method incorporating adjustments for the difference in the level of interest rates between the dates the commitments were made and September 30, 1995 and December 31, 1994, respectively. The fair value for commitments to purchase real estate approximates the amount of the initial commitment. Capital Gains and Losses: Realized capital gains and losses, net of taxes ------------------------ and amounts transferred to the IMR, are included in net gain or loss. Unrealized gains and losses, which consist of market value and book value adjustments, are shown as adjustments to the unassigned deficit. Policy Reserves: Reserves for variable life insurance policies are --------------- maintained principally on the modified preliminary term method using the 1958 and 1980 Commissioner's Standard Ordinary (CSO) mortality tables, with an assumed interest rate of 4% for policies issued prior to May 1, 1983 and 4 1/2% for policies issued on or thereafter. Reserves for single premium policies are determined by the net single premium method using the 1958 CSO mortality table, with an assumed interest rate of 4%. Reserves for universal life policies issued prior to 1985 are equal to the gross account value which at all times exceeds minimum statutory requirements. Reserves for universal life policies issued from 1985 through 1988 are maintained at the greater of the Commissioner's Reserve Valuation Method (CRVM) using the 1958 CSO mortality table, with 4 1/2% interest or the cash surrender value. Reserves for universal life policies issued after 1988 and for flexible variable policies are maintained using the greater of the cash surrender value or the CRVM method with the 1980 CSO mortality table and 5 1/2% interest for policies issued from 1988 through 1992; 5% interest for policies issued in 1993 and 1994; and 4 1/2% interest for policies issued in 1995. F-9 NOTES TO FINANCIAL STATEMENTS JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (Information as of, and for the periods ended September 30, 1995 and 1994 is unaudited) NOTE 1--ACCOUNTING PRACTICES--CONTINUED Federal Income Taxes: Federal income taxes are provided in the financial -------------------- statements based on amounts determined to be payable as a result of operations within the current accounting period. The operations of the Company are consolidated with John Hancock, its Parent, in filing a consolidated federal income tax return for the affiliated group. The federal income taxes of the Company are allocated on a separate return basis with certain adjustments. The Company made payments of $26.7 million for the nine months ended September 30, 1995 and received tax benefits of $1.8 million for the nine months ended September 30, 1994. The Company received federal tax benefits of $7.0 million in 1994 and made payments of $17.0 million and $24.9 million in 1993 and 1992, respectively. Income before taxes differs from taxable income principally due to tax-exempt investment income, the limitation placed on the tax deductibility of policyholder dividends, accelerated depreciation, differences in policy reserves for tax return and financial statement purposes, capitalization of policy acquisition expenses for tax purposes and other adjustments prescribed by the Internal Revenue Code. No provision is generally recognized for timing differences that may exist between financial reporting and taxable income or loss. Adjustments to Policy Reserves: From time to time, the Company finds it ------------------------------ appropriate to modify certain required policy reserves because of changes in actuarial assumptions or increased benefits. Reserve modifications resulting from such determinations are recorded directly to the unassigned deficit. During 1994, the Company refined certain actuarial assumptions inherent in the calculation of preconversion yearly renewable term and gross premium deficiency reserves, resulting in a $2.7 million decrease in the unassigned deficit at December 31, 1994. Similar refinements to the actuarial assumptions inherent in the calculation of active life waiver of premium disability reserves were made during 1993 and 1992 resulting in a $2.3 million and $9.0 million decrease in the unassigned deficit at December 31, 1993 and December 31, 1992, respectively. During the nine months ended September 30, 1995 and September 30, 1994, there were no refinements in actuarial assumptions inherent in the calculation of policy reserves. Reinsurance: Premiums, commissions, expense reimbursements, 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. Premiums ceded to other companies have been reported as a reduction of premium income. Amounts applicable to reinsurance ceded for future policy benefits, unearned premium reserves and claim liabilities have been reported as reductions of these items. Reclassifications: Certain 1993 and 1992 amounts have been reclassified to ------------------ permit comparison with the corresponding 1995 and 1994 amounts. F-10 NOTES TO FINANCIAL STATEMENTS JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (Information as of, and for the periods ended September 30, 1995 and 1994 is unaudited) NOTE 2--CAPITALIZATION At December 31, 1994, the Company had 50,000 shares authorized with 20,000 shares issued and outstanding. On February 16, 1995, the Company issued the remaining 30,000 shares to John Hancock and transferred $22.5 million from common stock to paid-in capital. The par value per share is $50. In prior years, the Company received capital contributions from John Hancock, with a portion of the contributed capital being credited to common stock, although no additional shares were issued. This practice had the effect of stating the carrying value of issued shares of common stock at amounts other than $50 per share par value with the offset reflected in paid-in capital. During 1993, the Company returned $1.8 million of paid-in capital to John Hancock. NOTE 3--ACQUISITION On June 23, 1993, the Company acquired all of the outstanding shares of stock of Colonial Penn Annuity and Life Insurance Company (CPAL) from Colonial Penn Life Insurance Company, for an aggregate purchase price of approximately $42.5 million. At the date of acquisition, assets of CPAL were approximately $648.5 million, consisting principally of cash and temporary cash investments and liabilities were approximately $635.2 million, consisting principally of reserves related to a block of interest sensitive single-premium whole life insurance business assumed by CPAL from Charter National Life Insurance Company (Charter). The purchase price includes contingent payments of up to approximately $7.3 million payable between 1994 and 1998 based on the actual lapse experience of the business in force on June 23, 1993. The acquisition was accounted for using the purchase method and the unamortized goodwill was $17.9 million and $18.9 million at September 30, 1995 and December 31, 1994, respectively. The Company made contingent payments to CPAL of $1.5 million for the nine months ended September 30, 1995 and $1.5 million in 1994. On June 24, 1993, the Company contributed $24.6 million in additional capital to CPAL. CPAL was renamed John Hancock Life Insurance Company of America (JHLICOA) on July 7, 1993. JHLICOA manages the business assumed from Charter and does not currently issue new business. F-11 NOTES TO FINANCIAL STATEMENTS JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (Information as of, and for the periods ended September 30, 1995 and 1994 is unaudited) NOTE 4--NET INVESTMENT INCOME Investment income has been reduced by the following amounts:
Nine months ended September 30 1995 1994 1994 1993 1992 ---- ------ ------ ------ ------ (In millions) Investment expenses $1.9 $2.3 $3.4 $2.9 $2.8 Interest expense 0.0 0.0 0.2 0.0 0.0 Depreciation expense 0.7 0.4 0.6 0.6 0.5 Investment taxes 0.4 0.2 0.2 0.3 0.2 $3.0 $2.9 $4.4 $3.8 $3.5
NOTE 5--NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS Net realized capital gains (losses) consist of the following items:
Nine months ended September 30 1995 1994 1994 1993 1992 ---- ------ ---- ------ ------ (In millions) Gains (losses) from asset sales $ 0.1 $(0.7) $(1.6) $ 9.6 $(2.1) Less capital gains (tax) credit (0.5) 2.5 2.5 (4.2) 0.8 Less net amounts transferred to IMR (0.2) (0.6) (0.5) (8.0) (0.1) Net Realized Capital Gains (Losses) $(0.6) $ 1.2 $ 0.4 $(2.6) $(1.4)
Net unrealized capital gains (losses) and other adjustments consist of the following items:
Nine months ended September 30 1995 1994 1994 1993 1992 ---- ---- ---- ---- ---- (In millions) Gains (losses) from changes in security values and book value adjustments $ 3.6 $(2.0) $ 0.7 $(1.4) $ 1.4 Increase in asset valuation reserve (1.6) (1.7) (2.2) (1.8) (3.6) Net Unrealized Capital Gains (Losses) and Other Adjustments $ 2.0 $(3.7) $(1.5) $(3.2) $(2.2)
F-12 NOTES TO FINANCIAL STATEMENTS JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (Information as of, and for the periods ended September 30, 1995 and 1994 is unaudited) NOTE 6--TRANSACTIONS WITH PARENT The Company's Parent provides the Company with personnel, property and facilities in carrying out certain of its corporate functions. The Parent annually determines a fee for these services and facilities based on a number of criteria which were revised in 1995, 1994, 1993 and 1992 to reflect continuing changes in the Company's operations. The amount of the service fee charged to the Company was $72.4 million, $88.5 million, $117.0 million, $98.2 million and $75.2 million for the nine months ended September 30, 1995 and September 30, 1994, in 1994 and 1993, and 1992, respectively, which has been included in insurance and investment expenses. The Parent has guaranteed that, if necessary, it will make additional capital contributions to prevent the Company's stockholder's equity from declining below $1.0 million. In 1992, the National Association of Insurance Commissioners issued its accounting policy for "Employers' Accounting for Postretirement Benefits Other Than Pensions." The service fee charged to the Company by the Parent includes $1.6 million, $2.0 million, $6.0 million and $1.4 million for the nine months ended September 30, 1995 and September 30, 1994 and the years ended December 31, 1994 and 1993, respectively, representing the portion of the provision for retiree benefit plans determined under the accrual method in accordance with this policy, including a provision for the transition liability which is being amortized over twenty years, that was allocated to the Company. On October 1, 1993, the Company entered into an assumption reinsurance agreement with John Hancock to cede a block of variable life, universal life and flexible variable life insurance policies to John Hancock representing substantially all of such policies written by the Company in the State of New York. In connection with this agreement, general account assets consisting of bonds, mortgage loans, policy loans, cash, investment income due and accrued and deferred and uncollected premiums totalling $72.2 million were transferred by the Company to John Hancock, along with policy reserves, unearned premiums and dividend liabilities totalling $47.7 million and surplus totalling $24.5 million. Separate account assets consisting of common stock and policy loans totalling $200.8 million were transferred to John Hancock's separate accounts along with $200.8 million in separate account policyholder obligations. Effective January 1, 1994, the Company entered into a modified coinsurance agreement with John Hancock to reinsure 50% of 1995 and 1994 issues of flexible premium variable life insurance and scheduled premium variable life insurance policies. In connection with this agreement, John Hancock transferred $30.2 million of cash for tax, commission, and expense allowances to the Company, which increased the Company's net gain from operations by $13.6 million for the nine months ended September 30, 1995. The corresponding amounts for the year ended December 31, 1994 were $29.5 million and $26.9 million, respectively. F-13 NOTES TO FINANCIAL STATEMENTS JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (Information as of, and for the periods ended September 30, 1995 and 1994 is unaudited) NOTE 7--INVESTMENTS The statement value and fair value of bonds are shown below:
Nine Months Ended September 30, 1995 Gross Gross Statement Unrealized Unrealized Fair Value Gains Losses Value (In millions) U.S. treasury securities and obligations of U.S. government corporations and agencies $ 4.4 $ 0.0 $ 0.1 $ 4.3 Obligations of states and political subdivisions 12.9 1.1 0.0 14.0 Debt securities issued by foreign governments 0.3 0.0 0.0 0.3 Corporate securities 442.6 38.5 0.6 480.5 Mortgage-backed securities 6.6 0.2 0.1 6.7 Totals $466.8 $39.8 $ 0.8 $505.8
Year Ended December 31, 1994 Gross Gross Statement Unrealized Unrealized Fair Value Gains Losses Value (In millions) U.S. treasury securities and obligations of U.S. government corporations and agencies $ 10.4 $ 0.0 $ 0.5 $ 9.9 Obligations of states and political subdivisions 11.6 0.2 0.1 11.7 Debt securities issued by foreign governments 1.3 0.0 0.0 1.3 Corporate securities 431.9 10.5 9.9 432.5 Mortgage-backed securities 3.1 0.1 0.1 3.1 Totals $458.3 $10.8 $10.6 $458.5
F-14 NOTES TO FINANCIAL STATEMENTS JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (Information as of, and for the periods ended September 30, 1995 and 1994 is unaudited) NOTE 7--INVESTMENTS--CONTINUED
Year Ended December 31, 1993 Gross Gross Statement Unrealized Unrealized Fair Value Gains Losses Value (In millions) U.S. treasury securities and obligations of U.S. government corporations and agencies $ 3.5 $ 0.2 $0.0 $ 3.7 Obligations of states and political subdivisions 10.6 1.3 0.0 11.9 Debt securities issued by foreign governments 0.4 0.0 0.0 0.4 Corporate securities 413.5 47.3 0.8 460.0 Mortgage-backed securities 5.0 0.2 0.0 5.2 Totals $433.0 $49.0 $0.8 $481.2
The statement value and fair value of bonds by contractual maturity, are shown below. Maturities will differ from contractual maturities because eligible borrowers may exercise their right to call or prepay obligations with or without call or prepayment penalties.
September 30, 1995 December 31, 1994 ------------------ ----------------- Statement Fair Statement Fair Value Value Value Value (In millions) Due in one year or less $ 14.5 $ 14.8 $ 28.5 $ 28.6 Due after one year through five years 133.0 139.1 163.1 165.7 Due after five years through ten years 177.1 188.4 167.7 162.5 Due after ten years 135.6 156.8 95.9 98.6 460.2 499.1 455.2 455.4 Mortgage-backed securities 6.6 6.7 3.1 3.1 $466.8 $505.8 $458.3 $458.5
Proceeds from sales, maturities and prepayments of bonds during the nine months ended September 30, 1995 and September 30, 1994 were $44.9 million and $44.5 million, respectively. Gross gains of $0.6 million and $0.9 million and gross losses of $0.1 million and $0.0 million were realized on these transactions during the nine months ended September 30, 1995 and September 30, 1994, respectively. F-15 NOTES TO FINANCIAL STATEMENTS JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (Information as of, and for the periods ended September 30, 1995 and 1994 is unaudited) NOTE 7--INVESTMENTS--CONTINUED Proceeds from sales, maturities, and prepayments of bonds during 1994, 1993 and 1992 were $70.1 million, $103.0 million and $49.1 million, respectively. Gross gains of $1.1 million in 1994, $10.1 million in 1993, and $0.9 million in 1992 and gross losses of $0.2 million in 1994, $0.0 million in 1993, and $1.0 million in 1992 were realized on these transactions. The cost of common stocks was $1.4 million at September 30, 1995, December 31, 1994 and December 31, 1993, respectively. Gross unrealized appreciation on common stocks totaled $1.6 million at September 30, 1995 and $1.6 million at December 31, 1994 and gross unrealized depreciation totaled $0.7 million at September 30, 1995 and $1.2 million at December 31, 1994. The fair value of preferred stock totaled $5.4 million at September 30, 1995, $5.0 million at December 31, 1994, and $6.7 million at December 31, 1993. Mortgage loans with outstanding principal balances of $1.1 million and bonds with amortized cost of $0.0 million were nonincome producing for the nine months ended September 30, 1995. The corresponding amounts for the twelve months ended December 31, 1994 were $3.4 million and $0.2 million, respectively. The mortgage loan portfolio was diversified by geographic region and specific collateral property type as displayed below. The Company controls credit risk through credit approvals, limits and monitoring procedures.
September 30, 1995 Statement Geographic Statement Property Type Value Concentration Value (In millions) (In millions) Apartments $ 44.9 East North Central $ 24.9 Hotels 4.5 East South Central 4.9 Industrial 20.7 Middle Atlantic 11.2 Office buildings 12.6 Mountain 11.8 Retail 12.1 New England 20.5 1-4 Family 20.4 Pacific 37.7 Agricultural 22.8 South Atlantic 27.0 $138.0 $138.0
F-16 NOTES TO FINANCIAL STATEMENTS JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (Information as of, and for the periods ended September 30, 1995 and 1994 is unaudited) NOTE 7--INVESTMENTS--CONTINUED
December 31, 1994 Statement Geographic Statement Property Type Value Concentration Value (In millions) (In millions) Apartments $ 53.7 East North Central $ 25.3 Hotels 4.6 East South Central 5.5 Industrial 20.9 Middle Atlantic 16.1 Office buildings 19.0 Mountain 14.4 Retail 17.1 New England 24.2 Agricultural 26.3 Pacific 38.2 Other 6.9 South Atlantic 24.8 $148.5 $148.5
At September 30, 1995, the fair values of the commercial and agricultural mortgage loans portfolios were $121.9 million and $29.3 million, respectively. The corresponding amounts as of December 31, 1994 were approximately $118.8 million and $27.3 million, respectively. The corresponding amounts as of December 31, 1993 were approximately $141.4 million and $31.4 million, respectively. NOTE 8--REINSURANCE The Company cedes business to reinsurers to share risks under variable life, universal life and flexible variable life insurance policies for the purpose of reducing exposure to large losses. Premiums, benefits and reserves ceded to reinsurers during the nine months ended September 30, 1995 were $48.1 million, $6.1 million, and $12.9 million, respectively. The corresponding amounts during the nine months ended September 30, 1994 were $9.5 million, $9.3 million, and $15.9 million, respectively. The corresponding amounts in 1994 were $67.5 million, $12.3 million, and $16.3 million, respectively. The corresponding amounts in 1993 were $74.9 million, $9.8 million, and $14.4 million, respectively. The corresponding amounts in 1992 were $15.5 million, $5.8 million, and $18.4 million, respectively. To the extent that an assuming reinsurance company is unable to meet its obligations under a reinsurance agreement, the Company remains liable as the direct insurer on all risks reinsured. F-17 NOTES TO FINANCIAL STATEMENTS JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (Information as of, and for the periods ended September 30, 1995 and 1994 is unaudited) NOTE 9--COMMITMENTS AND CONTINGENCIES The Company has extended commitments to purchase long-term bonds and issue real estate mortgages totalling $9.0 million and $9.3 million, respectively, at September 30, 1995. The corresponding amounts at December 31, 1994 were $6.7 million and $5.0 million, respectively. The Company monitors the creditworthiness of borrowers under long-term bond commitments and requires collateral as deemed necessary. If funded, loans related to real estate mortgages would be fully collateralized by the related properties. The fair values of the commitments described above was $19.2 million at September 30, 1995 and $11.7 million at December 31, 1994. The majority of the commitments at September 30, 1995 expire in 1996. In the normal course of its business operations, the Company is involved in litigation from time to time with claimants, beneficiaries and others, and a number of litigation matters were pending as of September 30, 1995 and December 31, 1994. It is the opinion of management, after consultation with counsel, that the ultimate liability with respect to these claims, if any, will not materially affect the financial position of the Company. F-18 APPENDIX A - SAMPLE MARKET VALUE ADJUSTMENT CALCULATIONS The formula which will be used to determine the Market Value Adjustment is: [(1 + g)/(1 + c + .005)] circumflex (n/12) - 1 Sample Calculation 1: Positive Adjustment Amount withdrawn or transferred $10,000 Existing Guarantee Period 7 years Time of withdrawal or transfer beginning of 3rd year of Existing Guarantee Period Guaranteed Rate (g) 8%* Guaranteed Rate for new 5-year guarantee (c) 7%* Remaining Guarantee Period (n) 60 months Market Value Adjustment:
$10,000 x [((1 + .08)/(1 + .07 + .005)) circumflex (60/12) - 1] = $234.73 Amount transferred or withdrawn (adjusted for Market Value Adjustment): $10,234.73 Sample Calculation 2: Negative Adjustment Amount withdrawn or transferred $10,000 Existing Guarantee Period 7 years Time of withdrawal or transfer beginning of 3rd year of Existing Guarantee Period Guaranteed Rate (g) 8%* Guaranteed Rate for new 5-year guarantee (c) 9%* Remaining Guarantee Period (n) 60 months Market Value Adjustment:
$10,000 x [((1 + .08)/(1 + .09 + .005)) circumflex (60/12) - 1] = $-666.42 Amount transferred or withdrawn (adjusted for Market Value Adjustment): $9,333.58 Sample Calculation 3: Negative Adjustment Amount withdrawn or transferred $10,000 Guarantee Period 7 years Time of withdrawal or transfer beginning of 3rd year of Existing Guarantee Period Guaranteed Rate (g) 8%* Guaranteed Rate for new 5-year guarantee (c) 7.75%* Remaining Guarantee Period (n) 60 months Market Value Adjustment:
$10,000 x [((1 + .08)/(1 + .0775 + .005)) circumflex (60/12) - 1] = $-114.94 Amount transferred or withdrawn (adjusted for Market Value Adjustment): $9,885.06 __________________________ . Assumed for illustrative purposes only. APPENDIX B - VARIABLE ANNUITY INFORMATION FOR INDIVIDUAL RETIREMENT ANNUITIES To help you understand your purchase of this Contract as an Individual Retirement Annuity (IRA), we are providing the following summary. I. Accumulation Units and the MVA Fixed Account. Each net premium payment you make into your Contract is allocated to the Subaccounts and/or Guarantee Periods you select. Accumulation Units are acquired under the Contract with amounts you allocate to the Subaccounts. This is the unit of measurement used to determine the value of the variable portion of your Contract. The number of units acquired in any Subaccount is based on the unit value of that Subaccount next determined after receipt of the payment at JHISC. The values of Accumulation Units fluctuate with the daily investment performance of the corresponding Subaccount. The growth in the value of your Contract, to the extent invested in the Separate Account, is neither guaranteed nor projected and varies with the investment performance of the Fund underlying the Subaccount you have selected. Each net premium payment allocated to a Guarantee Period in the MVA Fixed Account will be credited interest, as determined by the Company. A minimum guaranteed interest rate of 3% applies to all Contracts issued on an individual basis. Amounts withdrawn or surrendered from a Guarantee Period may be increased or decreased by a Market Value Adjustment. More details appear under "Accumulation Period" and "The MVA Fixed Account" in this prospectus. II. Separate Account and Trust Charges. The assets of the Separate Account are charged for services and certain expense guarantees. The annualized charge equals a maximum of 1.25%. Trust fees varying by Fund are charged against the Funds for investment management and advisory services, and other expenses. Details appear under "Charges Under the Contracts" in this prospectus and in the accompanying prospectus of the Trust. III. Deductions from the Contract. The full amount of each premium payment, net of any premium taxes deducted, is applied to the Contract. At or after the payment dates, one or more of the following charges may be made, depending on circumstances. 1. CDSL. In each Contract Year you may withdraw as much as 10% of the Accumulated Value of your Contract as of the beginning of the Contract Year without charge. Withdrawals in excess of this amount will be subject to the following charges:
Years from Date of Premium Payment to CDSL Date of Surrender or Withdrawal Charge ------------------------------- ------ 7 or more .............................................0% 6 but less than 7......................................2% 5 but less than 6......................................3% 4 but less than 5......................................4% 3 but less than 4......................................5% 2 but less than 3......................................5% less than 2............................................6%
For the purpose of calculating the CDSL, deposits are considered to be withdrawn on a "first-in first-out" basis. Earnings are considered to be withdrawn last, and are withdrawn without charge. Under certain circumstances the CDSL is not assessed. This is described in more detail under "Contingent Deferred Sales Load" under "Charges Under the Contracts" in this prospectus. 2. Contract Fee. The Company currently deducts $30 from the Accumulated Value as a Contract Fee if the Accumulated Value is less than $10,000. This occurs annually or at the time of surrender. Please refer to "Charges for Administrative Services" under "Charges Under the Contracts" in this prospectus. 3. STATE PREMIUM TAX. Some states and local governments impose a premium or similar tax on annuities. The Company only deducts this tax when required to do so. Please refer to "Premium or Similar Taxes" under "Changes Under Contracts" in this prospectus. 4. OPTIONAL BENEFIT RIDERS. Three optional benefit riders are available under the Contracts, including the One Year Stepped-Up Death Benefit, Accidental Death Benefit and Nursing Home Waiver of CDSL riders. The charges for these riders are 0.15%, 0.10% and 0.05% (annual percentage rates), respectively, of Accumulated Value. Please refer to "Nursing Home Waiver of CDSL" and "Optional Death Benefit Charges" under "Charges Under the Contracts." PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The estimated expenses of issuance and distribution of the Contracts are as follows:
AMOUNT* ------- Securities and Exchange Commission Registration Fee . $100 Printing Expenses .................................... $ Accounting Fees .................................. $ Legal Fees and Miscellaneous Expenses ................ $ ------- Total expenses ................................... $ =======
- -------------- * To be completed by amendment. ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS Pursuant to Section X of the Company's By-Laws and Section 67 of the Massachusetts Business Corporation Law, the Company indemnifies each director, former director, officer, and former officer, and his or her heirs and legal representatives from liability incurred or imposed in connection with any legal action in which he or she may be involved by reason of any alleged act or omission as an officer or a director of the Company. No indemnification shall be paid if a director or officer is finally adjudicated not to have acted in good faith in the reasonable belief that his or her action was in the best interest of the Company. The Company may pay expenses incurred in defending an action or claim in advance of its final disposition, but only upon receipt of an undertaking by the person indemnified to repay such amounts if he or she should be determined not to be entitled to indemnification. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES Not Applicable ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 1(a). Distribution Agreement by and between John Hancock Mutual Life Insurance Company and John Hancock Variable Life Insurance Company, dated August 26, 1993, incorporated by reference from Pre-Effective Amendment No. 1 to initial Form S-6 Registration Statement for John Hancock Variable Life Account S (File No. 33-64366) filed October 29, 1993. II-1 1(b). Amendment dated August 1, 1994, to Distribution Agreement by and between John Hancock Mutual Life Insurance Company and John Hancock Variable Life Insurance Company, dated August 26, 1993, incorporated by reference from Form N-4 Registration Statement for John Hancock Variable Annuity Account I (File No. 33-82648), filed August 10, 1994. 1(c). Second Amendment dated September __, 1995, to Distribution Agreement by and between John Hancock Mutual Life Insurance Company and John Hancock Variable Life Insurance Company, dated August 26, 1993. (To be filed by amendment.) 1(d). Third Amendment dated December __, 1995, to Distribution Agreement by and between John Hancock Mutual Life Insurance Company and John Hancock Variable Life Insurance Company, dated August 26, 1993. (To be filed by amendment.) 1(e). [Individual and Group Combination MVA/Variable Annuity Contracts Marketing and Distribution Agreement Among John Hancock Mutual Life Insurance Company, John Hancock Variable Life Insurance Company, and John Hancock Funds, Inc., dated December __, 1995. (To be filed by amendment.) 1(f). Form of Soliciting Dealer Agreement between John Hancock Funds, Inc., and soliciting broker-dealers or financial institutions participating in distribution of Contracts. (Included as Appendix B to Exhibit 3(e).) 3(a). Articles of Organization of John Hancock Variable Life Insurance Company, incorporated by reference from Form S-1 Registration Statement of John Hancock Variable Life Insurance Company (File No. 33-62895) filed electronically on September 22, 1995. 3(b). By-Laws of John Hancock Variable Life Insurance Company, incorporated by reference from Form S-1 Registration Statement of John Hancock Variable Life Insurance Company (File No. 33-62895) filed electronically on September 22, 1995. 4(a). Form of group deferred combination fixed and variable annuity contract. 4(b). Form of group deferred combination fixed and variable annuity certificate. 4(c). Form of individual deferred combination fixed and variable annuity contract. (To be filed by amendment.) 4(d). Form of nursing home waiver of CDSL rider. 4(e). Form of one year stepped-up death benefit rider. II-2 4(f). Form of accidental death benefit rider. 4(g). Form of contract application. 5. Opinion and consent of counsel. (To be filed by amendment.) 10. Responsibility and Cost Allocation Agreement Among John Hancock Mutual Life Insurance Company, John Hancock Variable Life Insurance Company and John Hancock Funds, Inc., dated December __, 1995. (To be filed by amendment.) 23(a). Consent of independent auditors. (To be filed by amendment.) 23(b). Consent of counsel. (See Exhibit 5.) 24. Powers of Attorney. (Incorporated by reference from Form S-1 Registration Statement for John Hancock Variable Life Insurance Company, filed September 25, 1995 (File No. 33-62895). 27. Financial Data Schedule with respect to Unaudited Financial Statements of John Hancock Variable Life Insurance Company for the Period Ended September 30, 1995. ITEM 17. UNDERTAKINGS (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: i. To include any Prospectus required by Section 10(a)(3) of the Securities Act of 1933; ii. To reflect in the Prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant will, unless in the opinion or its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-4 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF BOSTON, COMMONWEALTH OF MASSACHUSETTS, ON THE 7th DAY OF DECEMBER, 1995. JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (REGISTRANT) By /s/HENRY D. SHAW ------------------------------- Henry D. Shaw Vice Chairman of the Board and President AS REQUIRED BY THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THEIR CAPACITIES WITH JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY AND ON THE DATES INDICATED.
Signature Title Date - --------- ----- ---- /s/PATRICK F. SMITH Controller (Principal December 7, 1995 - ------------------- Patrick F. Smith Financial Officer and Principal Accounting Officer) /s/HENRY D. SHAW Vice Chairman December 7, 1995 - ------------------ Henry D. Shaw and President for himself and as (Acting Principal Attorney-in-Fact Executive Officer) FOR: David F. D'Alessandro Chairman of the Board Robert S. Paster Director Michelle G. Van Leer Director Joseph A. Tomlinson Director Robert R. Reitano Director Francis C. Cleary, Jr. Director Barbara L. Luddy Director
II-5 EX-27 2 FINANCIAL DATA SCHEDULE
7 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STATEMENTS OF FINANCIAL POSITION STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS YEAR DEC-31-1995 DEC-31-1994 JAN-01-1995 JAN-31-1994 SEP-30-1995 DEC-31-1994 466,829,751 458,313,767 0 0 0 0 7,468,506 7,109,257 137,978,757 148,499,846 42,950,009 27,783,616 655,227,023 641,706,486 52,418,599 76,071,698 0 0 0 0 3,107,786,838 2,626,919,271 0 0 0 0 658,090,594 638,584,571 0 0 0 0 2,258,506 1,849,257 0 0 5,210,000 5,260,000 0 0 3,107,786,838 2,626,919,271 378,880,910 430,469,918 47,149,140 57,595,660 (594,260) 484,859 57,678,599 95,699,066 440,476,466 544,877,466 0 0 0 0 33,828,426 28,028,786 19,883,695 14,989,791 13,944,731 13,038,995 0 0 0 0 0 0 13,944,731 13,038,995 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-99.1 3 VOTE OF BOARD OF DIRECTORS EXHIBIT 1 JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY Boston, Massachusetts VOTE OF BOARD OF DIRECTORS Meeting of November 13,1995 VOTED, with respect to separate investment accounts: (a) To establish one or more separate investment accounts (the "Account"), pursuant to Section 132 G of Chapter 175 of the Massachusetts General Laws, as amended, for the funds attributable to deferred annuity contracts on an individual or group basis, as determined by the Company, providing benefits to eligible individuals. The Officers of the Company may determine the designation of each Account and may from time to time change its designation as they deem necessary and appropriate. (b) To allocate to the Account amounts to provide for annuities (including benefits incidental thereto) payable in fixed or variable amounts or both and the income, gains and losses, realized or unrealized, attributable to the Account shall be credited to or charged against the Account without regard to the other income, gains or losses of the Company. (c) To authorize the registration of the Account as an investment company under the Investment Company Act of 1940 and the registration of the annuity contracts issued in connection with the Account as securities under the Securities Act of 1933, and to authorize and empower the Chairman of the Board, the Vice Chairman, the President, or the Secretary of the Company ("Officers of the Company") to take all action necessary to comply with the Acts, including but not limited to the execution and filing of registration statements on Form N-4 and amendments thereto, applications for exemptions from the provisions of the Act as may be necessary or desirable and amendments thereto, and agreements for the administration of the Account and for the distribution of annuity contracts carrying an interest in the Account assets and any other actions necessary under all other applicable federal and state laws and regulations. (d) To authorize the Officers of the Company to take all actions necessary to register the Account as a unit investment trust under the Investment Company Act of 1940, and to take such related actions as they deem necessary and appropriate in their sole discretion to carry out the foregoing, including, without limitation, the following: determining that the fundamental investment policy of the Account shall be to invest or reinvest the assets in securities issued by such investment companies registered under -2- the Investment Company Act of 1940 as the Officers may designate pursuant to the provisions of the annuity contracts issued by the Company; establishing one or more subaccounts within the Account to which net premiums under the annuity contracts will be allocated in accordance with instructions received from contractowners, reserving to the officers the authority to increase or decrease the number of subaccounts in the Account as they deem necessary or appropriate; and investing each subaccount only in the shares of a single mutual fund or a single portfolio of an investment company organized as a series fund pursuant to the Investment Company Act of 1940. (e) To authorize the Officers of the Company to deposit such amount in the Account or in each subaccount thereof as may be necessary or appropriate to facilitate the Account's operations; to transfer funds from time to time between the Company's general account and the Account as deemed appropriate and consistent with the terms of the annuity contracts and applicable laws; and to establish criteria by which the Company shall institute procedures to provide for a pass-through of voting rights to the owners of annuity contracts issued by the Company, as required by applicable laws, with respect to the shares of any investment companies which are held in the Account. (f) To authorize the registration of interests in the portion of the contracts constituting modified guaranteed annuities as securities under the Securities Act of 1933, and to authorize, and empower the Chairman of the Board, the Vice Chairman, the President, or the Secretary of the Company ("Officers of the Company") to take all action necessary to comply with the Act, including but not limited to the execution and filing of registration statements on Form S-1 and amendments thereto, applications for exemptions from the provisions of the Act as may be necessary or desirable and amendments thereto, and agreements for the administration of the contracts and for the distribution of the annuity contracts and any other actions necessary under all other applicable federal and state laws and regulations. (g) To appoint Sandra M. DaDalt; Assistant Secretary and Counsel, as agent for service of process or the like for the Company to receive notices and communications from the Securities and Exchange Commission with respect to such Registration Statements or exemptive applications and amendments thereto as may be filed on behalf of the Company concerning the Account or the annuity contracts, and to exercise the powers given to such agent in the rules and regulations of the Securities and Exchange Commission under the Securities Act of 1933, the Investment Company Act of 1940, or the Securities Exchange Act of 1934. (h) To authorize the Officers of the Company to do or cause to be done all things necessary or desirable, as may be advised by counsel, to comply with, or obtain exemptions from, federal, state or local statutes or regulations that may be applicable to the issuance and sale of annuity contracts by the Company. -3- (i) To authorize the Company to act as the depositor for the Account and to authorize the Company or its designee to provide all administrative services in connection with the establishment and maintenance of the Account and in connection with the issuance and sale of annuity contracts, all on such terms and subject to such modifications as the Officers deem necessary or appropriate to effectuate the foregoing. (j) To authorize the Officers of the Company to contract with a suitable investment company under the Investment Company Act of 1940, the shares of which shall be purchased by the Company in order to serve as an investment vehicle for the Account and, further, that the Officers are authorized to do all things as they deem necessary and appropriate to carry out the foregoing. (k) To empower the Executive Committee to authorize the execution and delivery of such instruments and such other action as it may deem necessary or desirable in order to carry out the purpose and intent of this vote and to comply with applicable federal or state laws and regulations. Certified to be a true and complete copy. ___________________________ Francis C. Cleary Jr. Vice President and Counsel EX-99.4.A 4 FIXED AND VARIABLE ANNUITY CONTRACT Exhibit 4(a) [LOGO OF JOHN HANCOCK APPEARS HERE] Variable Life Insurance Company John Hancock Place PO Box 717 Boston, Massachusetts 02117 JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (the "Company") John Hancock Place PO Box 717 Boston, Massachusetts 02117 CONTRACT HOLDER: Group Annuities Insurance Trust ANNUITY CONTRACT NUMBER: [12345] FLEXIBLE PREMIUM MODIFIED GUARANTEED GROUP ANNUITY: [00000] John Hancock Variable Life Insurance Company agrees to provide the benefits, rights and privileges as stated in this contract This contract is issued in consideration of the master application for this contract and payment of the premium. A certificate evidencing participation under this contract will be issued to each member of the eligible group from which we receive a fully completed enrollment application and the required premium contribution. If a certificate is in force under this contract on such certificate's Date of Maturity, we will pay an Annuity to the Annuitant under such certificate, unless otherwise directed by the Participant. The variable and fixed portions of each Annuity payment will be determined in accordance with Section 15. The variable portion may increase or decrease depending upon the investment experience of the Subaccounts in which the Net Premiums are invested. Unless another option offered in Section 16 is elected by the Participant, Annuity payments will be payable for a guaranteed period of 10 years and as long thereafter as the Annuitant lives. By written notice, the Participant may elect the Date of Maturity at any time before the Provisional Date of Maturity, provided the Date elected is: (i) not later than the Annuitant's 85th birthday without our prior approval; (ii) at least 31 days after the written notice; and (iii) at least six months after the date the first premium is applied to the certificate. If no other election is made, the Date of Maturity will be the Provisional Date of Maturity. A Death Benefit, as stated in Section 9, will be payable if the Annuitant's death occurs before the Date of Maturity and before the Surrender Date.The Date of Issue of this group annuity contract is [December 1, 1995]. Single Premium Modified Guarantee Annuity - Annuity payable to the Annuitant beginning on the Date of Maturity for a guaratneed period of 10 years and as long thereafter as the Annuitant lives. Nonparticipating - not eligible for dividends All benefits, payments and values under the certificate which are based on the investment experience of a Separate Account are variable and not guaranteed as to fixed dollar amount. John Hancock Servicing Office P.O. Box 9298 Boston, Massachusetts 02205-9116 Telephone [800-225-5291] Fax [800-225-0000] Form JHFI95 V0195A CERTIFICATE PROVISIONS Numerical Guide Alphabetical Guide
Section Section - ------- ------- 1. Definitions 7. Accumulations 2. Interpretation of Contract Provisions 22. Annual Statement 3. Participant, Beneficiary 19. Assignment 4. The Contract 10. Certificate Fee and Rider Charges 5. Premiums 20. Claims of Creditors 6. Investment/Transfer Options 12. Contingent Deferred Sales Load 7. Accumulations 4. The Contract 8. Valuation Procedures 15. Conversion 9. Death Benefit 9. Death Benefit 10. Certificate Fee and Rider Charges 1. Definitions 11. Partial Withdrawals 2. Interpretation of Contract Provisions 12. Contingent Deferred Sales Load 6. Investment/Transfer Options 13. Market Value Adjustment 13. Market Value Adjustment 14. Surrender Provision 23. Miscellaneous 15. Conversion 18. Misstatements 16. Settlement Provisions 11. Partial Withdrawals 17. Proof Required for Payment 3. Participant, Beneficiary 18. Misstatements 5. Premiums 19. Assignment 17. Proof Required for Payment 20. Claims of Creditors 21. Right to Make Changes 21. Right to Make Changes 16. Settlement Provisions 22. Annual Statement 14. Surrender Provision 23. Miscellaneous 8. Valuation Procedures
2 V0295A - -------------------------------------------------------------------------------- 1. DEFINITIONS - -------------------------------------------------------------------------------- The following terms are commonly used throughout this annuity contract: The term "Account", unmodified, means a Subaccount or a Guarantee Period. The term "Accumulated Value" means the value of the certificate on any date prior to the commencement of life annuity payments. This value equals the sum of (i) the accumulated values for all Subaccounts and (ii) the accumulated value of the certificate in the MVA Fixed Account. The accumulated value for each Subaccount as of any date will equal the number of Accumulation Units for that Subaccount then credited to the certificate multiplied by the Accumulation Unit Value for that Subaccount on that date. Accumulated Value for the MVA Fixed Account means the premium paid plus earned interest, less any withdrawals and applicable deduction for certificate fees, rider charges, premium taxes or similar taxes, if any. The term "Accumulation Unit" means a unit of measurement used in determining the value of the certificate prior to the commencement of life annuity payments. The Accumulation Unit Value for each Subaccount will reflect the investment experience of that Subaccount. It will vary in dollar amount. The term "Annuitant" means, for any given annuity certificate, the individual designated as such in the application for the certificate. The term "Annuity Unit" means a unit of measurement used in determining the amount of the variable portion of each Annuity payment. The value of an Annuity Unit for each Subaccount will depend on the assumed investment rate and the investment experience of that Subaccount. It will vary in dollar amount. The term "Beneficiary" is defined in Section 3. The term "Certificate Year" means, for any given certificate, the 12 month period following the Date of Issue and each 12 month period thereafter. The term "Contingent Deferred Sales Load" ("CDSL") is defined in Section 12. The term "Date of Issue" means, the date shown in Section 1 of the certificate. The term "Date of Maturity" is the date annuity payments under the certificate begin, in accordance with Section 15. The term "Free Withdrawal Value" means, for any Certificate Year, an amount totaling 10% of the Accumulated Value calculated as of the first day of the Certificate Year, reduced by any prior withdrawals made during the Certificate Year. The term "Fund" means each division of a Series Fund which has a specific investment objective. The term "In force" means that the Annuitant is living, Surrender Value of the certificate has not become payable, and the certificate has not been terminated in accordance with the "Premiums" provision in Section 5. The term "Guarantee Period" refers to the Guarantee Period elected under the Market Value Adjusted Fixed Account. The term "Last Valuation Date" means the earliest of the Date of Maturity, the Surrender Date, and the date of the Annuitant's death. The term "Market Value Adjustment" is defined in Section 13. The term "Market Value Adjustment Factor" is defined in Section 13. The term "MVA Value Adjusted ("MVA") Fixed Account" means, unmodified, a separate investment account established by us pursuant to applicable law in which you are eligible to invest under the certificate. The term "Measuring Person" means the person on whose life annuity payments will be based. 3 The term "Net Premium" means the premium paid less any applicable taxes based on the amount of premium payment. The term "Participant" is defined in Section 3. The term "Payment" means, unless otherwise stated, payment at our Servicing Office in Boston, Massachusetts. The term "Separate Account", unmodified, means a separate investment account established by us pursuant to applicable law in which the Participant is eligible to invest under the certificate. The term "Series Fund" means a series type mutual fund registered under the Investment Company Act of 1940 (the Act) as an open-end diversified management investment company. The term "Subaccount", means each division of a Separate Account. The assets of each Subaccount are invested solely in shares of the corresponding Fund of a Series Fund. The term "Surrender Date" means the date of receipt of written notice of surrender under Section 14. The term "Surrender Value" means the Accumulated Value of the certificate, adjusted by any Market Value Adjustment, less, if applicable, any certificate fees, any income taxes withheld, any rider charges, any deduction for premium taxes or similar taxes, and any CDSL. The term "Valuation Date" means any date on which the New York Stock Exchange is open for trading and on which the Fund values its shares. The term "Valuation Period" means that period of time from the beginning of the day following a Valuation Date to the end of the next following Valuation Date. The terms "we", "us" , "our" refer only to the Company. The term "withdrawal" means, unless otherwise specified, the amount withdrawn prior to any deductions but after any Market Value Adjustment. The term "written notice" means, unless otherwise stated, a notice in writing satisfactory to us which is received at our Servicing Office in Boston, Massachusetts. 4 - -------------------------------------------------------------------------------- 2. INTERPRETATION OF CONTRACT PROVISIONS - -------------------------------------------------------------------------------- All section references appearing in this contract refer to sections of this group annuity contract only. Each of the provisions shall apply to each certificate issued by us under this group annuity contract as if it were the only certificate issued. - -------------------------------------------------------------------------------- 3. PARTICIPANT, BENEFICIARY - -------------------------------------------------------------------------------- The Participant and the Beneficiary will be as shown in the application unless changed by the Participant or they are changed by the terms of this provision. With regard to joint Participants, at the first death of a joint Participant prior to the Date of Maturity and prior to the Surrender Date, the Beneficiary will be the surviving Participant notwithstanding that the designated Beneficiary may be different. If the Annuitant dies and there is no surviving Beneficiary, the Participant will be the Beneficiary, but if the Participant were the Annuitant, then the Participant's estate will be the Beneficiary. The Participant has the sole and absolute power to exercise all rights and privileges without the consent of any other person except as provided by this group contract or the certificate or unless the Participant provides otherwise by written notice. While the Annuitant is alive, the Participant may change the Participant by written notice. The Participant may change the Beneficiary by written notice no later than our receipt of the required proof of the Annuitant's death. A change will take effect when the notice is signed if we acknowledge receipt of the notice at our Servicing Office. The change will take effect whether or not the Participant or the Annuitant is then alive. A change shall be subject to the rights of any assignee of record with us and subject to any payment made or other action taken by us before we acknowledge receipt. Regarding joint Participants, signatures of both joint Participants are required for any transactions requiring written notification from a Participant. - -------------------------------------------------------------------------------- 4. THE CONTRACT - -------------------------------------------------------------------------------- The contract is an agreement between the contract owner and us consists of this group annuity contract, the master application, the certificates issued under it and all of the enrollment applications for such certificates. Either party, the contract owner or us, may terminate the contract at any time without cause upon 30 days prior written notice. Certificate years, certificate months, and certificate anniversaries are measured from the Date of Issue of the particular certificate. Only the President, a Vice President, the Secretary, or an Assistant Secretary of the Company has authority to waive or modify any of the provisions of this group annuity contract or certificates issued under it. - -------------------------------------------------------------------------------- 5. PREMIUMS - -------------------------------------------------------------------------------- PAYMENT OF PREMIUMS All premium payments shall be made to us at our Servicing Office. Premium payments are subject to the following conditions: (a) Each premium payment must be at least $500. (b) The maximum premium that may be deposited to the certificate in any certificate year is $1,000,000. (c) No premium payments may be deposited to the certificate within six months prior to the Annuitant's 85th birthday. Upon request we will consider waiving any of the above conditions. 5 PREMIUM TAXES A deduction for a premium tax or a similar tax will be made from the Accumulated Value at the time of annuitization. If we pay a tax on the premium at the time such premium is paid, then we will deduct a charge for these taxes from the Accumulated Value for the amount withdrawn or surrendered, at the time of annuitization, death, surrender, or withdrawal. - -------------------------------------------------------------------------------- 6. INVESTMENT / TRANSFER OPTIONS - -------------------------------------------------------------------------------- INVESTMENT OPTION The Net Premium will be allocated to the Accounts according to the Investment Option then in effect. The Initial Investment Option is that elected by the Participant in the application. The Participant may elect to change the Investment Option. The change will be effective as to the application of any Net Premium made on or after the date of receipt at our Servicing Office of notice satisfactory to us. The minimum percentage that may be allocated to any Account and the maximum number of Accounts in which amounts may be held will be subject to our administrative rules in effect at the time of the election. All percentages the Participant elects must be whole numbers. If allocation is made to the MVA Fixed Account, the Participant may select from the Guarantee Periods available. The period selected will determine the guaranteed interest rate applicable, which will be payable for a Guarantee Period. A Guarantee Period begins on the date premium is credited, or in the case of transfer, on the effective date of transfer. At least 30 days prior to the end of any Guarantee Period, we will provide the Participant with written notice of the expiry of any such Guarantee Period. The Participant may elect, by written notice within 30 days prior to the expiry of such Guarantee Period, any Guarantee Period from among those that are then available. We reserve the right to change the duration of Guarantee Periods offered. The effective date of a new Guarantee Period will be the first day following the expiry of the immediately preceding Guarantee Period. If we do not receive written notice within 30 days prior to the expiry of any Guarantee Period to elect a new Guarantee Period, then amounts available under such Guarantee Period will be transferred to the Money Market Account. The effective date of the transfer will be the first day following the expiry of such Guarantee Period. Except as otherwise provided, a Guarantee Period is not available if it extends beyond the Date of Maturity. Also, except as otherwise provided, if a new Guarantee Period becomes effective that causes this certificate to continue beyond the Provisional Date of Maturity, then the Provisional Date of Maturity will become the Date of Maturity. ACCOUNT TRANSFER OPTION The Participant may elect to reallocate amounts among the Accounts up to twelve times in a certificate year. Transfers between the Accounts will be effective on the date of receipt at our Servicing Office of notice satisfactory to us. No transfer will be permitted on or within 30 days of the Maturity Date. The number of Accumulation Units or Annuity Units and the amount of Accumulated Value of the MVA Fixed Account transferred to or from each Account will reflect the respective values in each Account. The maximum number of Accounts in which Accumulated Value may be held will be subject to our rules in effect at the time of election. The maximum amount which may be transferred or paid into a Subaccount in any certificate year is $1,000,000 without our prior approval. Any transfer made out of the MVA Fixed Account may be subject to a Market Value Adjustment. ALLOCATION AT ANNUITY COMMENCEMENT AND BEFORE CONVERSION If the Accumulated Value is invested in more than four Accounts on the Date of Maturity or other date elected for commencement of annuity payments and before conversion in accordance with Section 15, we will allocate the Accumulated Value to the four Accounts then having the largest portions of the Accumulated Value. To determine the number of Accounts in which the Accumulated Value is invested, each Subaccount is counted separately as one Account while all Guarantee Periods are counted together as one Account. The Accumulated Value in Accounts other than such four Accounts will be allocated to the four Accounts in proportion to the amounts in the four Accounts. Such allocation will be made not withstanding any transfer restrictions specified in this subsection. The rules that will be applied as of any date will be those in effect on that date. 6 - -------------------------------------------------------------------------------- 7. ACCUMULATIONS - -------------------------------------------------------------------------------- PURCHASE OF ACCUMULATION UNITS The portion of the Net Premium not allocated to the MVA Fixed Account will be allocated to each elected Subaccount for investment with other funds in each such Subaccount and applied to the purchase of Accumulation Units. The number of Accumulation Units in each Subaccount purchased by each premium payment will be determined by dividing the applicable portion of the Net Premium by the applicable Accumulation Unit Value on the first Valuation Date which is the same as or next follows the receipt of the premium payment at our Servicing Office. ACCUMULATED VALUE IN THE MVA FIXED ACCOUNT We will accumulate (i) the portion of any Net Premium allocated to the MVA Fixed Account and (ii) any amount transferred from a Subaccount, from the date the premium is received or the transfer is made. The Accumulated Value of the certificate's share of the MVA Fixed Account on any date prior to the date annuity payments commence is the sum of such Net Premiums and transfers accumulated with interest to that date less the sum of (a), (b), and (c) accumulated with interest to that date, where: (a) is any partial withdrawal made from the MVA Fixed Account; (b) is any transfer made from the MVA Fixed Account; and (c) is any charge deducted from the MVA Fixed Account. INTEREST ON PREMIUM ALLOCATED TO MVA FIXED ACCOUNT Premium earns interest for as long as it remains in the certificate beginning on the date it is credited. Interest will be credited daily and will then earn interest from such date. During a Guarantee Period, the interest rate credited will be based upon our declared interest rate then in effect and will apply throughout such Guarantee Period. Such declared interest rate will be expressed on an annual effective basis. The interest credited on any given day will be at a rate which, if compounded daily for one year, would equal the applicable declared interest rate. - -------------------------------------------------------------------------------- 8. VALUATION PROCEDURES - -------------------------------------------------------------------------------- ACCUMULATION UNIT VALUE The Accumulation Unit Value is calculated separately for each Subaccount. The value of one Accumulation Unit was set at $10 on the date assets were first allocated to each Subaccount. The value of one Accumulation Unit on any Valuation Date thereafter will be determined for each Subaccount by multiplying the immediately preceding Accumulation Unit Value by the applicable Net Investment Factor for the Valuation Period ending on that Valuation Date. On any date other than a Valuation Date, the Accumulation Unit Value will be the same as that on the next following Valuation Date. ANNUITY UNIT VALUE The Annuity Unit Value is calculated separately for each Subaccount. The value of one Annuity Unit was set at $1 on the date assets were first allocated to each Subaccount. The value of one Annuity Unit on any Valuation Date thereafter will be determined for each Subaccount by multiplying (1) the immediately preceding Annuity Unit Value by (2) the applicable Net Investment Factor for the Valuation Period ending on the Valuation Date reduced by .00009425 times the applicable Net Investment Factor for each calendar day in the Valuation Period. On any date other than a Valuation Date, the Annuity Unit Value will be the same as that on the next following Valuation Date. 7 NET INVESTMENT FACTOR The Net Investment Factor for each Subaccount for any Valuation Period is equal to one plus the applicable net investment rate for such period. A Net Investment Factor may be more or less than one. The net investment rate for each Subaccount for any Valuation Period will be determined by : (1) taking the sum of the accrued investment income and capital gains and losses, realized or unrealized, of the Subaccount for the Valuation Period; (2) subtracting the sum of (i) an amount for any applicable income taxes and (ii) an amount for mortality and expense risks and administrative expenses computed by multiplying .00003425 times the number of calendar days in the Valuation Period; and (3) dividing the result by the value of the Subaccount at the beginning of the Valuation Period. VALUATION OF ASSETS The values of the assets in the Subaccounts shall be determined at a fair value in accordance with applicable law. Liabilities attributable to the Subaccount will be deducted to determine the value of the Subaccount. ADJUSTMENT OF UNITS AND VALUES We reserve the right to change the number and value of the Accumulation Units or Annuity Units or both without the Participant's consent or the consent of any other person, provided strict equity is preserved and the change does not affect the benefits, provisions or investment return of the certificate. - -------------------------------------------------------------------------------- 9. DEATH BENEFIT - -------------------------------------------------------------------------------- If the Annuitant dies before the Date of Maturity, we will pay the Death Benefit to the Beneficiary. The Death Benefit will equal the greatest of: (i) the Accumulated Value of the certificate, adjusted by any Market Value Adjustment, as of the date of receipt of due proof of the Annuitant's death; and ii) the amount of the premiums paid less the amount of all partial withdrawals made and applicable CDSL. Notwithstanding any of the above, the following will apply upon the death of the Participant, if the certificate value has not already been converted into an annuity: (i) If the Beneficiary is the spouse of the Participant, the Beneficiary may continued the certificate in force as the Participant. (ii) If the Beneficiary is not the spouse of the Participant, or if the Beneficiary is the spouse of the Participant but does not choose to continue the certificate, we must pay, in accordance with the Internal Revenue Code, the death benefit (or the Surrender Value if the Participant is not the Annuitant) in full to the Beneficiary within five years of the Participant's death or apply the Accumulated Value in full towards the purchase of a life annuity on the Beneficiary with payments beginning within one year of the Participant's death. - -------------------------------------------------------------------------------- 10. CERTIFICATE FEE AND RIDER CHARGES - -------------------------------------------------------------------------------- We will deduct a certificate fee of $30 on each certificate anniversary prior to the Date of Maturity and on the date of surrender of the certificate if the Accumulated Value is then less than $10,000. No certificate fee will be deducted if the Accumulated Value is $10,000 or more. The fee will be deducted from the Accumulated Value of all Accounts according to the proportion the Accumulated Value of each account bears to the total Accumulated Value of the certificate. We reserve the right to increase the certificate fee up to $50, subject to applicable state regulations. We will deduct separate monthly charges for each optional rider that the Participant may elect at the time of application for the certificate. The charges, made at the beginning of each month, are equal to the Accumulated Value at the beginning of such month, multiplied by 1/12th of the applicable annual percentage rate, as specified on page 3 of the certificate, for each rider elected. The charge for each rider elected will be deducted from the Accumulated Value of all Accounts according to the proportion the Accumulated Value of each Account bears to the total Accumulated Value of the certificate. 8 - -------------------------------------------------------------------------------- 11. PARTIAL WITHDRAWALS - -------------------------------------------------------------------------------- Subject to the limits described in this Section, the Participant may request a withdrawal of less than the Surrender Value. The total of the requested amount and any CDSL made is called a partial withdrawal. We will pay the requested amount on receipt of written notice before the Annuitant's death and before the commencement of annuity payments. The amount of the partial withdrawal will then be deducted from the Accumulated Value. Without our prior approval, we will not permit a partial withdrawal of less than $100 nor will we permit a partial withdrawal if the Accumulated Value after such requested partial withdrawal would be less than $1000. Unless specified in writing otherwise, withdrawals will be removed proportionately from the values in all Accounts. Withdrawal amounts removed from the MVA Fixed Account will be subject to a Market Value Adjustment as described in Section 13. Prior to payment, the amount of any withdrawal will be reduced by any applicable income taxes, premium taxes, and similar taxes, and any applicable CDSL. Upon written request, at any time during each Certificate Year, the Participant may make a withdrawal of the Free Withdrawal Value, as described in Section 12. If the Free Withdrawal Value is less than $100, then any written request for the Free Withdrawal Value must be for the entire Free Withdrawal Value. A withdrawal, other than one on the last day of a Guarantee Period, will be effective on the date we receive the Particpant's written notice. To make a withdrawal that is to be effective on the last day of any Guarantee Period, we must receive written notice from the Participant within 30 days prior to the expiry of such Guarantee Period. We may defer payment of a withdrawal in the same manner as we may defer payment of the Surrender Value, described in Section 14. - -------------------------------------------------------------------------------- 12. CONTINGENT DEFERRED SALES LOAD - -------------------------------------------------------------------------------- A Contingent Deferred Sales Load ("CDSL") will be computed upon surrender of the certificate and upon each partial withdrawal. To determine the CDSL, we will first deduct the following amounts from the premium payments made to date in the order that such payments were received: (a) The sum of all certificate fees deducted to date; (b) The sum of all prior partial withdrawals; (c) The Free Withdrawal Value. The Free Withdrawal Value is an amount equal to 10% of the Accumulated Value of the certificate on the first day of the current certificate year less the sum of all prior partial withdrawals made during the current certificate year. This amount may be withdrawn without incurring a CDSL. We will then continue to withdraw the remaining premium payments in the order that they were received and will apply a CDSL to these premiums in accordance with the following table, until all remaining premium payments have been withdrawn, or until the total amount withdrawn (including the CDSL) reaches (i) the Accumulated Value, adjusted by any MVA in the case of a full surrender, or (ii) the amount of the partial withdrawal. 9 During each Certificate Year the Participant may make withdrawals in an amount not to exceed the Free Withdrawal Value without incurring a CDSL. Withdrawals in excess of the Free Withdrawal Value will be subject to a CDSL in accordance with the table shown below. The charge (expressed as a percentage of the amount subject to the charge) is shown below.
---------------------------------------------------------- Years From Date of Premium CDSL Payment to Date of Surrender or Withdrawal ---------------------------------------------------------- 7 or more No Charge ---------------------------------------------------------- at least 6, but less than 7 2% ---------------------------------------------------------- at least 5, but less than 6 3% ---------------------------------------------------------- at least 4, but less than 5 4% ---------------------------------------------------------- at least 3, but less than 4 5% ---------------------------------------------------------- at least 2, but less than 3 5% ---------------------------------------------------------- Less than 2 Years 6% -----------------------------------------------------------
A withdrawal will be deemed to have been "made" on the date we receive written notice. For purposes of such determination, payment of the Surrender Value will be deemed a withdrawal. 10 - -------------------------------------------------------------------------------- 13. MARKET VALUE ADJUSTMENT - -------------------------------------------------------------------------------- Prior to the last day of any Guarantee Period, amounts withdrawn or transferred from the MVA Fixed Account will be adjusted up or down by the application of a Market Value Adjustment. FORMULA The market value adjustment is equal to A times (B minus 1) where: A is (i) the amount subject to a market value adjustment, and B is the market value adjustment factor below: [ ] (/n/) [ 1+g ] ----- [ ---------- ] 12 [ 1+c+.005 ] Where: g = The guaranteed rate in effect for the current Guarantee Period (in decimal form). c = The current rate (in decimal form) in effect for durations equal to the number of years remaining in the current Guarantee Period (years rounded up to the nearest whole number). If not available, we will declare a rate solely for this purpose that is consistent with rates for durations that are currently available. n = The number of complete months from the date of withdrawal to the end of the current Guarantee Period. (Where less than one complete month remains, n will equal one unless a withdrawal is made on the last day of the Guarantee Period at which time no adjustment will apply.) The Market Value Adjustment may be positive or negative. 11 - -------------------------------------------------------------------------------- 14. SURRENDER PROVISION - -------------------------------------------------------------------------------- Upon receipt of written notice from the Participant before the Annuitant's death and the Date of Maturity, we will pay the Surrender Value. The Surrender Value will be determined by us as of the date of receipt of written notice. We may defer payment of a Surrender Value for the period provided by law. With respect to the MVA Fixed Account, we will not defer payment more than six months beyond the date we receive written notice. If we defer payment for more than 30 days, we will pay interest on the Surrender Value at a rate equal to the greater of (i) the rate required by law; and (ii) the rate declared by us. - -------------------------------------------------------------------------------- 15. CONVERSION - -------------------------------------------------------------------------------- CONVERSION OF ACCUMULATION UNITS TO ANNUITY UNITS On the Date of Maturity or other date elected under Section 16 for commencement of Annuity payments, the Accumulation Units credited to the certificate will be converted into Annuity Units. Annuity payments will then commence subject to the limitations specified in Section 16 and all other applicable provisions. The number of Annuity Units credited to each Subaccount will be determined by: (1) multiplying the number of Accumulation Units credited to the Subaccount on the date of conversion by the Accumulation Unit Value for the Subaccount as of ten days prior to the date the first Annuity payment is due; (2) deducting any applicable premium tax; (3) dividing the resulting value by 1000; (4) multiplying the value from (3) by the applicable factor from the Table of First Variable Annuity Payment Factors for the option elected, or if no option is elected the applicable factor for the Option A (Variable) with a guaranteed period of ten years, to determine that Subaccount's portion of the variable portion of the first monthly annuity payment, and (5) dividing the value from (4) by the Annuity Unit Value for the Subaccount as of ten days prior to the date the first Annuity payment is due. VARIABLE ANNUITY PAYMENTS The amount of the variable portion of the monthly annuity payment due on the first payment date is equal to the sum of the portions for each Subaccount determined as described in the preceding paragraph. The amount of the variable portion of any monthly annuity payment subsequent to the first will be determined by adding together for each Subaccount the product of the number of Annuity Units credited to the Subaccount and the Annuity Unit Value for the Subaccount 10 days prior to the date the payment is due. We guarantee that the Annuity Unit Values used in determining annuity payments will not be affected by variations in our actual mortality experience or our actual expenses from those assumed. CONVERSION OF ACCUMULATED VALUE IN MVA FIXED ACCOUNT By written notice, the Participant may elect the Date of Maturity at any time before the Provisional Date of Maturity, provided that the Date elected is (i) no later than the Annuitant's 85th birthday, without our prior approval; (ii) at least 31 days after our receipt of the written notice; and (iii) at least six months after the date the premium was applied to the certificate. If no other election is made, the Date of Maturity will be the Provisional Date of Maturity shown in Section 1. On the Date of Maturity or other date elected to begin annuity payments, we will convert the Accumulated Value of the certificate adjusted by any Market Value Adjustment, if applicable, into annuity payments. We will determine the annuity payments by: (i) dividing the adjusted Accumulated Value by $1,000; and (ii) multiplying the result by the annuity payment rate then in effect for the option elected in Section 16. The annuity payment will never be less than that available by applying the adjusted Accumulated Value to buy an immediate annuity offered by us. If the annuity payments are made monthly, the annuity payment rate is guaranteed to be at least that provided in the Monthly Annuity Payment Rate Table in Section 16. 12 - -------------------------------------------------------------------------------- 16. SETTLEMENT PROVISIONS - -------------------------------------------------------------------------------- ANNUITY ON DATE OF MATURITY We shall make the annuity payments provided on the first page of the certificate automatically as a Life Annuity with Payments for a Guaranteed Period of 10 Years in accordance with the provisions of Option A unless another option is elected. We shall determine the amounts of the annuity payments in accordance with the provisions of this section and of the "Conversion" provision in Section 15. Amounts in the Subaccounts will be used to provide variable benefits. Amounts in the MVA Fixed Account will be used to provide fixed benefits. If the amount of the first monthly annuity payment would be less than $20, we will make a single payment equal to the Surrender Value on the Date of Maturity. This single payment shall be in place of all other benefits provided by the certificate. If the amount of the first monthly annuity payment would be at least $20 but less than $50, we may make payments at quarterly, semi-annual or annual intervals. OPTIONAL METHODS OF SETTLEMENT In place of (i) the Annuity on the Date of Maturity provided on the first page of the certificate or (ii) a single payment in case of death prior to the date annuity payments commence or (iii) a single payment in case of surrender which occurs at least 6 months after the date the first premium is applied to the certificate, proceeds payable under the certificate may be left with us in accordance with one of the options set forth below and the terms of a supplementary agreement to be issued when the option becomes effective, but only if (i) such proceeds are in an amount of $5000 or more and (ii) the amount of the first monthly Annuity payment would be $50 or more. Option A - -------- A(Variable) - Life Annuity on a Variable Basis with Payments for a Guaranteed Period. If the Measuring Person's death occurs within the Guaranteed Period, payments will be made for the remainder of the Guaranteed Period in accordance with the terms of the supplementary agreement. A(Fixed) - Life Annuity with Payments for a Guaranteed Period. If the Measuring Person's death occurs within the Guaranteed Period, payments will be made for the remainder of the Guaranteed Period in accordance with the terms of the supplementary agreement. A five year Guaranteed Period cannot be elected if the Measuring Person is age 85 at the time of annuitization. The range of Guaranteed Periods available for election is 3 to 30 years if the certificate has been in effect for five years or more. The range of Guaranteed Periods available for election is 10 to 30 years if the certificate has been in force at least six months but less than five years. Option B - -------- B(Variable) - Life Annuity on a Variable Basis Without Further Payment on Death of the Measuring Person. B(Fixed) - Life Annuity Without Further Payment on Death of the Measuring Person. 13 Option B is not available if the Measuring Person is age 85 at the time of annuitization. The Participant may elect an option by written notice before the death of the Annuitant and before the commencement of annuity payments. If the Participant has made no election before the death of the Annuitant, the Beneficiary may make an election by written notice before the proceeds become payable. ANNUITY PAYMENT AND OPTION LIMITATIONS While the Annuitant is living (i) the Measuring Person will be the Annuitant; (ii) the Payee will be the Annuitant unless otherwise directed by the Participant; and (iii) the Contingent Payee will be the Beneficiary unless otherwise provided by written notice. If the Annuitant dies and Death Benefit proceeds are left with us in accordance with a settlement option election (i) the Measuring Person will be the Beneficiary, (ii) the Payee will be the Beneficiary unless otherwise designated in the election, and (iii) the Contingent Payee will be the person or persons so designated in the election and in accordance with the terms of the supplementary agreement. Optional methods of settlement are not available without our consent if the proceeds are payable to an executor, administrator, trustee, corporation, partnership or association. If the Participant of the certificate dies on or after annuity payments have begun, any remaining benefit under such annuity on the date of the Participant's death must be paid out at least as rapidly as under the method of making annuity payments then in effect. FIRST VARIABLE ANNUITY PAYMENT FACTORS The Table of First Variable Annuity Payment Factors shows the amount of the variable portion of the first monthly annuity payment provided on the first page of the certificate and under Option A(Variable) and Option B(Variable) for each $1,000 applied. The factors in this table are based on the 1983a Individual Annuity Mortality Table for males and females with mortality and age adjustments and interest at the rate of 3 1/2% a year. If permitted by state law, the Participant may choose 5% or 6% in place of the 3 1/2% rate. The amount of the variable portion of the first payment will depend on the sex and adjusted age of the Measuring Person. The adjusted age is determined from the actual age on the Measuring Person's birthday nearest the date the first Annuity payment is due, by subtracting one year for each complete 10 year period elapsed since the Date of Issue. FIXED ANNUITY PAYMENTS The Table of Fixed Annuity Payment Factors shows the guaranteed amount of the fixed portion of the monthly annuity payments for each $1,000 applied. The factors in this table are based on the 1983a Individual Annuity Mortality Table for females with interest at the rate of 3% a year. The guaranteed amount of the fixed portion of the annuity payments will depend on the adjusted age of the Measuring Person. The adjusted age is determined from the actual age on the Measuring Person's birthday nearest the date the first annuity payment is due, by subtracting one year for each complete 10 year period elapsed since the Date of Issue. 14 TABLE OF FIRST VARIABLE ANNUITY PAYMENT FACTORS Monthly life annuity with payments on a variable basis for each $1,000 applied. ================================================================================
Option A(Variable) Option B (Variable) Life Annuity Without Life Annuity with Payments Further Payment on Death Adjusted for a Guaranteed Period of Measuring Person Age of Measuring ---------------------------------------------------------- --------------------------- Person on Birthday 5 Years 10 Years 20 Years Nearest Date ------- -------- -------- of First Payment Male Female Male Female Male Female Male Female ---------------- ---- ------ ---- ------ ---- ------ ---- ------ 55 4.50 4.13 4.46 4.11 4.32 4.05 4.51 4.13 56 4.58 4.19 4.54 4.18 4.38 4.10 4.59 4.20 57 4.67 4.26 4.62 4.24 4.44 4.16 4.68 4.27 58 4.76 4.33 4.71 4.31 4.50 4.22 4.78 4.34 59 4.86 4.41 4.80 4.39 4.57 4.28 4.88 4.42 60 4.96 4.49 4.90 4.46 4.63 4.35 4.98 4.50 61 5.08 4.58 5.00 4.55 4.70 4.41 5.10 4.59 62 5.20 4.67 5.11 4.64 4.77 4.48 5.22 4.69 63 5.32 4.77 5.23 4.73 4.84 4.55 5.36 4.79 64 5.46 4.88 5.35 4.83 4.91 4.62 5.50 4.89 65 5.61 4.99 5.47 4.94 4.97 4.69 5.65 5.01 66 5.76 5.11 5.61 5.05 5.04 4.77 5.81 5.13 67 5.93 5.24 5.74 5.17 5.11 4.84 5.99 5.27 68 6.10 5.38 5.89 5.29 5.17 4.92 6.17 5.41 69 6.29 5.53 6.04 5.43 5.24 5.00 6.37 5.56 70 6.49 5.69 6.20 5.57 5.30 5.07 6.59 5.73 71 6.69 5.86 6.36 5.72 5.35 5.15 6.81 5.91 72 6.91 6.05 6.52 5.88 5.41 5.22 7.05 6.10 73 7.14 6.25 6.69 6.04 5.46 5.29 7.31 6.32 74 7.39 6.46 6.87 6.22 5.50 5.35 7.58 6.55 75 7.65 6.70 7.05 6.40 5.54 5.41 7.88 6.79 76 7.92 6.94 7.23 6.59 5.58 5.47 8.19 7.06 77 8.21 7.20 7.41 6.78 5.61 5.52 8.53 7.35 78 8.52 7.48 7.59 6.98 5.64 5.56 8.90 7.66 79 8.84 7.78 7.78 7.19 5.67 5.61 9.29 8.00 80 9.17 8.10 7.96 7.40 5.69 5.64 9.71 8.36 81 9.52 8.44 8.14 7.61 5.71 5.67 10.16 8.76 82 9.88 8.81 8.31 7.82 5.73 5.70 10.64 9.20 83 10.26 9.19 8.48 8.03 5.74 5.72 11.16 9.67 84 10.65 9.59 8.64 8.23 5.74 5.73 11.71 10.18 85 and over 11.05 10.02 8.79 8.42 5.75 5.74 12.30 10.74
15 TABLE OF FIXED ANNUITY PAYMENT FACTORS Monthly life annuity with payments on a fixed basis for each $1,000 applied.
Option A(Fixed) Option B (Fixed) Life Annuity Without Life Annuity with Payments Further Payment on Death Adjusted for a Guaranteed Period of Measuring Person Age of Measuring ---------------------------------------------------------- --------------------------- Person on Birthday 5 Years 10 Years 20 Years Nearest Date ------- -------- -------- of First Payment Male Female Male Female Male Female Male Female ---------------- ---- ------ ---- ------ ---- ------ ---- ------ 55 3.55 3.55 3.54 3.54 3.48 3.48 3.55 3.55 56 3.62 3.62 3.60 3.60 3.54 3.54 3.62 3.62 57 3.69 3.69 3.67 3.67 3.60 3.60 3.69 3.69 58 3.76 3.76 3.74 3.74 3.66 3.66 3.77 3.77 59 3.84 3.84 3.82 3.82 3.73 3.73 3.85 3.85 60 3.92 3.92 3.90 3.90 3.79 3.79 3.93 3.93 61 4.01 4.01 3.99 3.99 3.86 3.86 4.02 4.02 62 4.11 4.11 4.08 4.08 3.94 3.94 4.12 4.12 63 4.21 4.21 4.17 4.17 4.01 4.01 4.22 4.22 64 4.32 4.32 4.28 4.28 4.08 4.08 4.33 4.33 65 4.43 4.43 4.38 4.38 4.16 4.16 4.45 4.45 66 4.55 4.55 4.50 4.50 4.24 4.24 4.57 4.57 67 4.68 4.68 4.62 4.62 4.32 4.32 4.70 4.70 68 4.82 4.82 4.75 4.75 4.40 4.40 4.85 4.85 69 4.97 4.97 4.88 4.88 4.48 4.48 5.00 5.00 70 5.14 5.14 5.03 5.03 4.56 4.56 5.17 5.17 71 5.31 5.31 5.18 5.18 4.64 4.64 5.35 5.35 72 5.50 5.50 5.34 5.34 4.71 4.71 5.54 5.54 73 5.70 5.70 5.51 5.51 4.78 4.78 5.75 5.75 74 5.91 5.91 5.69 5.69 4.85 4.85 5.98 5.98 75 6.14 6.14 5.87 5.87 4.92 4.92 6.23 6.23 76 6.39 6.39 6.07 6.07 4.97 4.97 6.49 6.49 77 6.65 6.65 6.27 6.27 5.03 5.03 6.78 6.78 78 6.93 6.93 6.47 6.47 5.08 5.08 7.09 7.09 79 7.23 7.23 6.68 6.68 5.12 5.12 7.42 7.42 80 7.55 7.55 6.90 6.90 5.16 5.16 7.79 7.79 81 7.90 7.90 7.11 7.11 5.19 5.19 8.18 8.18 82 8.26 8.26 7.33 7.33 5.22 5.22 8.62 8.62 83 8.65 8.65 7.54 7.54 5.23 5.23 9.08 9.08 84 9.05 9.05 7.74 7.74 5.25 5.25 9.59 9.59 85 and over 9.48 9.48 7.94 7.94 5.26 5.26 10.15 10.15
16 - -------------------------------------------------------------------------------- 17. PROOF REQUIRED FOR PAYMENT - -------------------------------------------------------------------------------- Before making the first annuity payment, we shall have the right to require proof of the correct age of the Measuring Person. We shall also have the right to require proof that the Measuring Person is living on the date each annuity payment is due. - -------------------------------------------------------------------------------- 18. MISSTATEMENTS - -------------------------------------------------------------------------------- If the age or sex of the Measuring Person has been misstated, we will adjust the amount of each annuity payment to reflect the correct age and sex. Any overpayment will be repaid to us. If it is not repaid, we will deduct the overpayment from future payments we make under the certificate. Any underpayment will be added to future payments we make under the certificate. Interest on any overpayment will be accrued at an annual rate of 6% to the date or dates of settlement. - -------------------------------------------------------------------------------- 19. ASSIGNMENT - -------------------------------------------------------------------------------- The Participant may assign an interest in the certificate, except as otherwise provided, without the consent of any revocable Beneficiary. The Participant's interest, any interest of the Annuitant and of any revocable Beneficiary shall be subject to the terms of the assignment. We will not be on notice of any assignment unless it is in writing; nor will we be on notice until a duplicate of the original assignment has been filed at our Servicing Office. We assume no responsibility for the validity or sufficiency of any assignment. - -------------------------------------------------------------------------------- 20. CLAIMS OF CREDITORS - -------------------------------------------------------------------------------- The proceeds and all other payments under the certificate will be exempt from the claims of creditors to the extent permitted by law. The proceeds and payments may not be assigned or withdrawn before becoming payable without our agreement. - -------------------------------------------------------------------------------- 21. RIGHT TO MAKE CHANGES - -------------------------------------------------------------------------------- We reserve the right to make certain changes if, in our judgment, they would best serve the interest of the participants of certificates or would be appropriate in carrying out the purposes of such certificates. Any changes will be made only to the extent and in the manner permitted by applicable laws. Also, when required by law, we will obtain your approval of the changes and approval from any appropriate regulatory authority. If any changes result in a material change in the underlying investment of Subaccounts to which the reserves for the certificate are allocated, we will notify the Participant of such change. The Participant may then make a new election under the Investment / Transfer Option provision. - -------------------------------------------------------------------------------- 22. ANNUAL STATEMENT - -------------------------------------------------------------------------------- We will furnish the Participant with reports annually, or more frequently, as required by applicable law. They will include: (i) a statement of the investments held in each Fund; and (ii) a statement of the condition and value of the certificate which will show the number of Accumulation Units, if any, credited to each Subaccount, the value of each Accumulation Unit, and the Accumulated Value of the certificate. 17 - -------------------------------------------------------------------------------- 23. MISCELLANEOUS - -------------------------------------------------------------------------------- If the Accumulated Value of the certificate becomes zero, we reserve the right to terminate the certificate. Under Massachusetts law, all income, gains and losses, realized or unrealized, of the Separate Accounts shall be credited to or charged against the amounts placed in the Separate Accounts without regard to our other income, gains and losses. The assets of the Separate Accounts are owned solely by us. We are not a trustee with respect to any part or the whole of those assets. The portion of the assets in the Separate Accounts equal to the reserves and other liabilities under the certificate with respect to the Separate Accounts shall not be chargeable with liabilities arising out of any other business we may conduct. In place of operating each Separate Account as a unit investment trust, we reserve the right to make investments directly, operating the Separate Account as a "management-type investment company" under the Act, or in any other form permitted by law, the investment adviser of which would be us or an affiliate. The Separate Account assets would be invested as provided with respect to the investment objectives of the Separate Account. 18 Communications about this group annuity contract should be sent to the Company at its Servicing Office, Boston, Massachusetts 02205-9298. Single Premium Modified Guarantee Annuity -- Annuity payable to the Annuitant beginning on the Date of Maturity for a guaranteed period of 10 years and as long thereafter as the Annuitant lives. Nonparticipating - not eligible for dividends All benefits, payments and values under the certificate which are based on the investment experience of a Separate Account are variable and not guaranteed as to fixed dollar amount. BP EX-99.4.B 5 FIXED AND VARIABLE ANNUITY CERTIFICATE Exhibit 4(b) [LOGO OF JOHN HANCOCK APPEARS HERE] Variable Life John Hancock Place Insurance Company PO Box 717 Boston, Massachusetts 02117 PARTICIPANT AT ISSUE [JOHN DOE] ANNUITY CERTIFICATE NUMBER [000000] ANNUITANT [JOHN DOE] GROUP CONTRACT NUMBER [12345] John Hancock Variable Life Insurance Company ("the Company") agrees to provide the benefits, rights and privileges as stated in this certificate. If this certificate is in force on the Date of Maturity, we will pay an annuity to the Annuitant, unless otherwise directed by the Participant. The variable and fixed portions of each annuity payment will be determined in accordance with Section 15 of this certificate. The variable portion may increase or decrease depending upon the investment experience of the Subaccounts in which the Net Premiums are invested. Unless another option offered in Section 16 is elected, annuity payments will be payable for a guaranteed period of 10 years and as long thereafter as the Annuitant lives. By written notice, the Participant may elect the Date of Maturity at any time before the Provisional Date of Maturity, provided the Date elected is: (i) not later than the Annuitant's 85th birthday without our prior approval; (ii) at least 31 days after the written notice; and (iii) at least six months after the date the first premium is applied to this certificate. If no other election is made, the Date of Maturity will be the Provisional Date of Maturity. We are issuing this certificate in consideration of the application and the payment of premiums. GROUP ANNUITY CERTIFICATE Variable Annuity Nonparticipating - not eligible for dividends Initial Premium shown on page 3 All benefits, payments and values under this certificate which are based on the investment experience of a Separate Account are variable and not guaranteed as to fixed dollar amount. John Hancock Servicing Office ----------------------------- John Hancock Investors Services Corporation P.O. Box 9298 Boston, Massachusetts 02205-9298 Telephone [800-225-5291] Fax [800-225-0000] JHFI95 V0195A CERTIFICATE PROVISIONS
Numerical Guide Alphabetical Guide Section Section - ------- ------- 1. Certificate Specifications 7. Accumulations 2. Definitions 22. Annual Statement 3. Participant, Beneficiary 19. Assignment 4. The Contract 10. Certificate Fee and Rider Charges 5. Premiums 1. Certificate Specifications 6. Investment/Transfer Options 20. Claims of Creditors 7. Accumulations 12. Contingent Deferred Sales Load 8. Valuation Procedures 4. The Contract 9. Death Benefit 15. Conversion 10. Certificate Fee and Rider Charges 9. Death Benefit 11. Partial Withdrawals 2. Definitions 12. Contingent Deferred Sales Load 6. Investment/Transfer Options 13. Market Value Adjustment 13. Market Value Adjustment 14. Surrender Provision 23. Miscellaneous 15. Conversion 18. Misstatements 16. Settlement Provisions 11. Partial Withdrawals 17. Proof Required for Payment 3. Participant, Beneficiary 18. Misstatements 5. Premiums 19. Assignment 17. Proof Required for Payment 20. Claims of Creditors 21. Right to Make Changes 21. Right to Make Changes 16. Settlement Provisions 22. Annual Statement 14. Surrender Provision 23. Miscellaneous 8. Valuation Procedures
2 V0295A - -------------------------------------------------------------------------------- 1. CERTIFICATE SPECIFICATIONS - -------------------------------------------------------------------------------- PARTICIPANT [John Doe] ANNUITANT [John Doe] ANNUITY CERTIFICATE NUMBER [0000000] GROUP ANNUITY CONTRACT NUMBER [12345] ISSUE AGE [35] DATE OF ISSUE [January 1, 1996] PROVISIONAL DATE OF MATURITY [January 1, 2036] INITIAL PREMIUM PAYMENT [$1,000.00]
ANNUAL PERCENTAGE RIDERS ELECTED RATE (APR) ANNUAL RIDER CHARGE -------------- ----------------- ------------------- One Year Stepped-Up Death Benefit Rider [.15%] APR x Accumulated Value Accidental Death Benefit Rider [.10%] APR x Accumulated Value Nursing Home Waiver of Contingent Deferred Sales Load Rider [.05%] APR x Accumulated Value
*For an explanation of rider charges, see Section 10 of this certificate. 3 V0395A - -------------------------------------------------------------------------------- 2. DEFINITIONS - -------------------------------------------------------------------------------- The following terms are commonly used throughout this annuity certificate: The term "Account", unmodified, means a Subaccount or a Guarantee Period. The term "Accumulated Value" means the value of this certificate on any date prior to the commencement of annuity payments. This value equals the sum of (i) the accumulated values for all Subaccounts and (ii) the accumulated value of this certificate in the MVA Fixed Account. The accumulated value for each Subaccount as of any date will equal the number of Accumulation Units for that Subaccount then credited to this certificate multiplied by the Accumulation Unit Value for that Subaccount on that date. Accumulated Value for the MVA Fixed Account means the premium amount allocated plus earned interest, less any withdrawals and applicable deduction for certificate fees, rider charges, premium taxes or similar taxes, if any. The term "Accumulation Unit" means a unit of measurement used in determining the value of this certificate prior to the commencement of life annuity payments. The Accumulation Unit Value for each Subaccount will reflect the investment experience of that Subaccount. It will vary in dollar amount. The term "Annuitant" means the individual designated as such in the application for this certificate. The term "Annuity Unit" means a unit of measurement used in determining the amount of the variable portion of each annuity payment. The value of an Annuity Unit for each Subaccount will depend on the assumed investment rate and the investment experience of that Subaccount. It will vary in dollar amount. The term "Beneficiary" is defined in Section 3. The term "Certificate Year" means the 12 month period following the Date of Issue and each 12 month period thereafter. The term "Contingent Deferred Sales Load" ("CDSL") is defined in Section 12. The term "Date of Issue" means, the date shown in Section 1. The term "Date of Maturity" is the date annuity payments under this certificate begin, in accordance with Section 15. The term "Free Withdrawal Value" means, for any Certificate Year, an amount totaling 10% of the Accumulated Value calculated as of the first day of the Certificate Year, reduced by any prior withdrawals made during the Certificate Year. The term "Fund" means each division of a Series Fund which has a specific investment objective. The term "In force" means that the Annuitant is living, Surrender Value of this certificate has not become payable, and this certificate has not been terminated in accordance with the "Premiums" provision in Section 5. The term "Guarantee Period" refers to a Guarantee Period elected under the Market Value Adjusted Fixed Account. The term "Last Valuation Date" means the earliest of the Date of Maturity, the Surrender Date, and the date of the Annuitant's death. The term "Market Value Adjustment" is defined in Section 13. The term "Market Value Adjustment Factor" is defined in Section 13. The term "Market Value Adjusted ("MVA") Fixed Account" means, unmodified, a separate investment account established by us pursuant to applicable law in which you are eligible to invest under this certificate. The term "Measuring Person" means the person on whose life annuity payments will be based. 4 The term "Net Premium" means the premium paid less any applicable taxes based on the amount of premium payment. The term "Participant" is defined in Section 3. The term "Payment" means, unless otherwise stated, payment at our Servicing Office in Boston, Massachusetts. The term "Separate Account", unmodified, means a separate investment account established by us pursuant to applicable law in which you are eligible to invest under this certificate. The term "Series Fund" means a series type mutual fund registered under the Investment Company Act of 1940 (the Act) as an open-end diversified management investment company. The term "Subaccount", means each division of a Separate Account. The assets of each Subaccount are invested solely in shares of the corresponding Fund of a Series Fund. The term "Surrender Date" means the date of receipt of written notice of surrender under Section 14. The term "Surrender Value" means the Accumulated Value of your certificate, adjusted by any Market Value Adjustment, less, if applicable, any certificate fees, any income taxes withheld, any rider charges, any deduction for premium taxes or similar taxes, and any CDSL. The term "Valuation Date" means any date on which the New York Stock Exchange is open for trading and on which the Fund values its shares. The term "Valuation Period" means that period of time from the beginning of the day following a Valuation Date to the end of the next following Valuation Date. The terms "we", "us", "our" refer only to the Company. The term "withdrawal" means, unless otherwise specified, the amount withdrawn prior to any deductions but after any Market Value Adjustments. The term "written notice" means, unless otherwise stated, a notice in writing satisfactory to us which is received at our Servicing Office in Boston, Massachusetts. The terms "you" and "your" refer to the Participant of this certificate. 5 - -------------------------------------------------------------------------------- 3. PARTICIPANT, BENEFICIARY - -------------------------------------------------------------------------------- The Participant and the Beneficiary will be as shown in the application unless you change them or they are changed by the terms of this provision. With regard to joint Participants, at the first death of a joint Participant prior to the Date of Maturity and prior to the Surrender Date, the Beneficiary will be the surviving Participant notwithstanding that the designated Beneficiary may be different. If the Annuitant dies and there is no surviving Beneficiary, you will be the Beneficiary, but if you were the Annuitant, your estate will be the Beneficiary. You have the sole and absolute power to exercise all rights and privileges without the consent of any other person except as provided by this certificate or unless you provide otherwise by written notice. While the Annuitant is alive, you may change the Participant by written notice. You may change the Beneficiary by written notice no later than our receipt of the required proof of the Annuitant's death. A change will take effect when the notice is signed if we acknowledge receipt of the notice at our Servicing Office. The change will take effect whether or not you or the Annuitant is then alive. A change shall be subject to the rights of any assignee of record with us and subject to any payment made or other action taken by us before we acknowledge receipt. Regarding joint Participants, signatures of both joint Participants are required for any transactions requiring written notification from a Participant. - -------------------------------------------------------------------------------- 4. THE CONTRACT - -------------------------------------------------------------------------------- The contract is an agreement between the contract owner and the Company. This certificate is a summary of the Group Annuity Contract. The entire contract consists of the Group Annuity Contract, this certificate, any riders, and the application, a copy of which is attached. Certificate years, certificate months, and certificate anniversaries are measured from the Date of Issue of this certificate. Only the President, a Vice President, the Secretary, or an Assistant Secretary of the Company has authority to waive or modify any of the provisions of the contract. - -------------------------------------------------------------------------------- 5. PREMIUMS - -------------------------------------------------------------------------------- PAYMENT OF PREMIUMS All premium payments shall be made to us at our Servicing Office. Premium payments are subject to the following conditions: (a) Each premium payment must be at least $500. (b) The maximum premium that may be deposited to this certificate in any certificate year is $1,000,000. (c) No premium payments may be made to this certificate within six months prior to the Annuitant's 85th birthday. Upon request we will consider waiving any of the above conditions. PREMIUM TAXES A deduction for a premium tax or a similar tax will be made from the Accumulated Value at the time of annuitization. If we pay a tax on the premium at the time such premium is paid, then we will deduct a charge for these taxes from the Accumulated Value for the amount withdrawn or surrendered, at the time of annuitization, death, surrender, or withdrawal. 6 - -------------------------------------------------------------------------------- 6. INVESTMENT / TRANSFER OPTIONS - -------------------------------------------------------------------------------- INVESTMENT OPTION The Net Premium will be allocated to the Accounts according to the Investment Option then in effect. The Initial Investment Option is that elected by you in the application. You may elect to change the Investment Option. The change will be effective as to the application of any Net Premium made on or after the date of receipt at our Servicing Office of notice satisfactory to us. The minimum percentage that may be allocated to any Account and the maximum number of Accounts in which amounts may be held will be subject to our administrative rules in effect at the time of the election. All percentages you elect must be whole numbers. If allocation is made to the MVA Fixed Account, the Participant may select from the Guarantee Periods then available. The period selected will determine the guaranteed interest rate applicable, which will be payable for a Guarantee Period. A Guarantee Period begins on the date premium is credited, or in the case of transfer, on the effective date of transfer. At least 30 days prior to the end of any Guarantee Period, we will provide you with written notice of the expiry of any such Guarantee Period. You may elect, by written notice within 30 days prior to the expiry of such Guarantee Period, any Guarantee Period from among those that are then available. We reserve the right to change the duration of Guarantee Periods offered. The effective date of a new Guarantee Period will be the first day following the expiry of the immediately preceding Guarantee Period. If we do not receive written notice within 30 days prior to the expiry of any Guarantee Period to elect a new Guarantee Period, then amounts available under such Guarantee Period will be transferred to the Money Market Account. The effective date of the transfer will be the first day following the expiry of such Guarantee Period. Except as otherwise provided, a Guarantee Period is not available if it extends beyond the Date of Maturity. Also, except as otherwise provided, if a new Guarantee Period becomes effective that causes this certificate to continue beyond the Provisional Date of Maturity, then the Provisional Date of Maturity will become the Date of Maturity. ACCOUNT TRANSFER OPTION You may elect to reallocate amounts among the Accounts up to twelve times in a certificate year. Transfers between the Accounts will be effective on the date of receipt at our Servicing Office of notice satisfactory to us. No transfer will be permitted on or within 30 days of the Maturity Date. The number of Accumulation Units or Annuity Units and the amount of Accumulated Value of the MVA Fixed Account transferred to or from each Account will reflect the respective values in each Account. The maximum number of Accounts in which Accumulated Value may be held will be subject to our rules in effect at the time of election. The maximum amount which may be transferred or paid into a Subaccount in any certificate year is $1,000,000 without our prior approval. Any transfer made out of the MVA Fixed Account may be subject to a Market Value Adjustment. ALLOCATION AT ANNUITY COMMENCEMENT AND BEFORE CONVERSION If the Accumulated Value is invested in more than four Accounts on the Date of Maturity or other date elected for commencement of annuity payments and before conversion in accordance with Section 15, we will allocate the Accumulated Value to the four Accounts then having the largest portions of the Accumulated Value. To determine the number of Accounts in which the Accumulated Value is invested, each Subaccount is counted separately as one Account while all Guarantee Periods are counted together as one Account. The Accumulated Value in Accounts other than such four Accounts will be allocated to the four Accounts in proportion to the amounts in the four Accounts. Upon commencement of annuity payments, transfers are only permitted between Subaccounts. Such allocation will be made notwithstanding any transfer restrictions specified in this subsection. The rules that will be applied as of any date will be those in effect on that date. 7 - -------------------------------------------------------------------------------- 7. ACCUMULATIONS - -------------------------------------------------------------------------------- PURCHASE OF ACCUMULATION UNITS The portion of the Net Premium not allocated to the MVA Fixed Account will be allocated to each elected Subaccount for investment with other funds in each such Subaccount and applied to the purchase of Accumulation Units. The number of Accumulation Units in each Subaccount purchased by each premium payment will be determined by dividing the applicable portion of the Net Premium by the applicable Accumulation Unit Value on the first Valuation Date which is the same as or next follows the receipt of the premium payment at our Servicing Office. ACCUMULATED VALUE IN THE MVA FIXED ACCOUNT We will accumulate (i) the portion of any Net Premium allocated to the MVA Fixed Account and (ii) any amount transferred from a Subaccount, from the date the premium is received or the transfer is made. The Accumulated Value of this certificate's share of the MVA Fixed Account on any date prior to the date annuity payments commence is the sum of such Net Premiums and transfers accumulated with interest to that date less the sum of (a), (b), and (c) accumulated with interest to that date, where: (a) is any partial withdrawal made from the MVA Fixed Account; (b) is any transfer made from the MVA Fixed Account; and (c) is any charge deducted from the MVA Fixed Account. INTEREST ON PREMIUM ALLOCATED TO MVA FIXED ACCOUNT Premium earns interest for as long as it remains in this certificate beginning on the date it is credited. Interest will be credited daily and will then earn interest from such date. During a Guarantee Period, the interest rate credited will be based upon our declared interest rate then in effect and will apply throughout such Guarantee Period. Such declared interest rate will be expressed on an annual effective basis. The interest credited on any given day will be at a rate which, if compounded daily for one year, would equal the applicable declared interest rate. - -------------------------------------------------------------------------------- 8. VALUATION PROCEDURES - -------------------------------------------------------------------------------- ACCUMULATION UNIT VALUE The Accumulation Unit Share Value is calculated separately for each Subaccount. The value of one Accumulation Unit was set at $10 on the date assets were first allocated to each Subaccount. The value of one Accumulation Unit on any Valuation Date thereafter will be determined for each Subaccount by multiplying the immediately preceding Accumulation Unit Value by the applicable Net Investment Factor for the Valuation Period ending on that Valuation Date. On any date other than a Valuation Date, the Accumulation Unit Value will be the same as that on the next following Valuation Date. ANNUITY UNIT VALUE The Annuity Unit Value is calculated separately for each Subaccount. The value of one Annuity Unit was set at $1 on the date assets were first allocated to each Subaccount. The value of one Annuity Unit on any Valuation Date thereafter will be determined for each Subaccount by multiplying (1) the immediately preceding Annuity Unit Value by (2) the applicable Net Investment Factor for the Valuation Period ending on the Valuation Date reduced by .00009425 times the applicable Net Investment Factor for each calendar day in the Valuation Period. On any date other than a Valuation Date, the Annuity Unit Value will be the same as that on the next following Valuation Date. 8 NET INVESTMENT FACTOR The Net Investment Factor for each Subaccount for any Valuation Period is equal to one plus the applicable net investment rate for such period. A Net Investment Factor may be more or less than one. The net investment rate for each Subaccount for any Valuation Period will be determined by: (1) taking the sum of the accrued investment income and capital gains and losses, realized or unrealized, of the Subaccount for the Valuation Period; (2) subtracting the sum of (i) an amount for any applicable income taxes and (ii) an amount for mortality and expense risks and administrative expenses computed by multiplying an amount not to exceed .00003425 times the number of calendar days in the Valuation Period and multiplying the result by the value of the Subaccount at the beginning of the Valuation Period; and (3) dividing the result by the value of the Subaccount at the beginning of the Valuation Period. VALUATION OF ASSETS The values of the assets in the Subaccounts shall be determined at a fair value in accordance with applicable law. Liabilities attributable to the Subaccount will be deducted to determine the value of the Subaccount. ADJUSTMENT OF UNITS AND VALUES We reserve the right to change the number and value of the Accumulation Units or Annuity Units or both without your consent or the consent of any other person, provided strict equity is preserved and the change does not affect the benefits, provisions or investment return of this certificate. - -------------------------------------------------------------------------------- 9. DEATH BENEFIT - -------------------------------------------------------------------------------- If the Annuitant dies before the Date of Maturity, we will pay the Death Benefit to the Beneficiary. The Death Benefit will equal the greatest of: (i) the Accumulated Value of this certificate, adjusted by any Market Value Adjustment, as of the date of receipt of due proof of the Annuitant's death; and (ii) the amount of the premiums paid less the amount of all partial withdrawals made, including any applicable CDSL. Notwithstanding any of the above, the following will apply upon the death of the Participant, if the certificate value has not already been converted into an annuity: (i) If the Beneficiary is the spouse of the Participant, the Beneficiary may continue this certificate in force as the Participant. (ii) If the Beneficiary is not the spouse of the Participant, or if the Beneficiary is the spouse of the Participant but does not choose to continue this certificate, we must pay, in accordance with the Internal Revenue Code, the death benefit (or the Surrender Value if the Participant is not the Annuitant) in full to the Beneficiary within five years of the Participant's death or apply the Accumulated Value in full towards the purchase of a life annuity on the Beneficiary with payments beginning within one year of the Participant's death. - -------------------------------------------------------------------------------- 10. CERTIFICATE FEE AND RIDER CHARGES - -------------------------------------------------------------------------------- We will deduct a certificate fee of $30 on each certificate anniversary prior to the Date of Maturity and on the date of surrender of this certificate if the Accumulated Value is then less than $10,000. No certificate fee will be deducted if the Accumulated Value is $10,000 or more. The fee will be deducted from the Accumulated Value of all Accounts according to the proportion the Accumulated Value of each account bears to the total Accumulated Value of this certificate. We reserve the right to increase the certificate fee up to $50, subject to applicable state regulations. We will deduct separate monthly charges for each optional rider that you may elect at the time of application for this certificate. The charges, made at the begining of each month, are equal to the Accumulated Value at the beginning of such month, multiplied by 1/12th of the applicable annual percentage rate, as specified on page 3 of this certificate, for each rider elected. The charge for each rider elected will be deducted from the Accumulated Value of all Accounts according to the proportion the Accumulated Value of each Account bears to the total Accumulated Value of this certificate. 9 - -------------------------------------------------------------------------------- 11. PARTIAL WITHDRAWALS - -------------------------------------------------------------------------------- Subject to the limits described in this Section, you may request a withdrawal of less than the Surrender Value. The total of the requested amount and any CDSL made is called a partial withdrawal. We will pay the requested amount on receipt of written notice before the Annuitant's death and before the commencement of annuity payments. The amount of the partial withdrawal will then be deducted from the Accumulated Value. Without our prior approval, we will not permit a partial withdrawal of less than $100 nor will we permit a partial withdrawal if the Accumulated Value after such requested partial withdrawal would be less than $1000. Unless specified in writing otherwise, withdrawals will be removed proportionately from the values in all Accounts. Withdrawal amounts removed from the MVA Fixed Account will be subject to a Market Value Adjustment as described in Section 13. Prior to payment, the amount of any withdrawal will be reduced by any applicable income taxes, premium taxes, and similar taxes, and any applicable CDSL. Upon written request, at any time during each Certificate Year, you may make a withdrawal of the Free Withdrawal Value, as described in Section 12. If the Free Withdrawal Value is less than $1,500, then any written request for the Free Withdrawal Value must be for the entire Free Withdrawal Value. A withdrawal, other than one on the last day of a Guarantee Period, will be effective on the date we receive your written notice. To make a withdrawal that is to be effective on the last day of any Guarantee Period, we must receive written notice from you within 30 days prior to the expiry of such Guarantee Period. We may defer payment of a withdrawal in the same manner as we may defer payment of the Surrender Value, described in Section 14. - -------------------------------------------------------------------------------- 12. CONTINGENT DEFERRED SALES LOAD - -------------------------------------------------------------------------------- A Contingent Deferred Sales Load ("CDSL") will be computed upon surrender of this certificate and upon each partial withdrawal. To determine the CDSL, we will first deduct the following amounts from the premium payments made to date in the order that such payments were received: (a) The sum of all certificate fees deducted to date; (b) The sum of all prior partial withdrawals; (c) The Free Withdrawal Value. The Free Withdrawal Value is an amount equal to 10% of the Accumulated Value of this certificate on the first day of the current certificate year less the sum of all prior partial withdrawals made during the current certificate year. This amount may be withdrawn without incurring a CDSL. We will then continue to withdraw the remaining premium payments in the order that they were received and will apply a CDSL to these premiums in accordance with the following table, until all remaining premium payments have been withdrawn, or until the total amount withdrawn (including the CDSL) reaches (i) the Accumulated Value, adjusted by any MVA in the case of a full surrender, or (ii) the amount of the partial withdrawal. 10 During each Certificate Year you may make withdrawals in an amount not to exceed the Free Withdrawal Value without incurring a CDSL. Withdrawals in excess of the Free Withdrawal Value will be subject to a CDSL in accordance with the table shown below. The charge (expressed as a percentage of the amount subject to the charge) is shown below.
---------------------------------------------------------------- Years From Date of Premium Payment to Date of Surrender or Withdrawal CDSL ---------------------------------------------------------------- 7 or more No Charge ---------------------------------------------------------------- at least 6, but less than 7 2% ---------------------------------------------------------------- at least 5, but less than 6 3% ---------------------------------------------------------------- at least 4, but less than 5 4% ---------------------------------------------------------------- at least 3, but less than 4 5% ---------------------------------------------------------------- at least 2, but less than 3 5% ---------------------------------------------------------------- Less than 2 Years 6% ----------------------------------------------------------------
A withdrawal will be deemed to have been "made" on the date we receive written notice. For purposes of such determination, payment of the Surrender Value will be deemed a withdrawal. 11 - -------------------------------------------------------------------------------- 13. MARKET VALUE ADJUSTMENT - -------------------------------------------------------------------------------- Prior to the last day of any Guarantee Period, amounts withdrawn or transferred from the MVA Fixed Account will be adjusted up or down by the application of a Market Value Adjustment. FORMULA The Market Value Adjustment is equal to A times (B minus 1) where: A is (i) the amount subject to a market value adjustment, and B is the market value adjustment factor below: [ ] (/n/) [ 1 + g ] ---- [ ---------- ] 12 [ 1 + c +.005 ] Where: g = The guaranteed rate in effect for the current Guarantee Period (in decimal form). c = The current rate (in decimal form) in effect for durations equal to the number of years remaining in the current Guarantee Period (years rounded up to the nearest whole number). If not available, we will declare a rate solely for this purpose that is consistent with rates for durations that are currently available. n = The number of complete months from the date of withdrawal to the end of the current Guarantee Period. (Where less than one complete month remains, n will equal one unless a withdrawal is made on the last day of the Guarantee Period at which time no adjustment will apply.) The Market Value Adjustment may be positive or negative. 12 - -------------------------------------------------------------------------------- 14. SURRENDER PROVISION - -------------------------------------------------------------------------------- Upon receipt of written notice from you before the Annuitant's death and the Date of Maturity, we will pay the Surrender Value. The Surrender Value will be determined by us as of the date of receipt of written notice. We may defer payment of a Surrender Value for the period provided by law. With respect to the MVA Fixed Account, we will not defer payment more than six months beyond the date we receive written notice. If we defer payment for more than 30 days, we will pay interest on the Surrender Value at a rate equal to the greater of (i) the rate required by law; and (ii) the rate declared by us. - -------------------------------------------------------------------------------- 15. CONVERSION - -------------------------------------------------------------------------------- CONVERSION OF ACCUMULATION UNITS TO ANNUITY UNITS On the Date of Maturity or other date elected under Section 16 for commencement of annuity payments, the Accumulation Units credited to this certificate will be converted into Annuity Units. Annuity payments will then commence subject to the limitations specified in Section 16 and all other applicable provisions. The number of Annuity Units credited to each Subaccount will be determined by: (1) multiplying the number of Accumulation Units credited to the Subaccount on the date of conversion by the Accumulation Unit Value for the Subaccount as of ten days prior to the date the first annuity payment is due; (2) deducting any applicable premium tax; (3) dividing the resulting value by 1000; (4) multiplying the value from (3) by the applicable factor from the Table of First Variable Annuity Payment Factors for the option elected, or if no option is elected the applicable factor for the Option A (Variable) with a guaranteed period of ten years, to determine that Subaccount's portion of the variable portion of the first monthly annuity payment, and (5) dividing the value from (4) by the Annuity Unit Value for the Subaccount as of ten days prior to the date the first annuity payment is due. VARIABLE ANNUITY PAYMENTS The amount of the variable portion of the monthly annuity payment due on the first payment date is equal to the sum of the portions for each Subaccount determined as described in the preceding paragraph. The amount of the variable portion of any monthly annuity payment subsequent to the first will be determined by adding together for each Subaccount the product of the number of Annuity Units credited to the Subaccount and the Annuity Unit Value for the Subaccount 10 days prior to the date the payment is due. We guarantee that the Annuity Unit Values used in determining annuity payments will not be affected by variations in our actual mortality experience or our actual expenses from those assumed. CONVERSION OF ACCUMULATED VALUE IN MVA FIXED ACCOUNT By written notice, you may elect the Date of Maturity at any time before the Provisional Date of Maturity, provided that the Date elected is (i) no later than the Annuitant's 85th birthday, without our prior approval; (ii) at least 31 days after our receipt of the written notice; and (iii) at least six months after the date the premium was applied to this certificate. If no other election is made, the Date of Maturity will be the Provisional Date of Maturity shown in Section 1. On the Date of Maturity or other date elected to begin annuity payments, we will convert the Accumulated Value of this certificate adjusted by a Market Value Adjustment, if applicable, into annuity payments. We will determine the annuity payments by: (i) dividing the adjusted Accumulated Value by $1,000; and (ii) multiplying the result by the annuity payment rate then in effect for the option elected in Section 16. The annuity payment will never be less than that available by applying the adjusted Accumulated Value to buy an immediate annuity offered by us. If the annuity payments are made monthly, the annuity payment rate is guaranteed to be at least that provided in the Monthly Annuity Payment Rate Table in Section 16. 13 - -------------------------------------------------------------------------------- 16. SETTLEMENT PROVISIONS - -------------------------------------------------------------------------------- ANNUITY ON DATE OF MATURITY We shall make the annuity payments provided on the first page of this certificate automatically as a Life Annuity with Payments for a Guaranteed Period of 10 Years in accordance with the provisions of Option A unless another option is elected. We shall determine the amounts of the annuity payments in accordance with the provisions of this section and of the "Conversion" provision in Section 15. Amounts in the Subaccounts will be used to provide variable benefits. Amounts in the MVA Fixed Account will be used to provide fixed benefits. If the amount of the first monthly annuity payment would be less than $20, we will make a single payment equal to the Surrender Value on the Date of Maturity. This single payment shall be in place of all other benefits provided by this certificate. If the amount of the first monthly annuity payment would be at least $20 but less than $50, we may make payments at quarterly, semi-annual or annual intervals. OPTIONAL METHODS OF SETTLEMENT In place of (i) the Annuity on the Date of Maturity provided on the first page of this certificate or (ii) a single payment in case of death prior to the date annuity payments commence or (iii) a single payment in case of surrender which occurs at least 6 months after the date the first premium is applied to this certificate, proceeds payable under this certificate may be left with us in accordance with one of the options set forth below and the terms of a supplementary agreement to be issued when the option becomes effective, but only if (i) such proceeds are in an amount of $5000 or more and (ii) the amount of the first monthly annuity payment would be $50 or more. Option A - -------- A(Variable) - Life Annuity on a Variable Basis with Payments for a Guaranteed Period. If the Measuring Person's death occurs within the Guaranteed Period, payments will be made for the remainder of the Guaranteed Period in accordance with the terms of the supplementary agreement. A(Fixed) - Life Annuity with Payments for a Guaranteed Period. If the Measuring Person's death occurs within the Guaranteed Period, payments will be made for the remainder of the Guaranteed Period in accordance with the terms of the supplementary agreement. A five year Guaranteed Period cannot be elected if the Measuring Person is age 85 at the time of annuitization. The range of Guaranteed Periods available for election is 3 to 30 years if this certificate has been in effect for five years or more. The range of Guaranteed Periods available for election is 10 to 30 years if this certificate has been in force at least six months but less than five years. Option B - -------- B(Variable) - Life Annuity on a Variable Basis Without Further Payment on Death of the Measuring Person. B(Fixed) - Life Annuity Without Further Payment on Death of the Measuring Person. 14 Option B is not available if the Measuring Person is age 85 at the time of annuitization. You may elect an option by written notice before the death of the Annuitant and before the commencement of annuity payments. If you have made no election before the death of the Annuitant, the Beneficiary may make an election by written notice before the proceeds become payable. ANNUITY PAYMENT AND OPTION LIMITATIONS While the Annuitant is living (i) the Measuring Person will be the Annuitant; (ii) the Payee will be the Annuitant unless otherwise directed by you; and (iii) the Contingent Payee will be the Beneficiary unless otherwise provided by written notice. If the Annuitant dies and Death Benefit proceeds are left with us in accordance with a settlement option election (i) the Measuring Person will be the Beneficiary, (ii) the Payee will be the Beneficiary unless otherwise designated in the election, and (iii) the Contingent Payee will be the person or persons so designated in the election and in accordance with the terms of the supplementary agreement. Optional methods of settlement are not available without our consent if the proceeds are payable to an executor, administrator, trustee, corporation, partnership or association. If the Participant of this certificate dies on or after annuity payments have begun, any remaining benefit under such annuity on the date of the Participant's death must be paid out at least as rapidly as under the method of making annuity payments then in effect. FIRST VARIABLE ANNUITY PAYMENT FACTORS The Table of First Variable Annuity Payment Factors shows the amount of the variable portion of the first monthly annuity payment provided on the first page of this certificate and under Option A(Variable) and Option B(Variable) for each $1,000 applied. The factors in this table are based on the 1983a Individual Annuity Mortality Table for males and females with mortality and age adjustments and interest at the rate of 3 1/2% a year. If permitted by state law, the Participant may choose 5% or 6% in place of the 3 1/2% rate. The amount of the variable portion of the first payment will depend on the sex and adjusted age of the Measuring Person. The adjusted age is determined from the actual age on the Measuring Person's birthday nearest the date the first annuity payment is due, by subtracting one year for each complete 10 year period elapsed since the Date of Issue. FIXED ANNUITY PAYMENTS The Table of Fixed Annuity Payment Factors shows the guaranteed amount of the fixed portion of the monthly annuity payments for each $1,000 applied. The factors in this table are based on the 1983a Individual Annuity Mortality Table for females with interest at the rate of 3% a year. The guaranteed amount of the fixed portion of the annuity payments will depend on the adjusted age of the Measuring Person. The adjusted age is determined from the actual age on the Measuring Person's birthday nearest the date the first annuity payment is due, by subtracting one year for each complete 10 year period elapsed since the Date of Issue. 15 TABLE OF FIRST VARIABLE ANNUITY PAYMENT FACTORS Monthly life annuity with payments on a variable basis for each $1,000 applied. - --------------------------------------------------------------------------------
Option A(Variable) Option B (Variable) Life Annuity Without Life Annuity with Payments Further Payment on Death Adjusted for a Guaranteed Period of Measuring Person Age of Measuring -------------------------------------------------------- -------------------------- Person on Birthday 5 Years 10 Years 20 Years Nearest Date ------- -------- --------- of First Payment Male Female Male Female Male Female Male Female - ------------------ ---- ------ ---- ------ ---- ------ ---- ------ 55 4.50 4.13 4.46 4.11 4.32 4.05 4.51 4.13 56 4.58 4.19 4.54 4.18 4.38 4.10 4.59 4.20 57 4.67 4.26 4.62 4.24 4.44 4.16 4.68 4.27 58 4.76 4.33 4.71 4.31 4.50 4.22 4.78 4.34 59 4.86 4.41 4.80 4.39 4.57 4.28 4.88 4.42 60 4.96 4.49 4.90 4.46 4.63 4.35 4.98 4.50 61 5.08 4.58 5.00 4.55 4.70 4.41 5.10 4.59 62 5.20 4.67 5.11 4.64 4.77 4.48 5.22 4.69 63 5.32 4.77 5.23 4.73 4.84 4.55 5.36 4.79 64 5.46 4.88 5.35 4.83 4.91 4.62 5.50 4.89 65 5.61 4.99 5.47 4.94 4.97 4.69 5.65 5.01 66 5.76 5.11 5.61 5.05 5.04 4.77 5.81 5.13 67 5.93 5.24 5.74 5.17 5.11 4.84 5.99 5.27 68 6.10 5.38 5.89 5.29 5.17 4.92 6.17 5.41 69 6.29 5.53 6.04 5.43 5.24 5.00 6.37 5.56 70 6.49 5.69 6.20 5.57 5.30 5.07 6.59 5.73 71 6.69 5.86 6.36 5.72 5.35 5.15 6.81 5.91 72 6.91 6.05 6.52 5.88 5.41 5.22 7.05 6.10 73 7.14 6.25 6.69 6.04 5.46 5.29 7.31 6.32 74 7.39 6.46 6.87 6.22 5.50 5.35 7.58 6.55 75 7.65 6.70 7.05 6.40 5.54 5.41 7.88 6.79 76 7.92 6.94 7.23 6.59 5.58 5.47 8.19 7.06 77 8.21 7.20 7.41 6.78 5.61 5.52 8.53 7.35 78 8.52 7.48 7.59 6.98 5.64 5.56 8.90 7.66 79 8.84 7.78 7.78 7.19 5.67 5.61 9.29 8.00 80 9.17 8.10 7.96 7.40 5.69 5.64 9.71 8.36 81 9.52 8.44 8.14 7.61 5.71 5.67 10.16 8.76 82 9.88 8.81 8.31 7.82 5.73 5.70 10.64 9.20 83 10.26 9.19 8.48 8.03 5.74 5.72 11.16 9.67 84 10.65 9.59 8.64 8.23 5.74 5.73 11.71 10.18 85 and over 11.05 10.02 8.79 8.42 5.75 5.74 12.30 10.74
16 TABLE OF FIXED ANNUITY PAYMENT FACTORS Monthly life annuity with payments on a fixed basis for each $1,000 applied. - --------------------------------------------------------------------------------
Option A(Fixed) Option B (Fixed) Life Annuity Without Life Annuity with Payments Further Payment on Death Adjusted for a Guaranteed Period of Measuring Person Age of Measuring -------------------------------------------------------- -------------------------- Person on Birthday 5 Years 10 Years 20 Years Nearest Date ------- -------- --------- of First Payment Male Female Male Female Male Female Male Female - ------------------ ---- ------ ---- ------ ---- ------ ---- ------ 55 3.55 3.55 3.54 3.54 3.48 3.48 3.55 3.55 56 3.62 3.62 3.60 3.60 3.54 3.54 3.62 3.62 57 3.69 3.69 3.67 3.67 3.60 3.60 3.69 3.69 58 3.76 3.76 3.74 3.74 3.66 3.66 3.77 3.77 59 3.84 3.84 3.82 3.82 3.73 3.73 3.85 3.85 60 3.92 3.92 3.90 3.90 3.79 3.79 3.93 3.93 61 4.01 4.01 3.99 3.99 3.86 3.86 4.02 4.02 62 4.11 4.11 4.08 4.08 3.94 3.94 4.12 4.12 63 4.21 4.21 4.17 4.17 4.01 4.01 4.22 4.22 64 4.32 4.32 4.28 4.28 4.08 4.08 4.33 4.33 65 4.43 4.43 4.38 4.38 4.16 4.16 4.45 4.45 66 4.55 4.55 4.50 4.50 4.24 4.24 4.57 4.57 67 4.68 4.68 4.62 4.62 4.32 4.32 4.70 4.70 68 4.82 4.82 4.75 4.75 4.40 4.40 4.85 4.85 69 4.97 4.97 4.88 4.88 4.48 4.48 5.00 5.00 70 5.14 5.14 5.03 5.03 4.56 4.56 5.17 5.17 71 5.31 5.31 5.18 5.18 4.64 4.64 5.35 5.35 72 5.50 5.50 5.34 5.34 4.71 4.71 5.54 5.54 73 5.70 5.70 5.51 5.51 4.78 4.78 5.75 5.75 74 5.91 5.91 5.69 5.69 4.85 4.85 5.98 5.98 75 6.14 6.14 5.87 5.87 4.92 4.92 6.23 6.23 76 6.39 6.39 6.07 6.07 4.97 4.97 6.49 6.49 77 6.65 6.65 6.27 6.27 5.03 5.03 6.78 6.78 78 6.93 6.93 6.47 6.47 5.08 5.08 7.09 7.09 79 7.23 7.23 6.68 6.68 5.12 5.12 7.42 7.42 80 7.55 7.55 6.90 6.90 5.16 5.16 7.79 7.79 81 7.90 7.90 7.11 7.11 5.19 5.19 8.18 8.18 82 8.26 8.26 7.33 7.33 5.22 5.22 8.62 8.62 83 8.65 8.65 7.54 7.54 5.23 5.23 9.08 9.08 84 9.05 9.05 7.74 7.74 5.25 5.25 9.59 9.59 85 and over 9.48 9.48 7.94 7.94 5.26 5.26 10.15 10.15
17 - -------------------------------------------------------------------------------- 17. PROOF REQUIRED FOR PAYMENT - -------------------------------------------------------------------------------- Before making the first annuity payment, we shall have the right to require proof of the correct age of the Measuring Person. We shall also have the right to require proof that the Measuring Person is living on the date each annuity payment is due. - -------------------------------------------------------------------------------- 18. MISSTATEMENTS - -------------------------------------------------------------------------------- If the age or sex of the Measuring Person has been misstated, we will adjust the amount of each annuity payment to reflect the correct age and sex. Any overpayment will be repaid to us. If it is not repaid, we will deduct the overpayment from future payments we make under this certificate. Any underpayment will be added to future payments we make under this certificate. Interest on any overpayment will be accrued at an annual rate of 6% to the date or dates of settlement. - -------------------------------------------------------------------------------- 19. ASSIGNMENT - -------------------------------------------------------------------------------- You may assign your interest in this certificate, except as otherwise provided, without the consent of any revocable Beneficiary. Your interest, any interest of the Annuitant and of any revocable Beneficiary shall be subject to the terms of the assignment. We will not be on notice of any assignment unless it is in writing; nor will we be on notice until a duplicate of the original assignment has been filed at our Servicing Office. We assume no responsibility for the validity or sufficiency of any assignment. - -------------------------------------------------------------------------------- 20. CLAIMS OF CREDITORS - -------------------------------------------------------------------------------- The proceeds and all other payments under this certificate will be exempt from the claims of creditors to the extent permitted by law. The proceeds and payments may not be assigned or withdrawn before becoming payable without our agreement. - -------------------------------------------------------------------------------- 21. RIGHT TO MAKE CHANGES - -------------------------------------------------------------------------------- We reserve the right to make certain changes if, in our judgment, they would best serve the interest of the participants of certificates such as this or would be appropriate in carrying out the purposes of such certificates. Any changes will be made only to the extent and in the manner permitted by applicable laws. Also, when required by law, we will obtain your approval of the changes and approval from any appropriate regulatory authority. If any changes result in a material change in the underlying investment of A Subaccounts to which the reserves for this certificate are allocated, we will notify you of such change. You may then make a new election under the Investment / Transfer Option provision. - -------------------------------------------------------------------------------- 22. ANNUAL STATEMENT - -------------------------------------------------------------------------------- We will furnish you with reports annually, or more frequently, as required by applicable law. They will include: (i) a statement of the investments held in each Fund; and (ii) a statement of the condition and value of this certificate which will show the number of Accumulation Units, if any, credited to each Subaccount, the value of each Accumulation Unit, and the Accumulated Value of this certificate. 18 - -------------------------------------------------------------------------------- 23. MISCELLANEOUS - -------------------------------------------------------------------------------- If the Accumulated Value of this certificate becomes zero, we reserve the right to terminate this certificate. Under Massachusetts law, all income, gains and losses, realized or unrealized, of the Separate Accounts shall be credited to or charged against the amounts placed in the Separate Accounts without regard to our other income, gains and losses. The assets of the Separate Accounts are owned solely by us. We are not a trustee with respect to any part or the whole of those assets. The portion of the assets in the Separate Accounts equal to the reserves and other liabilities under this certificate with respect to the Separate Accounts shall not be chargeable with liabilities arising out of any other business we may conduct. In place of operating each Separate Account as a unit investment trust, we reserve the right to make investments directly, operating the Separate Account as a "management-type investment company" under the Act, or in any other form permitted by law, the investment adviser of which would be us or an affiliate. The Separate Account assets would be invested as provided with respect to the investment objectives of the Separate Account. 19 Communications about this certificate should be sent to the Company at its Servicing Office at John Hancock Place, Boston, Massachusetts 02117. GROUP ANNUITY CERTIFICATE Variable Annuity Nonparticipating - not eligible for dividends Initial Premium shown on page 3 All benefits, payments and values under this certificate which are based on the investment experience of a Separate Account are variable and not guaranteed as to fixed dollar amount. BP EX-99.4.D 6 FORM OF NURSING HOME WAIVER Exhibit 4(d) [LOGO OF JOHN HANCOCK Variable Life Insurance Company APPEARS HERE] - -------------------------------------------------------------------------------- NURSING HOME WAIVER OF CONTINGENT DEFERRED SALES LOAD ("CDSL") RIDER WAIVER OF CDSL IN EVENT OF OWNER'S CONFINEMENT TO NURSING HOME FACILITY AS DEFINED AND LIMITED - -------------------------------------------------------------------------------- We agree, subject to the terms and conditions of this Rider and the certificate, to waive any applicable Contingent Deferred Sales Load ("CDSL") prior to the date annuity payments have commenced if beginning at least 30 days after the Date of Issue all of the following conditions have been met: 1. you become confined to a Nursing Home Facility for at least 90 consecutive days; 2. you are receiving Skilled Nursing Care; 3. such Skilled Nursing Care is based on a Physician's plan in accordance with accepted standards of medical practice, and is Medically Necessary; 4. such Skilled Nursing Care is needed because of your inability to perform at least two of the Activities of Daily Living without Human Assistance because of either Physical Impairment or Cognitive Impairment; 5. such Skilled Nursing Care is received while the certificate is in force, and is not assigned; and 6. the written request for a withdrawal and adequate proof of confinement on a form satisfactory to us is received by us no later than 90 days after discharge from a Nursing Home Facility. This Rider is made a part of the certificate to which it is attached, in consideration of: (a) the application, a copy of which is attached to and made a part of the certificate; and (b) payment of the applicable rider charge as shown on page 3 of the certificate. This Rider may not be issued subsequent to the Date of Issue of the certificate. Definitions "Activities of Daily Living" means the following activities: Dressing, which means your ability to get clothes from closets or drawers and put them on and take them off, including undergarments, outer garments, and the use of fasteners and braces, if worn. Dressing includes the ability to fasten your shoes and to put on and take off any artificial limbs. Eating, which means feeding yourself once the meal has been prepared and made available. Feeding yourself is specifically the ability to bring food, including beverages, to your mouth and the ability to chew and swallow food. Eating includes your ability to administer yourself any tube feedings or nutrition through a catheter into the blood stream, if required. Eating does not include the preparation of food. Toileting, which means your ability to get to and from the toilet, get onto and off of the toilet, clean oneself after elimination, perform associated personal hygiene, and adjust your clothing after toileting. If you have an ostomy or catheter, toileting includes your ability to empty the ostomy equipment. Transferring from bed to chair, which means your ability to get into or out of a bed of chair even if you use canes, quad canes, walkers, crutches, grab bars or other support devices. Maintaining continence, which means your ability to maintain control of urination and bowel movements. Maintaining continence includes your ability to use ostomy supplies or other devices such as catheters. "Cognitive Impairment" means loss of intellectual functioning (such as thinking, remembering, and reasoning) which interferes with a person's ability to perform the Activities of Daily Living. An individual with a Cognitive Impairment would require Human Assistance in the form of verbal direction and/or supervision in order to perform the Activities of Daily Living. NURSC96 VNH01 "Human Assistance" means physical, hands on, assistance in the case of Physical Impairment or verbal direction or supervision in the case of a Cognitive Impairment, which helps another person to perform Activities of Daily Living. "Medically Necessary" means appropriate and consistent with the diagnosis in accord with accepted standards of practice, and which could not have been omitted without adversely affecting the individual's condition. "Nursing Home Facility" means a facility which meets all of the following requirements: 1. it is located in the United States or its territories; 2. it is licensed and operated to provide Skilled Nursing Care for a charge including room and board, according to the laws of the jurisdiction in which it is located; 3. it must administer programs of treatment and observation that are ordered by and are part of a Physician's plan of care; 4. it provides Skilled Nursing Care under the supervision of a registered nurse (RN); and 5. can accommodate three or more persons. Nursing Home Facility does not include any of the following: . any home health care, including a place owned or operated by your spouse, children, parents, grandparents, grandchildren, siblings, or in-laws; . a hospital, regardless of whether it provides Skilled Nursing Care; . a rest home, adult day care center, or assisted care living facility that does not provide, as its primary function, Skilled Nursing Care. "Physical Impairment" means a loss of physical functioning which interferes with a person's ability to perform the Activities of Daily Living. A person with a physical impairment would require hands-on Human Assistance in order to perform the Activities of Daily Living. "Physician" is a licensed medical doctor (MD) or a licensed doctor of osteopathy (DO) practicing within the scope of his or her license. Physician does not include you, a spouse, children, parents, grandparents, grandchildren, siblings, or in-laws. "Skilled Nursing Care" means nursing care that meets all of the following requirements: 1. its primary function is to provide daily professional nursing care for your benefit. 2. it is performed under the orders of a Physician; 3. it is performed by a registered nurse, licensed vocational nurse, licensed practical nurse, physical therapist, occupational therapist, speech therapist, respiratory therapist, or registered dietician; 4. it is available on a 24-hour basis. "You" and "Your" mean the Participant as shown on page 3 of the certificate. NURSC96 VNH02 Termination This Rider will terminate on the earliest of the following: 1. termination of the certificate; 2. the lapse or exchange of the certificate; 3. your written request to discontinue the Rider; 4. the Annuitant's death; 5. the Date of Maturity of the certificate. Signed for the Company at Boston, Massachusetts. Secretary NURSC96 VNH03 [LOGO OF JOHN HANCOCK Variable Life Insurance Company APPEARS HERE] - -------------------------------------------------------------------------------- NURSING HOME WAIVER OF CONTINGENT DEFERRED SALES LOAD ("CDSL") RIDER WAIVER OF CDSL IN EVENT OF OWNER'S CONFINEMENT TO NURSING HOME FACILITY AS DEFINED AND LIMITED - -------------------------------------------------------------------------------- We agree, subject to the terms and conditions of the Rider and the certificate, to waive any applicable Contingent Deferred Sales Load ("CDSL") prior to the date annuity payments have commenced if beginning at least 30 days after the Date of Issue all of the following conditions have been met: 1. the Participant becomes confined to a Nursing Home Facility for at least 90 consecutive days; 2. the Participant is receiving Skilled Nursing Care; 3. such Skilled Nursing Care is based on a Physician's plan in accordance with accepted standards of medical practice, and is Medically Necessary; 4. such Skilled Nursing Care is needed because of the Participant's inability to perform at least two of the Activities of Daily Living without Human Assistance because of either Physical Impairment or Cognitive Impairment; 5. such Skilled Nursing Care is received while the certificate is in force, and is not assigned; and 6. the written request for a withdrawal and adequate proof of confinement on a form satisfactory to us is received by us no later than 90 days after discharge from a Nursing Home Facility. The Rider is made a part of the certificate to which it is attached, in consideration of: (a) the application, a copy of which is attached to and made a part of the certificate; and (b) payment of the applicable rider charge as shown on page 3 of the certificate. The Rider may not be issued subsequent to the Date of Issue of the certificate. Definitions "Activities of Daily Living" means the following activities: Dressing, which means the Participant's ability to get clothes from closets or drawers and put them on and take them off, including undergarments, outer garments, and the use of fasteners and braces, if worn. Dressing includes the ability of the Participant to fasten shoes and to put on and take off any artificial limbs. Eating, which means feeding oneself once the meal has been prepared and made available. Feeding oneself is specifically the Participant's ability to bring food, including beverages, to the Participant's mouth and the ability to chew and swallow food. Eating includes the Participant's ability to administer to oneself any tube feedings or nutrition through a catheter into the blood stream, if required. Eating does not include the preparation of food. Toileting, which means the Participant's ability to get to and from the toilet, get onto and off of the toilet, clean oneself after elimination, perform associated personal hygiene, and adjust one's clothing after toileting. If Participant has an ostomy or catheter, toileting includes the Participant's ability to empty the ostomy equipment. Transferring from bed to chair, which means the Particpant's ability to get into or out of a bed of chair even if the Participant uses canes, quad canes, walkers, crutches, grab bars or other support devices. Maintaining continence, which means the Participant's ability to maintain control of urination and bowel movements. Maintaining continence includes the Participant's ability to use ostomy supplies or other devices such as catheters. "Cognitive Impairment" means loss of intellectual functioning (such as thinking, remembering, and reasoning) which interferes with a person's ability to perform the Activities of Daily Living. An individual with a Cognitive Impairment would require Human Assistance in the form of verbal direction and/or supervision in order to perform the Activities of Daily Living. NURSG96 VNH01 "Human Assistance" means physical, hands on, assistance in the case of Physical Impairment or verbal direction or supervision in the case of a Cognitive Impairment, which helps another person to perform Activities of Daily Living. "Medically Necessary" means appropriate and consistent with the diagnosis in accord with accepted standards of practice, and which could not have been omitted without adversely affecting the individual's condition. "Nursing Home Facility" means a facility which meets all of the following requirements: 1. it is located in the United States or its territories; 2. it is licensed and operated to provide Skilled Nursing Care for a charge including room and board, according to the laws of the jurisdiction in which it is located; 3. it must administer programs of treatment and observation that are ordered by and are part of a Physician's plan of care; 4. it provides Skilled Nursing Care under the supervision of a registered nurse (RN); and 5. can accommodate three or more persons. Nursing Home Facility does not include any of the following: . any home health care, including a place owned or operated by the Participant's spouse, children, parents, grandparents, grandchildren, siblings, or in-laws; . a hospital, regardless of whether it provides Skilled Nursing Care; . a rest home, adult day care center, or assisted care living facility that does not provide, as its primary function, Skilled Nursing Care. "Physical Impairment" means a loss of physical functioning which interferes with a person's ability to perform the Activities of Daily Living. A person with a physical impairment would require hands-on Human Assistance in order to perform the Activities of Daily Living. "Physician" is a licensed medical doctor (MD) or a licensed doctor of osteopathy (DO) practicing within the scope of his or her license. Physician does not include the Participant, the Participant's spouse, children, parents, grandparents, grandchildren, siblings, or in-laws. "Skilled Nursing Care" means nursing care that meets all of the following requirements: 1. its primary function is to provide daily professional nursing care for the Participant's benefit. 2. it is performed under the orders of a Physician; 3. it is performed by a registered nurse, licensed vocational nurse, licensed practical nurse, physical therapist, occupational therapist, speech therapist, respiratory therapist, or registered dietician; 4. it is available on a 24-hour basis. NURSG96 VNH02 Termination The Rider will terminate on the earliest of the following: 1. termination of the certificate; 2. the lapse or exchange of the certificate; 3. the Participant's written request to discontinue the Rider; 4. the Annuitant's death; 5. the Date of Maturity of the certificate. Signed for the Company at Boston, Massachusetts. Secretary NURSG96 VNH03 EX-99.4.E 7 ONE YEAR STEPPED-UP DEATH BENEFIT RIDER Exhibit 4(e) [LOGO OF JOHN HANCOCK Variable Life Insurance Company APPEARS HERE] RIDER ONE YEAR STEPPED-UP DEATH BENEFIT The Death Benefit provision of your certificate, Section 9, is replaced by the following: If the Annuitant dies before the Date of Maturity, we will pay the Death Benefit to the Beneficiary. The Death Benefit will equal the greatest of : (i) the Accumulated Value adjusted by any Market Value Adjustment, as of the date of receipt of due proof of the Annuitant's death; (ii) the amount of the premiums paid less the amount of all partial withdrawals made, if any; and (iii) the Accumulated Value as of any Certificate anniversary preceding the date of receipt of due proof of the Annuitant's death and preceding the Certificate anniversary nearest the Annuitant's 81st birthday plus any premiums paid less any partial withdrawals made since such Certificate anniversary. Notwithstanding any of the above, the following will apply upon the death of the Participant, if the Accumulated Value has not already been converted into Annuity Units: (i) If the Beneficiary is the spouse of the Participant, the Beneficiary may continue the certificate in force as Participant. (ii) If the Beneficiary is not the spouse of the Participant, or if the Beneficiary is the spouse of the Participant but does not choose to continue the certificate, we must pay, in accordance with the Internal Revenue Code, the Death Benefit (or the Surrender Value if the Participant is not the Annuitant) in full to the Beneficiary within five years of the Participant's death or apply the Accumulated Value in full towards the purchase of a life annuity for the Beneficiary with payments beginning within one year of the Participant's death. This Rider is made a part of the certificate to which it is attached and is effective on the Date of Issue of the certificate. Consideration for this Rider is the application, a copy of which is attached to the certificate, and (b) payment of the applicable rider charge as shown on page 3 of the certificate. This Rider will terminate and the Death Benefit provision appearing in the certificate will become effective upon the earlier of: (i) receipt of written notice at our Servicing Office that you elect to terminate this Rider; (ii) the Date of Maturity; (iii) the date the certificate is surrendered; (iv) the date the certificate is exchanged; (v) the date the certificate is terminated (vi) the date of the Annuitant's death. Signed for the Company at Boston, Massachusetts. STEPC-96 Variable Life Insurance Company RIDER ONE YEAR STEPPED-UP DEATH BENEFIT The Death Benefit provision of the certificate, Section 9, is replaced by the following: If the Annuitant dies before the Date of Maturity, we will pay the Death Benefit to the Beneficiary. The Death Benefit will equal the greatest of: (i) the Accumulated Value adjusted by any Market Value Adjustment, as of the date of receipt of due proof of the Annuitant's death; (ii) the amount of the premiums paid less the amount of all partial withdrawals made, if any; and (iii) the Accumulated Value as of any Certificate anniversary preceding the date of receipt of due proof of the Annuitant's death and preceding the Certificate anniversary nearest the Annuitant's 81st birthday plus any premiums paid less any partial withdrawals made since such Certificate anniversary. Notwithstanding any of the above, the following will apply upon the death of the Participant, if the Accumulated Value has not already been converted into Annuity Units: (i) If the Beneficiary is the spouse of the Participant, the Beneficiary may continue the certificate in force as Participant. (ii) If the Beneficiary is not the spouse of the Participant, or if the Beneficiary is the spouse of the Participant but does not choose to continue the certificate, we must pay, in accordance with the Internal Revenue Code, the Death Benefit (or the Surrender Value if the Participant is not the Annuitant) in full to the Beneficiary within five years of the Participant's death or apply the Accumulated Value in full towards the purchase of a life annuity for the Beneficiary with payments beginning within one year of the Participant's death. The Rider is made a part of the certificate to which it is attached and is effective on the Date of Issue of the certificate. Consideration for the Rider is the application, a copy of which is attached to the certificate, and (b) payment of the applicable rider charge as shown on page 3 of the certificate. The Rider will terminate and the Death Benefit provision appearing in the certificate will become effective upon the earlier of: (i) receipt of written notice at our Servicing Office that the Participant elects to terminate the Rider; (ii) the Date of Maturity; (iii) the date the certificate is surrendered; (iv) the date the certificate is exchanged; (v) the date the certificate is terminated; (vi) the date of the Annuitant's death. Signed for the Company at Boston, Massachusetts. STEPG-96 EX-99.4.F 8 ACCIDENTAL DEATH BENEFIT RIDER Exhibit 4(f) [LOGO OF JOHN HANCOCK Variable Life Insurance Company APPEARS HERE] RIDER - -------------------------------------------------------------------------------- ACCIDENTAL DEATH BENEFIT RIDER ADDITIONAL BENEFIT IN EVENT OF ANNUITANT'S ACCIDENTAL DEATH AS DEFINED AND LIMITED (Applicable prior to Annuitant's 80th Birthday) - -------------------------------------------------------------------------------- We agree, subject to the terms and conditions of this Rider and the certificate, to pay an Accidental Death Benefit ("ADB") to the Beneficiary. Such ADB will be payable on receipt at our Servicing Office of due proof of the accidental death of the Annuitant. Such proof must directly show all of the following: (1) Death resulted solely from an accidental bodily injury; (2) Death occurred within 90 days of that injury; (3) The accidental injury occurred while this Rider was in force; (4) Both the injury and death occurred (i) prior to the Annuitant's 80th birthday, (ii) prior to the Date of Maturity of the certificate, (iii) prior to the surrender date of the certificate, if surrendered. The ADB payable is that sum which equals the Accumulated Value on the date of the accident which results in the Annuitant's death. The total ADB payable for all annuity certificates issued by John Hancock Mutual and Variable Life Insurance Companies on the life of the Annuitant will be limited to a maximum of $200,000. We will pay the ADB in one sum unless otherwise provided by written notice under the Settlement Provisions of the certificate. This Rider is made a part of the certificate to which it is attached and shall not have an Date of Issue later than the Date of Issue of the certificate. Consideration for this Rider is: (a) the application, a copy of which is attached to and made a part of the certificate; and (b) payment of the applicable Rider charge. ACCIDENTAL DEATH DEFINED The phrase "accidental death" means death resulting directly and solely from: a. An accidental injury; or b. A disease or infection: (i) resulting directly from an accidental injury as described; and (ii) beginning within 30 days after the date of the injury; or c. An accidental drowning. EXCEPTIONS AND EXCLUSIONS We will pay no benefit on this Rider if the Annuitant's death results, directly or indirectly, or wholly or partially, from: (1) An infection or bodily or mental infirmity or disease that existed before or began after the accidental injury. But this exception will not apply if the disease or infection is as defined above in the phrase "accidental death;" (2) Intentionally self-inflicted injury while sane; or self-inflicted injury while insane; (3) Commission by the Annuitant of an assault or a felony; (4) Travel, flight or descent in or from any kind of aircraft: (a) which is being operated for a training purpose; or (b) which the Annuitant is on to perform specific functions whether they apply to the operation of the aircraft or not; (5) War, declared or undeclared; (6) Service in an armed force of an international organization, or a country or group of countries at war, declared or undeclared; ADBC-96 (7) The voluntary use of any controlled substance as defined in Title II of the Comprehensive Drug Abuse Prevention and Control Act of 1970, as now or hereafter amended; unless the use is prescribed by a physician for the Annuitant; (8) Intoxication, which shall mean ten hundredths of one per cent or more by weight of alcohol in the Annuitant's blood; unless there is a different statutory definition in the jurisdiction in which the accidental bodily injury occurred, in which case that definition of intoxication will apply. TERMINATION This Rider will terminate on the earliest of: a. Surrender of the certificate; b. Maturity of the certificate; c. The Annuitant's 80th birthday; d. Receipt of written notice at our Servicing Office that you elect to terminate this Rider e. Exchange of the certificate. Signed for the Company at Boston, Massachusetts. ADBC-96 [LOGO OF JOHN HANCOCK Variable Life Insurance Company APPEARS HERE] RIDER - -------------------------------------------------------------------------------- ACCIDENTAL DEATH BENEFIT RIDER ADDITIONAL BENEFIT IN EVENT OF ANNUITANT'S ACCIDENTAL DEATH AS DEFINED AND LIMITED (Applicable prior to Annuitant's 80th Birthday) - -------------------------------------------------------------------------------- We agree, subject to the terms and conditions of the Rider and the certificate, to pay an Accidental Death Benefit ("ADB") to the Beneficiary. Such ADB will be payable on receipt at our Servicing Office of due proof of the accidental death of the Annuitant. Such proof must directly show all of the following: (1) Death resulted solely from an accidental bodily injury; (2) Death occurred within 90 days of that injury; (3) The accidental injury occurred while the Rider was in force; (4) Both the injury and death occurred (i) prior to the Annuitant's 80th birthday, (ii) prior to the Date of Maturity of the certificate, (iii) prior to the surrender date of the certificate, if surrendered. The ADB payable is that sum which equals the Accumulated Value on the date of the accident which results in the Annuitant's death. The total ADB payable for all annuity certificates issued by John Hancock Mutual and Variable Life Insurance Companies on the life of the Annuitant will be limited to a maximum of $200,000. We will pay the ADB in one sum unless otherwise provided by written notice under the Settlement Provisions of the certificate. The Rider is made a part of the certificate to which it is attached and shall not have an issue date later than the issue date of the certificate. Consideration for the Rider is: (a) the application, a copy of which is attached to and made a part of the certificate; and (b) payment of the applicable rider charge. ACCIDENTAL DEATH DEFINED The phrase "accidental death" means death resulting directly and solely from: a. An accidental injury; or b. A disease or infection: (i) resulting directly from an accidental injury as described; and (ii) beginning within 30 days after the date of the injury; or c. An accidental drowning. EXCEPTIONS AND EXCLUSIONS We will pay no benefit on the Rider if the Annuitant's death results, directly or indirectly, or wholly or partially, from: (1) An infection or bodily or mental infirmity or disease that existed before or began after the accidental injury. But this exception will not apply if the disease or infection is as defined above in the phrase "accidental death;" (2) Intentionally self-inflicted injury while sane; or self-inflicted injury while insane; (3) Commission by the Annuitant of an assault or a felony; (4) Travel, flight or descent in or from any kind of aircraft: (a) which is being operated for a training purpose; or (b) which the Annuitant is on to perform specific functions whether they apply to the operation of the aircraft or not; (5) War, declared or undeclared; (6) Service in an armed force of an international organization, or a country or group of countries at war, declared or undeclared; ADBG-96 (7) The voluntary use of any controlled substance as defined in Title II of the Comprehensive Drug Abuse Prevention and Control Act of 1970, as now or hereafter amended; unless the use is prescribed by a physician for the Annuitant; (8) Intoxication, which shall mean ten hundredths of one per cent or more by weight of alcohol in the Annuitant's blood; unless there is a different statutory definition in the jurisdiction in which the accidental bodily injury occurred, in which case that definition of intoxication will apply. TERMINATION The Rider will terminate on the earliest of: a. Surrender of the certificate; b. Maturity of the certificate; c. The Annuitant's 80th birthday; d. Receipt of written notice at our Servicing Office that the Particpant elects to terminate the Rider; e. Exchange of the certificate. Signed for the Company at Boston, Massachusetts. ADBG-96 EX-99.4.G 9 CONTRACT APPLICATION Exhibit 5 (Form N-4) Exhibit 4(g)(Form S-1) - ----------------------------------------------------------------------------------------------------------------------------- Application For Variable Annuity ANNUITIES [LOGO OF John Hancock Funds, Inc. JOHN HANCOCK Contract Number _____________ John Hancock Servicing Office, P.O. Box 9116, Boston, MA 02205-9116 APPEARS HERE] --------------------------------------------------------------------------------------------------------------- Participant __________________________________ __________/_____/_________ ____/____/____ [_]Male Name Social Security No./Tax ID Date of Birth [_]Female _______________________________________________________________________________________ Street City State Zip Code - ----------------------------------------------------------------------------------------------------------------------------- Joint Participant (spouse only) __________________________________ __________/_____/_________ ____/____/____ [_]Male Name Social Security No./Tax ID Date of Birth [_]Female _______________________________________________________________________________________ Street City State Zip Code - ----------------------------------------------------------------------------------------------------------------------------- Annuitant (if other than Participant) __________________________________ __________/_____/_________ ____/____/____ [_]Male Name Social Security No./Tax ID Date of Birth [_]Female _______________________________________________________________________________________ Street City State Zip Code - ----------------------------------------------------------------------------------------------------------------------------- Beneficiary Relationship Provisional Date of Maturity: Guarantee Period ending prior to the Annuitant's [_] 85th Birthday (Non-Qualified) [_] 70th Birthday (Qualified) [_] Other age________ - ----------------------------------------------------------------------------------------------------------------------------- Fund Selection Initial Investment $__________________ Percentages Must be Whole and Total 100% ++++ + ____% International VA Fund ____% Emerging Equities VA Fund + ____% Diversified Core Equity VA Fund ____% Discovery VA Fund + ____% Sovereign Investors VA Fund ____% 500 Index VA Fund + ____% Sovereign Bond VA Fund ____% Strategic Income VA Fund + ____% Global Income VA Fund ____% Money Market VA Fund + + MVA (by Initial Guarantee Period*) + ____% 1 Year ____% 2 Years ____% 3 Years ____% 4 Years ___% 5 Years + ____% 6 Years ____% 7 Years ____% 8 Years ____% 9 Years ___% 10 Years ++++ *all guarantee periods subject to availability - ----------------------------------------------------------------------------------------------------------------------------- Telephone Transfer Option [_] Yes [_]No I/we direct the Company to act upon telephone instructions from the owner (a trustee, if the owner is a trust; or an authorized business official, if the owner is a business entity) to change future payment allocations and/or transfer existing funds among the investment options subject to the provisions of the annuity. - ----------------------------------------------------------------------------------------------------------------------------- Tax Qualified Plans [_] IRA [_] Direct Transfer [_] Rollover [_] Other________________________ - ----------------------------------------------------------------------------------------------------------------------------- Suitability [_] I have completed a Client Profile Form and am satisfied that the annuity is suitable as applied for. - ----------------------------------------------------------------------------------------------------------------------------- Special Requests Riders [_] Accidental Death Benefit [_] One Year Stepped Up-Death Benefit [_] Waiver of Conditional Deferred Surrender Loads due to Nursing Home Confinement [_]Other___________________________________________ - -----------------------------------------------------------------------------------------------------------------------------
Form 156-JHF1-96 - -------------------------------------------------------------------------------- Additional Premium Payments Request for Premium Notices: Amount $__________________ [_] Annual [_] Semi-Annual [_] Quarterly [_] Other__________ - - - - Direct Premium Payment Programs Please [_] I/we authorize John Hancock to begin making automatic monthly staple withdrawals from my/our account at the financial institution indicated. your I/we understand that this authorization does not affect the terms of voided my/our annuity. (Special tax rules apply to IRA contributions.) Monthly check Amount $___________________ here - - - - ____________________________________ _______________________________ Financial Institution Account Number [_] I would like to have my annuity premium payment deducted automatically from my payroll check. Please send me a payroll deduction authorization form. [_] I would like to have my annuity premium payment deducted automatically from my Social Security or Federal Government check. Please submit the Government Standard Form 1199A to authorize automatic payment into your John Hancock annuity. Complete Sections A, B, C, and F of the 1199A, and sign. John Hancock will contact the appropriate government agency on your behalf. For information about obtaining a Form 1199A, call 1-800-225-5291. - -------------------------------------------------------------------------------- Replacement Information Will the Annuity applied for replace or change any existing annuity or life insurance? [_] Yes [_] No If yes, Issuer___________________________ Contract Type________________________ Contract Number_________________________________________________________________ [_] 1035 Exchange (please submit cost basis information) Have you purchased another John Hancock annuity during the previous 12 months? [_] Yes [_] No [_] RECEIPT OF A PROSPECTUS IS HEREBY ACKNOWLEDGED. If not checked, a prospectus will be mailed to you. - -------------------------------------------------------------------------------- Your Signature(s) and Taxpayer Identification Number Certification I/we represent: (1) that the number shown on this form is my/our correct taxpayer identification number, and (2) that I/we are not subject to 31% backup withholding, either because I/we are exempt from backup withholding, the Internal Revenue Service has notified me/us that I/we are subject to backup withholding as a result of a failure to report all interest or dividends, or the Internal Revenue Service has notified me/us that I/we are no long subject to backup withholding. (If you are currently subject to backup withholding due to a Internal Revenue Service notice, strike out clause #2 above.) I/we acknowledge that I/we have read and completed, as appropriate, all items contained on this application. I/we understand values and annuity payments which are based upon investment experience of a seperate account are variable and not guaranteed as to dollar amount. I/we also acknowledge that the annuity will be subject to the telephone exchange and loan priviledges described in the Series Trust's current prospectus (unless indicated otherwise) and agree that the Series Trust will not be liable for any loss in acting on any written or telephone instructions that are reasonably believed to be authentic. I/we further represent that my/our investment objective are the same as those stated in the current prospectus which I/we have received, read and understood. If this annuity is for a corporation, business organization or trust, I/we represent that the individuals signing below have the proper authority to enter into this contract. Amounts payable under this certificate may be subject to a Market Value Adjustment. ______________________________ ______________ __________________ _______ Owner Signature Joint Owner Additional Joint Date Signature Owner Signature [_] Check here if you wish a Statement of Additional Information - -------------------------------------------------------------------------------- Registered Representative Information Is the annuity applied for intended to replace or change any existing annuity or life insurance? [_] Yes [_] No _______________________________________ _____________________________________ Registered Representative (R.R.) Name Firm Name _______________________________________ _____________________________________ Branch or Agency Number R.R. Number Branch or Agency Address _______________________________________ _____________________________________ Registered Representative Signature City State ZIP _______________________________________ _____________________________________ Registered Representative Phone Branch or Agency Phone Extension -----END PRIVACY-ENHANCED MESSAGE-----