As filed with the U.S. Securities and Exchange Commission on April 16, 2002.

File No. 33-64945
- --------------------------------------------------------------------------------

U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------

POST-EFFECTIVE AMENDMENT NO. 6
TO
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 (I.R.S. Employer
of Incorporation or Industrial Classification Identification No.)
Organization) Code Number)

John Hancock Place
Insurance and Separate Accounts Dept.- Law Sector
Boston, Massachusetts 02117
(617) 572-9196
(Address, including zip code and telephone number,
including area code, of registrant's principal executive offices)

------------

Arnold R. Bergman, Esquire
John Hancock Variable Life Insurance Company
Insurance and Separate Accounts Dept.- Law Sector
John Hancock Place
Boston, Massachusetts 02117
(Name, address including zip code, and telephone number)

------------

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)

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 and Page 3

3. Summary Information, Address and
Telephone Number, Risk Factors and
Ratio of Earnings to Fixed Charges....................Guide to this prospectus;
Basic Information; John Hancock Annuity
Servicing Office; How will the value of
my investment in the contract change
over time? What fees and charges will be
deducted from my contract? Experts and
financial statements.

4. Use of Proceeds.......................................How the guarantee period works

5. Determination of Offering Price.......................Not Applicable

6. Dilution..............................................Not Applicable

7. Selling Security Holders..............................Not Applicable

8. Plan of Distribution..................................Distribution of Contracts

9. Description of Securities to be
Registered............................................What is the contract? What annuity
benefits does the contract provide?
Who should purchase a contract, The
accumulation period.

10. Interests of Named Experts and
Counsel...............................................Not Applicable

11. Information with Respect to the
Registrant............................................Description of JHVLICO

12. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities...................................... Not Applicable

PROSPECTUS DATED MAY 1, 2002

- --------------------------------------------------------------------------------
REVOLUTION ACCESS VARIABLE ANNUITY
- --------------------------------------------------------------------------------

a deferred combination fixed and variable annuity contract issued by
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY ("JHVLICO")
JOHN HANCOCK VARIABLE ACCOUNT JF

The contract enables you to earn fixed rates of interest that we guarantee
for stated periods of time ("guarantee periods") and investment-based
returns in the following variable investment options:

VARIABLE INVESTMENT OPTION MANAGED BY
- -------------------------- ----------

Equity Index ..................................... SSgA Funds Management, Inc.
Large Cap Value .................................. T. Rowe Price Associates, Inc.
Large Cap Value CORE/SM/ ......................... Goldman Sachs Asset Management
Large Cap Growth ................................. Independence Investment LLC
Large Cap Aggressive Growth ...................... Alliance Capital Management L.P.
Growth & Income .................................. Independence Investment LLC and Putnam Investment Management LLC
Fundamental Value ................................ Wellington Management Company, LLP
Multi Cap Growth ................................. Janus Capital Management LLC
Fundamental Growth ............................... Putnam Investment Management LLC
Small/Mid Cap CORE/SM/ ........................... Goldman Sachs Asset Management
Small/Mid Cap Growth ............................. Wellington Management Company, LLP
Small Cap Equity ................................. Capital Guardian Trust Company
Small Cap Value .................................. T. Rowe Price Associates, Inc.
Small Cap Growth ................................. John Hancock Advisers, LLC
V.A. Relative Value .............................. John Hancock Advisers, LLC
AIM V.I. Premier Equity .......................... A I M Advisors, Inc.
AIM V.I. Capital Development ..................... A I M Advisors, Inc.
Fidelity VIP Growth .............................. Fidelity Management & Research Company
Fidelity VIP Contrafund(R) ....................... Fidelity Management & Research Company
MFS Investors Growth Stock ....................... MFS Investment Management(R)
MFS Research ..................................... MFS Investment Management(R)
MFS New Discovery ................................ MFS Investment Management(R)
International Equity Index ....................... Independence Investment LLC
International Opportunities ...................... T. Rowe Price International, Inc.
Fidelity VIP Overseas ............................ Fidelity Management & Research Company
Emerging Markets Equity .......................... Morgan Stanley Investment Management Inc.
Janus Aspen Worldwide Growth ..................... Janus Capital Management LLC
Real Estate Equity ............................... Independence Investment LLC and Morgan Stanley Investment Management Inc.
Health Sciences .................................. Putnam Investment Management LLC
V.A. Financial Industries ........................ John Hancock Advisers, LLC
V.A. Technology .................................. John Hancock Advisers, LLC
Managed .......................................... Independence Investment LLC and Capital Guardian Trust Company
Global Balanced .................................. Capital Guardian Trust Company
Short-Term Bond .................................. Independence Investment LLC
Bond Index ....................................... Mellon Bond Associates, LLP
Active Bond ...................................... John Hancock Advisers, LLC
V.A. Strategic Income ............................ John Hancock Advisers, LLC
High Yield Bond .................................. Wellington Management Company, LLP
Global Bond ...................................... Capital Guardian Trust Company
Money Market ..................................... Wellington Management Company, LLP

The variable investment options shown on page 1 are those available as of the
date of this prospectus. We may add, modify or delete variable investment
options in the future.

When you select one or more of these variable investment options, we invest
your money in the corresponding investment option(s) of one or more of the
following: the John Hancock Declaration Trust, the John Hancock Variable Series
Trust I, the AIM Variable Insurance Funds, Fidelity's Variable Insurance
Products Fund (Service Class) and Variable Insurance Products Fund II (Service
Class), the Janus Aspen Series (Service Shares Class), and the MFS Variable
Insurance Trust (Initial Class) (together, "the Series Funds"). In this
prospectus, the investment options of the Series Funds are referred to as funds.
In the prospectuses for the Series Funds, the investment options may also be
referred to as "funds," "portfolios" or "series."

Each Series Fund is a so-called "series" type mutual fund registered with the
Securities and Exchange Commission ("SEC"). The investment results of each
variable investment option you select will depend on those of the corresponding
fund of one of the Series Funds. Each of the funds is separately managed and has
its own investment objective and strategies. Attached at the end of this
prospectus is a prospectus for each Series Fund. The Series Fund prospectuses
contain detailed information about each available fund. Be sure to read those
prospectuses before selecting any of the variable investment options shown on
page 1.

For amounts you don't wish to invest in a variable investment option, you can
choose among several guarantee periods, each of which has its own guaranteed
interest rate and expiration date. If you remove money from a guarantee period
prior to its expiration, however, we may increase or decrease your contract's
value to compensate for changes in interest rates that may have occurred
subsequent to the beginning of that guarantee period. This is known as a "market
value adjustment."

JOHN HANCOCK ANNUITY SERVICING OFFICE
-------------------------------------

Mail Delivery Phone:
------------- ------

1-800-824-0335
529 Main Street
Charlestown, MA 02129
Fax:
----

1-617-886-3070

Contracts are not deposits or obligations of, or insured, enforsed, 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,
other than JHVLICO. They involve investment risks including the possible loss of
principal.

********************************************************************************

Please note that the SEC has not approved or disapproved these securities, or
determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.

GUIDE TO THIS PROSPECTUS

This prospectus contains information that you should know before you buy a
contract or exercise any of your rights under the contract. We have arranged the
prospectus in the following way:

. The first section contains an "INDEX OF KEY WORDS."

. Behind the index is the "FEE TABLE." This section highlights the various
fees and expenses you will pay directly or indirectly, if you purchase a
contract.

. The next section is called "BASIC INFORMATION." It contains basic
information about the contract presented in a question and answer format.
You should read the Basic Information before reading any other section of
the prospectus.

. Behind the Basic Information is "ADDITIONAL INFORMATION." This section
gives more details about the contract. It generally does not repeat
information contained in the Basic Information.

The Series Funds' prospectuses are attached at the end of this prospectus. You
should save these prospectuses for future reference.

- --------------------------------------------------------------------------------
IMPORTANT NOTICES

This is the prospectus - it is not the contract. The prospectus simplifies many
contract provisions to better communicate the contract's essential features.
Your rights and obligations under the contract will be determined by the
language of the contract itself. On request, we will provide the form of
contract for you to review. In any event, when you receive your contract, we
suggest you read it promptly.

We've also filed with the SEC a "Statement of Additional Information," dated May
1, 2002. This Statement contains detailed information not included in the
prospectus. Although a separate document from this prospectus, the Statement of
Additional Information has the same legal effect as if it were a part of this
prospectus. We will provide you with a free copy of the Statement upon your
request. To give you an idea what's in the Statement, we have included a copy of
the Statement's table of contents on page 64.

The contracts are not 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.

- -------------------------------------------------------------------------------

INDEX OF KEY WORDS

We define or explain each of the following key words used in this prospectus on
the pages shown below:

KEY WORD PAGE

Accumulation units...........................................................31
Annuitant....................................................................14
Annuity payments.............................................................32
Annuity period...............................................................31
Contract year................................................................15
Date of issue................................................................15
Date of maturity.............................................................31
Funds.........................................................................2
Guarantee period.............................................................16
Investment options...........................................................16
Market value adjustment......................................................16
Premium payments.............................................................14
Surrender....................................................................21
Surrender value..............................................................21
Total value of your contract.................................................16
Variable investment options...............................................cover
Withdrawal...................................................................21

FEE TABLE

The following fee table shows the various fees and expenses that you will pay,
either directly or indirectly, if you purchase a contract. The table does not
include charges for premium taxes (which may vary by state) or fees for any
optional benefit riders that you select.

ANNUAL CONTRACT FEE (APPLIES ONLY TO CONTRACTS OF LESS THAN $50,000) $30

SEPARATE ACCOUNT ANNUAL EXPENSES (AS A % OF THE AVERAGE TOTAL VALUE OF THE
CONTRACT)

. Asset-based Charge (for administration and mortality and 1.25%
expense risks)
This charge doesn't apply to amounts held in the guarantee periods.

ANNUAL FUND EXPENSES (BASED ON % OF AVERAGE NET ASSETS)

The funds must pay investment management fees and other operating expenses.
These fees and expenses are different for each fund and reduce the investment
return of each fund. Therefore, they also indirectly reduce the return you will
earn on any variable investment options you select. We may also receive payments
from a fund or its affiliates at an annual rate of up to approximately 0.35% of
the average net assets that holders of our variable life insurance policies and
variable annuity contracts have invested in that fund. Any such payments do not,
however, result in any charge to you in addition to what is disclosed below.

The following figures for the funds are based on historical fund expenses, as
a percentage (rounded to two decimal places) of each fund's average daily

net assets for 2001, except as indicated in the Notes appearing at the end of
this table. Expenses of the funds are not fixed or specified under the terms of
the policy, and those expenses may vary from year to year.

Total Fund Total Fund
Investment Distribution and Other Operating Operating Operating
Management Service Expenses With Expenses With Expenses Absent
Fund Name Fee (12b-1) Fees Reimbursement Reimbursement Reimbursement
- --------- ---------- ---------------- --------------- ------------- ---------------

JOHN HANCOCK VARIABLE SERIES
TRUST I (NOTE 1):
Equity Index ..................... 0.13% N/A 0.07% 0.20% 0.20%
Large Cap Value .................. 0.75% N/A 0.08% 0.83% 0.83%
Large Cap Value CORE /SM/ ........ 0.75% N/A 0.10% 0.85% 0.88%
Large Cap Growth ................. 0.38% N/A 0.03% 0.41% 0.41%
Large Cap Aggressive Growth ...... 0.87% N/A 0.10% 0.97% 1.06%
Growth & Income .................. 0.67% N/A 0.05% 0.72% 0.72%
Fundamental Value * .............. 0.89% N/A 0.10% 0.99% 1.20%
Multi Cap Growth* ................ 0.93% N/A 0.10% 1.03% 1.03%
Fundamental Growth ............... 0.90% N/A 0.10% 1.00% 1.19%
Small/Mid Cap CORE /SM/ .......... 0.80% N/A 0.10% 0.90% 1.15%
Small/Mid Cap Growth ............. 0.97% N/A 0.10% 1.07% 1.07%
Small Cap Equity ................. 0.90% N/A 0.10% 1.00% 1.02%
Small Cap Value .................. 0.95% N/A 0.10% 1.05% 1.08%
Small Cap Growth ................. 1.05% N/A 0.10% 1.15% 1.17%
International Equity Index ....... 0.17% N/A 0.10% 0.27% 0.40%
International Opportunities ...... 1.14% N/A 0.10% 1.24% 1.39%
Emerging Markets Equity .......... 1.52% N/A 0.10% 1.62% 4.24%
Real Estate Equity ............... 1.00% N/A 0.07% 1.07% 1.07%
Health Sciences .................. 1.00% N/A 0.10% 1.10% 1.19%
Managed .......................... 0.67% N/A 0.06% 0.73% 0.73%
Global Balanced .................. 1.05% N/A 0.10% 1.15% 1.36%
Short-Term Bond .................. 0.60% N/A 0.08% 0.68% 0.68%
Bond Index ....................... 0.15% N/A 0.09% 0.24% 0.24%

JOHN HANCOCK VARIABLE SERIES
TRUST I - continued (NOTE 1):
Active Bond ....................... 0.62% N/A 0.05% 0.67% 0.67%
High Yield Bond ................... 0.80% N/A 0.10% 0.90% 1.00%
Global Bond ....................... 0.85% N/A 0.10% 0.95% 0.95%
Money Market ...................... 0.25% N/A 0.07% 0.32% 0.32%

JOHN HANCOCK DECLARATION TRUST
(NOTE 2):
V.A. Relative Value ............... 0.60% N/A 0.14% 0.74% 0.74%
V.A. Financial Industries ......... 0.80% N/A 0.09% 0.89% 0.89%
V.A. Technology ................... 0.80% N/A 0.25% 1.05% 1.08%
V.A. Strategic Income ............. 0.60% N/A 0.10% 0.70% 0.70%

AIM VARIABLE INSURANCE FUNDS -
SERIES I SHARES:
AIM V.I. Premier Equity Fund* * .. 0.60% N/A 0.25% 0.85% 0.85%

AIM VARIABLE INSURANCE FUNDS -
SERIES II SHARES:
AIM V.I. Capital Development Fund . 0.75% 0.25% 0.41% 1.41% 1.41%

VARIABLE INSURANCE PRODUCTS FUND
- SERVICE CLASS (NOTE 3):
Fidelity VIP Growth ............... 0.58% 0.10% 0.10% 0.78% 0.78%
Fidelity VIP Overseas ............. 0.73% 0.10% 0.20% 1.03% 1.03%

VARIABLE INSURANCE PRODUCTS FUND
II - SERVICE CLASS (NOTE 3):
Fidelity VIP Contrafund/(R)/ ...... 0.58% 0.10% 0.10% 0.78% 0.78%

MFS VARIABLE INSURANCE TRUST -
INITIAL CLASS SHARES (NOTE 4):
MFS Investors Growth Stock ........ 0.75% N/A 0.17% 0.92% 0.92%
MFS Research ...................... 0.75% N/A 0.15% 0.90% 0.90%
MFS New Discovery ................. 0.90% N/A 0.16% 1.06% 1.09%

JANUS ASPEN SERIES - SERVICE SHARES
CLASS (NOTE 5):
Janus Aspen Worldwide Growth ...... 0.65% 0.25% 0.04% 0.94% 0.94%

NOTES TO ANNUAL FUND EXPENSES

(1) Under its current investment management agreements with the John
Hancock Variable Series Trust I, John Hancock Life Insurance Company
reimburses a fund when the fund's "other fund expenses" exceed 0.10%
of the fund's average daily net assets (0.00% for Equity Index).
Percentages shown for the Large Cap Value and Small Cap Value funds
are calculated as if the current management fee schedules, which apply
to these funds effective May 1, 2001, were in effect for all of 2001.
Percentages shown for the Multi Cap Growth, Small/Mid Cap Growth,
Small Cap Growth, International Opportunities, Emerging Markets,
Short-Term Bond and High Yield Bond funds are calculated as if the
current management fee schedules, which apply to these funds effective
October 1, 2001, were in effect for all of 2001. Percentages shown for
the Health Sciences Fund are annualized. "CORE/SM/" is a service mark
of Goldman, Sachs & Co.

* Fundamental Value was formerly "Large/Mid Cap Value" and Multi Cap
Growth was formerly "Mid Cap Growth."

(2) Percentages shown for John Hancock Declaration Trust funds reflect the
investment management fees currently payable and other fund expenses
allocated in 2001. John Hancock Advisers, LLC has agreed to limit
temporarily other expenses of each fund to 0.25% of the fund's average
daily assets, at least until April 30, 2003.

* * AIM V.I. Premier Equity Fund was formerly "AIM V.I. Value Fund."

(3) Actual annual class operating expenses were lower for each of the
Fidelity VIP funds shown because a portion of the brokerage
commissions that the fund paid was used to reduce the fund's expense.
In addition, through rearrangements with the fund's custodian, credits
realized as a result of uninvested cash balances are used to reduce a
portion of the fund's custodian expenses. These offsets may be
discontinued at any time.

(4) MFS Variable Insurance Trust funds have an expense offset arrangement
which reduces each fund's custodian fee based upon the amount of cash
maintained by the fund with its custodian and dividend disbursing
agent. Each fund may enter into other similar arrangements and
directed brokerage arrangements, which would also have the effect of
reducing the fund's expenses. "Other Operating Expenses" do not take
into account these expense reductions, and are therefore higher than
the actual expenses of the funds. Had these fee reductions been taken
into account, "Total Fund Operating Expenses with Reimbursement" would
equal 0.90% for MFS Investors Growth Stock, 0.89% for MFS Research and
1.05% for MFS New Discovery. MFS Investment Management(R) (also doing
business as Massachusetts Financial Services Company) has
contractually agreed, subject to reimbursement, to bear expenses for
the MFS New Discovery Fund, such that the fund's "Other Expenses"
(after taking into account the expense offset arrangement described
above) does not exceed 0.15% annually. This contractual fee
arrangement will continue until at least May 1, 2003, unless changed
with the consent of the board of trustees which oversees the fund.

(5) Percentages shown for the Janus Aspen Fund are based upon expenses for
the year ended December 31, 2001. Expenses are shown without the
effect of any expense offset arrangement.

EXAMPLES

The four examples on the following pages illustrate the current expenses you
would pay, directly or indirectly, on a $1,000 investment allocated to one of
the variable investment options, assuming a 5% annual return on assets.

Examples I and II assume you have purchased a contract with the optional
enhanced death benefit rider, the optional earnings enhancement death benefit
rider, the optional accumulated value enhancement rider and the optional
guaranteed retirement income benefit rider. We refer to this contract as the
"All Rider Contract."

Examples III and IV assume you have purchased a contract with no optional
benefit riders. We refer to this contract as the "No Rider Contract."

The examples do not include any applicable premium taxes and should not be
considered representations of past or future expenses. Actual charges may be
greater or less than those shown, and not all optional benefit riders are
available in all states. The examples assume fund expenses at rates set forth
above for 2001, after reimbursements. The annual contract fee has been included
as an annual percentage of assets.

Example I If you "surrender" (turn in) your All Rider Contract at the end of the
- ---------
applicable time period, you would pay:

- ---------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years

- ---------------------------------------------------------------------------
Equity Index $28 $ 84 $144 $305
- ---------------------------------------------------------------------------
Large Cap Value $34 $103 $175 $364
- ---------------------------------------------------------------------------
Large Cap Value CORE/SM/ $34 $104 $176 $366
- ---------------------------------------------------------------------------
Large Cap Growth $30 $ 91 $154 $325
- ---------------------------------------------------------------------------
Large Cap Aggressive Growth $35 $107 $181 $377
- ---------------------------------------------------------------------------
Growth & Income $33 $100 $169 $354
- ---------------------------------------------------------------------------
Fundamental Value $35 $108 $182 $378
- ---------------------------------------------------------------------------
Multi Cap Growth $36 $109 $184 $382
- ---------------------------------------------------------------------------
Fundamental Growth $35 $108 $183 $379
- ---------------------------------------------------------------------------
Small/Mid Cap CORE/SM/ $34 $105 $178 $370
- ---------------------------------------------------------------------------
Small/Mid Cap Growth $36 $110 $186 $385
- ---------------------------------------------------------------------------
Small Cap Equity $35 $108 $183 $379
- ---------------------------------------------------------------------------
Small Cap Value $36 $109 $185 $384
- ---------------------------------------------------------------------------
Small Cap Growth $35 $105 $178 $371
- ---------------------------------------------------------------------------
V.A. Relative Value $33 $100 $170 $356
- ---------------------------------------------------------------------------
AIM V.I. Premier Equity $34 $104 $176 $366
- ---------------------------------------------------------------------------
AIM V.I. Capital Development $40 $120 $202 $415
- ---------------------------------------------------------------------------
Fidelity VIP Growth $33 $102 $172 $359
- ---------------------------------------------------------------------------
Fidelity VIP Contrafund(R) $33 $102 $172 $359
- ---------------------------------------------------------------------------
MFS Investors Growth Stock $35 $106 $179 $372
- ---------------------------------------------------------------------------
MFS Research $34 $105 $178 $370
- ---------------------------------------------------------------------------
MFS New Discovery $36 $110 $185 $384
- ---------------------------------------------------------------------------
International Equity Index $28 $ 87 $147 $312
- ---------------------------------------------------------------------------
International Opportunities $38 $115 $194 $400
- ---------------------------------------------------------------------------
Fidelity VIP Overseas $36 $109 $184 $382
- ---------------------------------------------------------------------------
Emerging Markets Equity $42 $126 $211 $432
- ---------------------------------------------------------------------------
Janus Aspen Worldwide Growth $35 $106 $180 $374
- ---------------------------------------------------------------------------
Real Estate Equity $36 $110 $186 $385
- ---------------------------------------------------------------------------
Health Sciences $36 $111 $187 $388
- ---------------------------------------------------------------------------
V.A. Financial Industries $34 $105 $177 $369
- ---------------------------------------------------------------------------
V.A. Technology $36 $109 $185 $384
- ---------------------------------------------------------------------------
Managed $33 $100 $170 $355
- ---------------------------------------------------------------------------
Global Balanced $37 $112 $190 $392
- ---------------------------------------------------------------------------
Short-Term Bond $32 $ 99 $167 $350
- ---------------------------------------------------------------------------
Bond Index $28 $ 86 $146 $309
- ---------------------------------------------------------------------------
Active Bond $32 $ 98 $167 $349
- ---------------------------------------------------------------------------
V.A. Strategic Income $32 $ 99 $168 $352
- ---------------------------------------------------------------------------
High Yield Bond $34 $105 $178 $370
- ---------------------------------------------------------------------------
Global Bond $35 $107 $180 $375
- ---------------------------------------------------------------------------
Money Market $29 $ 88 $150 $317
- ---------------------------------------------------------------------------

Example II If you begin receiving payments under one of the annuity payment
options of an All Rider Contract at the end of the applicable time period, or if
you do not surrender your All Rider Contract, you would pay:

- ---------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years

Example III If you "surrender" (turn in) your No Rider Contract at the end of
the applicable time period, or if you do not surrender your All Rider Contract,
you would pay:

- ---------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years

- ---------------------------------------------------------------------------
Equity Index $15 $48 $ 83 $181
- ---------------------------------------------------------------------------
Large Cap Value $22 $67 $115 $248
- ---------------------------------------------------------------------------
Large Cap Value CORE/SM/ $22 $68 $116 $250
- ---------------------------------------------------------------------------
Large Cap Growth $18 $54 $ 94 $204
- ---------------------------------------------------------------------------
Large Cap Aggressive Growth $23 $72 $123 $263
- ---------------------------------------------------------------------------
Growth & Income $21 $64 $110 $237
- ---------------------------------------------------------------------------
Fundamental Value $23 $72 $124 $265
- ---------------------------------------------------------------------------
Multi Cap Growth $24 $73 $126 $269
- ---------------------------------------------------------------------------
Fundamental Growth $24 $72 $124 $266
- ---------------------------------------------------------------------------
Small/Mid Cap CORE/SM/ $23 $69 $119 $255
- ---------------------------------------------------------------------------
Small/Mid Cap Growth $24 $75 $128 $273
- ---------------------------------------------------------------------------
Small Cap Equity $24 $72 $124 $266
- ---------------------------------------------------------------------------
Small Cap Value $24 $74 $127 $271
- ---------------------------------------------------------------------------
Small Cap Growth $23 $70 $119 $256
- ---------------------------------------------------------------------------
V.A. Relative Value $21 $65 $111 $239
- ---------------------------------------------------------------------------
AIM V.I. Premier Equity $22 $68 $116 $250
- ---------------------------------------------------------------------------
AIM V.I. Capital Development $28 $85 $144 $306
- ---------------------------------------------------------------------------
Fidelity VIP Growth $21 $66 $113 $243
- ---------------------------------------------------------------------------
Fidelity VIP Contrafund(R) $21 $66 $113 $243
- ---------------------------------------------------------------------------
MFS Investors Growth Stock $23 $70 $120 $257
- ---------------------------------------------------------------------------
MFS Research $23 $69 $119 $255
- ---------------------------------------------------------------------------
MFS New Discovery $24 $74 $127 $272
- ---------------------------------------------------------------------------
International Equity Index $16 $50 $ 87 $189
- ---------------------------------------------------------------------------
International Opportunities $26 $80 $136 $290
- ---------------------------------------------------------------------------
Fidelity VIP Overseas $24 $73 $126 $269
- ---------------------------------------------------------------------------
Emerging Markets Equity $30 $91 $155 $326
- ---------------------------------------------------------------------------
Janus Aspen Worldwide Growth $23 $71 $121 $260
- ---------------------------------------------------------------------------
Real Estate Equity $24 $75 $128 $273
- ---------------------------------------------------------------------------
Health Sciences $25 $75 $129 $276
- ---------------------------------------------------------------------------
V.A. Financial Industries $22 $69 $118 $254
- ---------------------------------------------------------------------------
V.A. Technology $24 $74 $127 $271
- ---------------------------------------------------------------------------
Managed $21 $64 $110 $238
- ---------------------------------------------------------------------------
Global Balanced $25 $77 $132 $281
- ---------------------------------------------------------------------------
Short-Term Bond $20 $63 $108 $233
- ---------------------------------------------------------------------------
Bond Index $16 $49 $ 85 $186
- ---------------------------------------------------------------------------
Active Bond $20 $62 $107 $232
- ---------------------------------------------------------------------------
V.A. Strategic Income $21 $63 $109 $235
- ---------------------------------------------------------------------------
High Yield Bond $23 $69 $119 $255
- ---------------------------------------------------------------------------
Global Bond $23 $71 $122 $261
- ---------------------------------------------------------------------------
Money Market $17 $52 $ 89 $194
- ---------------------------------------------------------------------------

Example IV If you begin receiving payments under one of the annuity payment
options of a No Rider Contract at the end of the applicable time period, or if
you do not surrender your No Rider Contract, you would pay:

- ---------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years

BASIC INFORMATION

This "Basic Information" section provides answers to commonly asked questions
about the contract. Here are the page numbers where the questions and answers
appear:

QUESTION STARTING ON PAGE
-------- ----------------

What is the contract? .................................................................................. 14

Who owns the contract? ................................................................................. 14

Is the owner also the annuitant? ....................................................................... 14

How can I invest money in a contract? .................................................................. 14

How will the value of my investment in the contract change over time? ................................... 16

What annuity benefits does the contract provide? ....................................................... 17

To what extent can JHVLICO vary the terms and conditions of its contracts? .............................. 17

What are the tax consequences of owning a contract? ..................................................... 17

How can I change my contract's investment allocations? .................................................. 18

What fees and charges will be deducted from my contract? ................................................ 20

How can I withdraw money from my contract? ............................................................. 21

What happens if the owner or the annuitant dies before my contract's date of maturity? ................. 22

What other benefits can I purchase under a contract? .................................................... 25

Can I return my contract? .............................................................................. 27

WHAT IS THE CONTRACT?

The contract is a deferred payment variable annuity contract. An "annuity
contract" provides a person (known as the "annuitant" or "payee") with a series
of periodic payments. Because this contract is also a "deferred payment"
contract, the "annuity payments" will begin on a future date, called the
contract's "date of maturity." Under a "variable" annuity contract, the amount
you have invested can increase or decrease in value daily based upon the value
of the variable investment options chosen. If your annuity is provided under a
master group contract, the term "contract" as used in this prospectus refers to
the certificate you will be issued and not to the master group contract.

WHO OWNS THE CONTRACT?

That's up to you. Unless the contract provides otherwise, the owner of the
contract is the person who can exercise the rights under the contract, such as
the right to choose the investment options or the right to surrender the
contract. In many cases, the person buying the contract will be the owner.
However, you are free to name another person or entity (such as a trust) as
owner. In writing this prospectus, we've assumed that you, the reader, are the
person or persons entitled to exercise the rights and obligations under
discussion. If a contract has joint owners, both must join in any written notice
or request.

IS THE OWNER ALSO THE ANNUITANT?

In many cases, the same person is both the annuitant and the owner of a
contract. The annuitant is the person whose lifetime is used to measure the
period of time when we make various forms of annuity payments. Also, the
annuitant receives payments from us under any annuity option that commences
during the annuitant's lifetime. We may permit you to name another person as
annuitant or joint annuitant if that person meets our underwriting standards. We
may also permit you to name as joint annuitants two persons other than yourself
if those persons meet our underwriting standards.

HOW CAN I INVEST MONEY IN A CONTRACT?

Premium payments

We call the investments you make in your contract premiums or premium
payments. In general, you need at least a $25,000 initial premium payment to
purchase a contract. If you purchase your contract through the automatic
investment plan, different minimums may apply. If you choose to contribute more
money into your contract, each subsequent premium payment must be at least $200
($100 for the annuity direct deposit program). If your contract's total value
ever falls to zero, we may terminate it. Therefore, you may need to pay more
premiums to keep the contract in force.

Applying for a contract

An authorized representative of the broker-dealer or financial institution
through whom you purchase your contract will assist you in (1) completing an
application or placing an order for a contract and (2) transmitting it, along
with your initial premium payment, to the John Hancock Annuity Servicing Office.

Once we receive your initial premium payment and all necessary information, we
will issue your contract and invest your initial premium payment within two
business days. If the information is not in good order, we will contact you to
get the necessary information. If for some reason, we are unable to complete
this process within 5 business days, we will either send back your money or get
your permission to keep it until we get all of the necessary information.

In certain situations, we will issue a contract upon receiving the order of
your broker-dealer or financial institution but delay the effectiveness of the
contract until we receive your signed application. (What we mean by "delaying
effectiveness" is that we will not allow allocations to the variable investment
options until we receive

your signed application.) In those situations, if we do not receive your signed
application within our required time period, we will deem the contract void from
the beginning and return your premium payment.

We measure the years and anniversaries of your contract from its date of
issue. We use the term contract year to refer to each period of time between
anniversaries of your contract's date of issue.

Limits on premium payments

You can make premium payments of up to $1,000,000 in any one contract year.
The total of all new premium payments and transfers that you allocate to any
one variable investment option in any one contract year may not exceed
$1,000,000. While the annuitant is alive and the contract is in force, you can
make premium payments at any time before the date of maturity. However,

YOU MAY NOT MAKE ANY PREMIUM
PAYMENTS AFTER THE ANNUITANT
IF YOUR CONTRACT IS USED TO FUND REACHES AGE
- -------------------------------------------------------------------------
a "tax qualified plan"* 70 1/2**
- -------------------------------------------------------------------------
a non-tax qualified plan 85
- -------------------------------------------------------------------------

* as that term is used in "Tax Information," beginning on page 29.
** except for a Roth IRA, which has no age limit.

We will not issue a contract if the proposed annuitant is older than age 84.
We may waive, however, waive this underwriting limit.

Ways to make premium payments

Premium payments made by check or money order should be:

. drawn on a U.S. bank,

. drawn in U.S. dollars, and

. made payable to "John Hancock."

We will not accept credit card checks. Nor will we accept starter or third
party checks that fail to meet our administrative requirements.

Premium payments after the initial premium payment should be sent to the John
Hancock Annuity Servicing Office at the address shown on page 2 of this
prospectus. We will also accept premium payments by wire. We will accept your
initial premium payment by exchange from another insurance company. You can find
information about wire payments under "Premium payments by wire," below. You can
find information about other methods of premium payment by contacting your
broker-dealer or by contacting the John Hancock Annuity Servicing Office.

Once we have issued your contract and it becomes effective, we credit you with
any additional premiums you pay as of the day we receive them at the John
Hancock Annuity Servicing Office.

Premium payments by wire

If you purchase your contract through a broker-dealer firm or financial
institution, you may transmit your initial premium payment by wire order. Your
wire orders must include information necessary to allocate the premium payment
among your selected investment options.

up to 5 business days while attempting to obtain the missing information. If we
can't obtain the information within 5 business days, we will immediately return
your premium payment, unless you tell us to hold the premium payment for 5 more
days pending completion of the application. Nevertheless, until we receive and
accept a properly completed and signed application, we will not:

. issue a contract;

. accept premium payments; or

. allow other transactions.

After we issue your contract, subsequent premium payments may be transmitted
by wire through your bank. Information about our bank, our account number, and
the ABA routing number may be obtained from the John Hancock Annuity Servicing
Office. Banks may charge a fee for wire services.

HOW WILL THE VALUE OF MY INVESTMENT IN THE CONTRACT CHANGE OVER TIME?

Prior to a contract's date of maturity, the amount you've invested in any
variable investment option will increase or decrease based upon the investment
experience of the corresponding fund. Except for certain charges we deduct, your
investment experience will be the same as if you had invested in the fund
directly and reinvested all fund dividends and distributions in additional
shares.

Like a regular mutual fund, each fund deducts investment management fees and
other operating expenses. These expenses are shown in the fee table beginning on
page 5. However, unlike a mutual fund, we will also deduct charges relating to
the annuity guarantees and other features provided by the contract. These
charges reduce your investment performance and the amount we have credited to
your contract in any variable investment option. We describe these charges under
"What fees and charges will be deducted from my contract?" beginning on page 20.

The amount you've invested in a guarantee period will earn interest at the
rate we have set for that period. The interest rate depends upon the length of
the guarantee period you select. In states where approved, we currently make
available various guarantee periods with durations of up to ten years. As long
as you keep your money in a guarantee period until its expiration date, we bear
all the investment risk on that money.

However, if you prematurely transfer, "surrender" or otherwise withdraw money
from a guarantee period we will increase or reduce the remaining value in your
contract by an amount that approximates the impact that any changes in interest
rates would have had on the market value of a debt instrument with terms
comparable to that guarantee period. This "market value adjustment" (or "MVA")
imposes investment risks on you. We describe how the market value adjustments
work in "Calculation of market value adjustment ('MVA')" beginning on page 25.

At any time before the date of maturity, the total value of your contract
equals:

. the total amount you invested,

. minus all charges we deduct,

. minus all withdrawals you have made,

. plus or minus any positive or negative MVAs that we have made at the time of
any premature withdrawals or transfers you have made from a guarantee period,

. plus or minus each variable investment option's positive or negative
investment return that we credit daily to any of your contract's value while
it is in that option, and

. plus the interest we credit to any of your contract's value while it is in a
guarantee period.

WHAT ANNUITY BENEFITS DOES THE CONTRACT PROVIDE?

If your contract is still in effect on its date of maturity, it enters what is
called the annuity period. During the annuity period, we make a series of fixed
or variable payments to you as provided under one of our several annuity
options. The form in which we will make the annuity payments, and the proportion
of such payments that will be on a fixed basis and on a variable basis, depend
on the elections that you have in effect on the date of maturity.

Therefore you should exercise care in selecting your date of maturity and your
choices that are in effect on that date.

You should carefully review the discussion under "The annuity period,"
beginning on page 31, for information about all of these choices you can make.

TO WHAT EXTENT CAN JHVLICO VARY THE TERMS AND CONDITIONS OF ITS CONTRACTS?

State law insurance requirements

Insurance laws and regulations apply to us in every state in which our
contracts are sold. As a result, various terms and conditions of your contract
may vary from the terms and conditions described in this prospectus, depending
upon where you reside. These variations will be reflected in your contract or in
endorsements attached to your contract.

Variations in charges or rates

We may vary the charges, guarantee periods, and other terms of our contracts
where special circumstances result in sales or administrative expenses,
mortality risks or other risks that are different from those normally associated
with the contracts. These include the types of variations discussed under
"Certain changes" in the Additional Information section of this prospectus.

WHAT ARE THE TAX CONSEQUENCES OF OWNING A CONTRACT?

In most cases, no income tax will have to be paid on amounts you earn under a
contract until these earnings are paid out. All or part of the following
distributions from a contract may constitute a taxable payout of earnings:

. partial withdrawal (including systematic withdrawals)

. full withdrawal ("surrender")

. payment of death benefit proceeds as a single sum upon the annuitant's
death

. periodic payments under one of our annuity payment options.

In addition, if you elect the accumulated value enhancement rider, the
Internal Revenue Service might take the position that the annual charge for this
rider is deemed a withdrawal from the contract which is subject to income tax
and, if applicable, the special 10% penalty tax for withdrawals before the age
of 59 1/2.

How much you will be taxed on a distribution is based upon complex tax rules
and depends on matters such as:

. the type of the distribution,

. when the distribution is made,

. the nature of any tax qualified retirement plan for which the contract is
being used, if any, and

. the circumstances under which the payments are made.

If your contract is issued in connection with a tax-qualified retirement plan,
all or part of your premium payments may be tax-deductible.

completed by a certain period of time. This effectively limits the period of
time during which you can continue to derive tax deferral benefits from any
tax-deductible premiums you paid or on any earnings under the contract.

THE FAVORABLE TAX BENEFITS AVAILABLE FOR ANNUITY CONTRACTS ISSUED IN
CONNECTION WITH TAX-QUALIFIED PLANS ARE ALSO GENERALLY AVAILABLE FOR OTHER TYPES
OF INVESTMENTS OF TAX-QUALIFIED PLANS, SUCH AS INVESTMENTS IN MUTUAL FUNDS,
EQUITIES AND DEBT INSTRUMENTS. YOU SHOULD CAREFULLY CONSIDER WHETHER THE
EXPENSES UNDER AN ANNUITY CONTRACT ISSUED IN CONNECTION WITH A TAX-QUALIFIED
PLAN, AND THE INVESTMENT OPTIONS, DEATH BENEFITS AND LIFETIME ANNUITY INCOME
OPTIONS PROVIDED UNDER SUCH AN ANNUITY CONTRACT, ARE SUITABLE FOR YOUR NEEDS AND
OBJECTIVES.

HOW CAN I CHANGE MY CONTRACT'S INVESTMENT ALLOCATIONS?

Allocation of premium payments

When you apply for your contract, you specify the variable investment options
or guarantee periods (together, your investment options) in which your premium
payments will be allocated. You may change this investment allocation for future
premium payments at any time. Any change in allocation will be effective as of
receipt of your request at the John Hancock Annuity Servicing Office.

Currently, you may use a maximum of 18 investment options over the life of
your contract. For purposes of this limit, each contribution or transfer of
assets into a variable investment option or guarantee period that you are not
then using or have not previously used counts as one "use" of an investment
option. Renewing a guarantee period upon its expiration does not count as a new
use, however, if the new guarantee period has the same number of years as the
expiring one.

Transferring your assets

Up to 12 times during each year of your contract, you may transfer, free of
any charge,

. all or part of the assets held in one VARIABLE INVESTMENT OPTION to any other
available variable investment option or guarantee period, or

. all or part of the assets held in one GUARANTEE PERIOD to any other available
guarantee period or variable investment option (these transfers may, however,
incur a market value adjustment - either positive or negative).

Currently, we impose no charge for transfers of more than 12 per contract
year. However, we reserve the right to impose a charge of up to $25 on any
transfers in excess of the 12 free transfers or to prohibit any such transfers
altogether. Transfers under our strategic rebalancing or dollar-cost averaging
programs do not count toward the 12 you are allowed each year. However, you may
not:

. transfer more than $1,000,000 in a contract year into any one variable
investment option or guarantee period, without our prior approval,

. make any transfer that would cause you to exceed the above-mentioned
maximum of 18 investment options,

. make any transfers, during the annuity period, to or from a guarantee
period, or

. make any transfer during the annuity period that would result in more than
four investment options being used at once.

We reserve the right to prohibit a transfer less than 30 days prior to the
contract's date of maturity.

The contract you are purchasing was not designed for professional market
timing organizations or other persons that use programmed or frequent transfers.
The use of such transfers may be disruptive to a fund. We reserve the right to
reject any premium payment or transfer request from any person, if in our
judgment, a fund

would be unable to invest effectively in accordance with its investment
objectives and policies, or would otherwise be potentially adversely affected.

Procedure for transferring your assets

You may request a transfer in writing or, if you have authorized telephone
transfers, by telephone or fax. All transfer requests should be directed to the
John Hancock Annuity Servicing Office at the location shown on page 2.

Your request should include:

. your name,

. daytime telephone number,

. contract number,

. the names of the investment options to and from which assets are being
transferred, and

. the amount of each transfer.

The request becomes effective on the day we receive your request, in proper
form, at the John Hancock Annuity Servicing Office.

Telephone transfers

Once you have completed a written authorization, you may request a transfer by
telephone or by fax. If the fax request option becomes unavailable, another
means of telecommunication will be substituted.

If you authorize telephone transactions, you will be liable for any loss,
expense or cost arising out of any unauthorized or fraudulent telephone
instructions which we reasonably believe to be genuine, unless such loss,
expense or cost is the result of our mistake or negligence. We employ procedures
which provide safeguards against the execution of unauthorized transactions, and
which are reasonably designed to confirm that instructions received by telephone
are genuine. These procedures include requiring personal identification, tape
recording calls, and providing written confirmation to the owner. If we do not
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, we may be liable for any loss due to unauthorized or
fraudulent instructions.

The contract you are purchasing was not designed for professional market
timing organizations or other persons or entities that use programmed or
frequent transfers. For reasons such as that, we reserve the right to change our
telephone transaction policies or procedures at any time. We also reserve the
right to suspend or terminate the privilege altogether.

Dollar-cost averaging program

You may elect, at no cost, to automatically transfer assets from any variable
investment option to one or more other variable investment options on a monthly,
quarterly, semiannual, or annual basis.

The following conditions apply to the dollar-cost averaging program:

. You may elect the program only if the total value of your contract equals
$15,000 or more.

. The amount of each transfer must equal at least $250.

. You may change your variable investment allocation instructions at any time
in writing or, if you have authorized telephone transfers, by telephone.

. You may discontinue the program at any time.

. The program automatically terminates when the variable investment option from
which we are taking the transfers has been exhausted.

. Automatic transfers to or from guarantee periods are not permitted.

. We reserve the right to suspend or terminate the program at any time.

Strategic rebalancing

This program automatically re-sets the percentage of your account value
allocated to the variable investment options. Over time, the variations in the
investment results for each variable investment option you've elected will shift
the percentage allocations among them. The strategic rebalancing program will
periodically transfer your account value among the variable investment options
to reestablish the preset percentages you have chosen. (You may, however, change
your variable investment allocation instructions at any time in writing or, if
you have authorized telephone transfers, by telephone.) Strategic rebalancing
would usually result in transferring amounts from a variable investment option
with relatively higher investment performance since the last rebalancing to one
with relatively lower investment performance. However, rebalancing can also
result in transferring amounts from a variable investment option with relatively
lower current investment performance to one with relatively higher current
investment performance.

This program can be elected by sending the appropriate form to our Annuity
Servicing Office. You must specify the frequency for rebalancing (monthly,
quarterly, semi-annually or annually), the preset percentage for each variable
investment option, and a future beginning date.

Once elected, strategic rebalancing will continue until we receive notice of
cancellation of the option or notice of the death of the insured person.

The guarantee periods do not participate in and are not affected by strategic
rebalancing. We reserve the right to modify, terminate or suspend the strategic
rebalancing program at any time.

WHAT FEES AND CHARGES WILL BE DEDUCTED FROM MY CONTRACT?

Asset-based charge

We deduct a daily asset-based charge that compensates us primarily for our
administrative expenses and for the mortality and expense risks that we assume
under the contracts. On an annual basis, this charge equals 1.25% of the value
of the assets you have allocated to the variable investment options. (This
charge does not apply to assets you have in our guarantee periods.)

In return for the mortality risk charge, we assume the risk that annuitants as
a class will live longer than expected, requiring us to pay a greater number of
annuity payments. In return for the expense risk charge, we assume the risk that
our expenses relating to the contracts may be higher than we expected when we
set the level of the contracts' other fees and charges, or that our revenues
from such other sources will be less than expected.

Annual contract fee

Prior to the date of maturity of your contract, we will deduct $30 each year
from your contract if it has a total value on the contract anniversary of less
than $50,000. We deduct this annual contract fee at the beginning of each
contract year after the first contract year. We also deduct it if you surrender
your contract, unless your total value is $50,000 or more at the time of
surrender. We take the deduction proportionally from each variable investment
option and each guarantee period you are then using. We reserve the right to
increase the annual contract fee to up to $50.

Premium taxes

We make deductions for any applicable premium or similar taxes based on the
amount of a premium payment. Currently, certain local jurisdictions assess a tax
of up to 5% of each premium payment.

In most cases, we deduct a charge in the amount of the tax from the total
value of the contract only at the time of annuitization, death, surrender, or
withdrawal. We reserve the right, however, to deduct the charge from each
premium payment at the time it is made. We compute the amount of the charge by
multiplying the applicable premium tax percentage times the amount you are
withdrawing, surrendering, annuitizing or applying to a death benefit.

Other charges

We offer, subject to state availability, four optional benefit riders. We
charge a separate monthly charge for each rider selected. At the beginning of
each month, we currently charge an amount equal to 1/12/th/ of the following
annual percentages:

- ----------------------------------------------------------------------------------------------------
Enhanced death benefit 0.25% of your contract's total value*
- ----------------------------------------------------------------------------------------------------
Earnings enhancement death benefit 0.25% of your contract's total value
- ----------------------------------------------------------------------------------------------------
Accumulated value enhancement 0.40% of your initial premium payment (we reserve the
right to increase this percentage on a uniform basis for all
riders issued in the same state)
- ----------------------------------------------------------------------------------------------------
Guaranteed retirement income benefit 0.30% of your contract's total value
- ----------------------------------------------------------------------------------------------------

* Rate is applicable to enhanced death benefit riders issued after May 1,
2002. In certain states, and for riders issued prior to May 1, 2002, a lower
rate may apply.

We deduct the charge proportionally from each of your investment options,
based on your value in each.

HOW CAN I WITHDRAW MONEY FROM MY CONTRACT?

Surrenders and partial withdrawals

Prior to your contract's date of maturity, if the annuitant is living, you
may:

. surrender your contract for a cash payment of its "surrender value," or

. make a partial withdrawal of the surrender value.

The surrender value of a contract is the total value of a contract, after any
market value adjustment, minus the annual contract fee, any applicable premium
-----
tax, and any applicable rider charges. We will determine the amount surrendered
or withdrawn as of the date we receive your request in proper form at the John
Hancock Annuity Servicing Office.

Certain surrenders and withdrawals may result in taxable income to you or
other tax consequences as described under "Tax information," beginning on page
34. Among other things, if you make a full surrender or partial withdrawal from
your contract before you reach age 59 1/2, an additional federal penalty of 10%
generally applies to any taxable portion of the withdrawal.

We will deduct any partial withdrawal proportionally from each of your
--------------
investment options based on the value in each, unless you direct otherwise.

Without our prior approval, you may not make a partial withdrawal:

. for an amount less than $100, or

. if the remaining total value of your contract would be less than $1,000.

We reserve the right to terminate your contract if the value of your contract
becomes zero.

You generally may not make any surrenders or partial withdrawals once we begin
making payments under an annuity option.

Systematic withdrawal plan

Our optional systematic withdrawal plan enables you to preauthorize periodic
withdrawals. If you elect this plan, we will withdraw a percentage or dollar
amount from your contract on a monthly, quarterly, semiannual or annual basis,
based upon your instructions. Unless otherwise directed, we will deduct the
requested amount from each applicable investment option in the ratio that the
value of each bears to the total value of your contract. Each systematic
withdrawal is subject to any market value adjustment that would apply to an
otherwise comparable non-systematic withdrawal. See "How will the value of my
investment in the contract change over time?" beginning on page 13. The same tax
consequences also generally will apply.

The following conditions apply to systematic withdrawal plans:

. You may elect the plan only if the total value of your contract equals
$25,000 or more.

. The amount of each systematic withdrawal must equal at least $100.

. If the amount of each withdrawal drops below $100 or the total value of your
contract becomes less that $5,000, we will suspend the plan and notify you.

. You may cancel the plan at any time.

. We reserve the right to modify the terms or conditions of the plan at any
time without prior notice.

WHAT HAPPENS IF THE OWNER OR THE ANNUITANT DIES BEFORE MY CONTRACT'S DATE OF
MATURITY?

We will pay a death benefit to the contract's beneficiary, depending on the
form of ownership and whether there is one annuitant or joint annuitants:

. If your contract is owned by a single natural person and has a single
annuitant, the death benefit is payable on the earlier of the owner's death
and the annuitant's death.

. If your contract is owned by a single natural person and has joint
annuitants, the death benefit is payable on the earliest of the owner's death
(whether or not the owner is also an annuitant) and the last annuitant's
death.

. If your contract is owned by joint owners and has a single annuitant, the
death benefit is payable on the earliest of the first owner's death (whether
or not the owner is also an annuitant) and the annuitant's death.

. If your contract is owned by joint owners and has joint annuitants, the death
benefit is payable on the earliest of the first owner's death (whether or not
the owner is also an annuitant) and the last annuitant's death.

If your contract has joint owners, each owner will automatically be deemed to
be the beneficiary of the other. This means that any death benefit payable upon
the death of one owner will be paid to the other owner. In that case, any other
beneficiary you have named would receive the death benefit only if neither joint
owner remains alive at the time the death benefit becomes payable.

We calculate the death benefit value as of the day we receive, in proper order
at the John Hancock Annuity Servicing Office:

. proof of death before the contract's date of maturity, and

. any required instructions as to method of settlement.

We will generally pay the death benefit in a single sum to the beneficiary you
chose, unless

. the death benefit is payable because of the owner's death, the designated
beneficiary is the owner's spouse, and he or she elects to continue the
contract in force (we explain contract continuation by a spouse in the
section entitled "Distributions following death of owner," on page __); or

. an optional method of settlement is in effect. If you have not elected an
optional method of settlement, the beneficiary may do so. However, if the
death benefit is less than $5,000, we will pay it in a lump sum, regardless
of any election. You can find more information about optional methods of
settlement under "Annuity options" on page __.

We will pay a "standard" death benefit, unless you have chosen either the
"enhanced death benefit" rider, the "earnings enhancement death benefit" rider,
or both. We describe these riders on the following pages.

Standard death benefit

The standard death benefit is the greater of:
-------

. the total value of your contract, adjusted by any then-applicable market
value adjustment, or

. the total amount of premium payments made, minus any partial withdrawals.

Enhanced death benefit rider

Under this rider, we will pay an enhanced death benefit (instead of the
standard death benefit) that is the greatest of:

. the amount of each premium you have paid, accumulated at 5% effective annual
interest during the rider's measuring period (less any partial withdrawals
you have taken and not including any interest on such amounts after they are
withdrawn);

. the highest total value of your contract (adjusted by any market value
adjustment) as of any anniversary of your contract during the rider's
measuring period, plus any premium payments you have made since that
----
anniversary, minus any withdrawals you have taken since that anniversary; or
-----

. the total value of your contract (adjusted by any market value adjustment) as
of the date we receive due proof of the annuitant's death.

The rider's "measuring period" includes only those contract anniversaries that
occur (1) before we receive proof of death and (2) before the measuring life
------ ------
attains age 81. The rider's "measuring life" is:

. the owner, if there is only one owner under your contract and the death
benefit is payable because the owner dies before the Maturity Date,

. the oldest owner, if there are joint owners under your contract and the death
benefit is payable because either owner dies before the Maturity Date,

. the annuitant, if there is only one annuitant under your contract and the
death benefit is payable because the annuitant dies before the Maturity Date,

. the youngest annuitant, if there are joint annuitants under your contract and
the death benefit is payable because the surviving annuitant dies during the
owner(s) lifetime(s) but before the Maturity Date.

If an owner is also an annuitant, we will generally consider that person to be
an "owner" instead of an "annuitant" for purposes of determining the rider's
measuring life.

You may elect to enhance the standard death benefit by purchasing an enhanced
death benefit rider:

. only if this rider is available in your state; and

. only when you apply for the contract; and

. only if each owner and each annuitant is under age 80 at the time you apply
for the contract. (We may waive either or both of the last two restrictions
for contracts purchased prior to the October 15, 2001 or prior to the date
this rider was available in your state.)

As long as the rider is in effect, you will pay a monthly charge for this
benefit. For a description of this charge, refer to page 20 under "Other
charges." For a more complete description of the terms and conditions of this
benefit, you should refer directly to the rider. We will provide you with a copy
on request.

This rider (and related charges) will terminate on the contract's date of
maturity, upon your surrendering the contract, or upon your written request that
we terminate it. The rider will also terminate upon a change of ownership,
except where a spousal beneficiary continues the rider after an owner's death.
(We explain contract continuation by a spouse in the section entitled
"Distributions following death of owner" on page __.)

You should carefully review the tax considerations for optional benefit riders
on page 35 before selecting this optional benefit rider

Earnings enhancement death benefit rider

Under this rider, the death benefit may be increased by an earnings
enhancement amount. The earnings enhancement amount is determined as follows:

. if all of the owners and the annuitant are under age 70 on the date your
rider is issued, the earnings enhancement amount will be 40% of the
difference between the Standard Death Benefit (or Enhanced Death Benefit, if
that rider is in effect) and your "Net Premiums," up to a maximum benefit
amount of 80% of your "Adjusted Net Premiums" prior to the date of the
decedent's death;

. if any of the owners or the annuitant is age 70 or older on the date your
rider is issued, the earnings enhancement amount will be 25% of the
difference between the Standard Death Benefit (or Enhanced Death Benefit, if
that rider is in effect) and your "Net Premiums," up to a maximum benefit
amount of 50% of your "Adjusted Net Premiums" prior to the date of the
decedent's death; but

. if there are joint annuitants under your contract, we will not count the age
of the older annuitant for either of these purposes unless the older
annuitant is also an owner.

"Net Premiums," for purposes of this rider, means premiums you paid for the
contract, less any withdrawals in excess of earnings from your contract
(including any surrender charges imposed on these withdrawals). For this
purpose, we consider withdrawals to be taken first from earnings on your
contract before they are taken from your purchase payments. "Adjusted Net
Premiums" means Net Premiums minus any premiums you paid in the 12 month period
prior to the decedent's death (excluding the initial premium).

This rider is unavailable if your contract is purchased in connection with a
tax-qualified retirement plan. In addition, you may elect to purchase an
earnings enhancement death benefit rider:

. only if this rider is available in your state; and

. only when you apply for the contract (we may waive this restriction, however,
for contracts purchased prior to October 15, 2001 or prior to the date this
rider was available in your state); and

. only if each owner and each annuitant is under age 75 at the time you apply
for the rider.

As long as the rider is in effect, you will pay a monthly charge for this
benefit. We describe this charge in our response to the question "What fees and
charges will be deducted from my contract?" For a more complete description of
the terms and conditions of this benefit, you should refer directly to the
rider. We will provide you with a copy on request.

This rider (and related charges) will terminate on the contract's date of
maturity or upon your surrendering the contract. The rider will also terminate
upon a transfer of ownership, except where a spousal beneficiary continues the
rider after an owner's death. (We explain contract continuation by a spouse in
the section entitled "Distributions following death of owner," below). Once this
rider is in effect, you cannot request that we terminate it.

In certain marketing materials, this rider may be referred to as the
"Beneficiary Tax Relief" rider because any amounts paid under this rider can be
used to cover taxes that may be due on death benefit proceeds under your
contract. Amounts paid under this rider, however, may also be subject to tax and
may be greater than or less than the amount of taxes due on the death benefits.
You should carefully review the tax considerations for optional benefit riders
on page 35 before selecting this optional benefit rider

The earnings enhancement amount decreases if you withdraw earnings that
accumulate under your contract. This rider may not be appropriate for you if you
expect to withdraw earnings.

WHAT OTHER BENEFITS CAN I PURCHASE UNDER A CONTRACT?

In addition to the enhanced death benefit rider discussed above, we currently
make available two other optional benefits if your state permits and you are
under age 75 when you apply for a contract. These optional benefits are provided
under riders that contain many terms and conditions not set forth below.
Therefore, you should refer directly to each rider for more complete
information. We will provide you with a copy on request. we may make other
riders available in the future.

Accumulated value enhancement

Under this rider, we will make a contribution to the total value of the
contract on a monthly basis if the covered person (who must be an owner and the
annuitant):

. is unable to perform at least 2 activities of daily living without human
assistance or has a cognitive impairment, AND

. is receiving certain qualified services described in the rider.

The amount of the contribution (called the "Monthly Benefit") is shown in the
specifications page of the contract. However, the rider contains an inflation
protection feature that will increase the Monthly Benefit by 5% each year after
the 7th contract year. The specifications page of the contract also contains a
limit on how much the total value of the contract can be increased by this rider
(the "benefit limit"). The rider must be in effect for 7 years before any
increase will occur.

You may elect this rider only when you apply for the contract. Under our
current administrative rules, the Monthly Benefit (without regard to the
inflation protection feature) is equivalent to 1% of your initial premium, up to
a maximum premium of $300,000. We may reduce this $300,000 limit further,
however, if you own additional annuity contracts issued by JHVLICO or its
affiliates that provide a similar benefit. The $300,000 limit applies only to
the calculation of the Monthly Benefit under the accumulated value enhancement
rider. (See "Limits on Premium Payments" on page __for a general description of
other premium limits under the contract).

There is a monthly charge for this rider. The charge is described under "Other
charges" on page 21.

total value of the contract falls below an amount equal to 25% of your initial
premium payment. You may cancel the rider by written notice at any time. The
rider charge will terminate when the rider terminates.

If you choose to continue the rider after the contract's date of maturity,
charges for the rider will be deducted from annuity payments and any Monthly
Benefit for which the covered person qualifies will be added to the next annuity
payment.

You should carefully review the tax considerations for optional benefit
riders on page 35 before selecting this optional benefit rider. In certain
marketing materials, this rider may be referred to as "CARESolutions Plus."

Guaranteed retirement income benefit

Under this rider, we will guarantee the amount of annuity payments you
receive, if the following conditions are satisfied:

. The date of maturity must be within the 30 day period following a contract
anniversary.

. If the annuitant was age 45 or older on the date of issue, the contract must
have been in effect for at least 10 contract years on the date of maturity
and the date of maturity must be on or after the annuitant's 60th birthday
and on or before the annuitant's 90th birthday.

. If the annuitant was less than age 45 on the date of issue, the contract must
have been in effect for at least 15 contract years on the date of maturity
and the date of maturity must be on or before the annuitant's 90th birthday.

You cannot elect this rider at any time after your contract is issued. If you
elect this rider you need not choose to receive the guaranteed income benefit
that it provides. Rather, unless and until such time as you exercise your option
to receive a guaranteed income benefit under this rider, you will continue to
have the option of exercising any other right or option that you would have
under the contract (including withdrawal and annuity payment options) if the
rider had not been added to it.

If you do decide to add this rider to your contract, and if you do ultimately
decide to take advantage of the guaranteed income it provides, we will
automatically provide that guaranteed income in the form of fixed payments under
our "Option A: life annuity with payments for guaranteed period" described below
under "Annuity options." The guaranteed period will automatically be a number of
years that the rider specifies, based on the annuitant's age at the annuity date
and whether your contract is purchased in connection with a tax-qualified plan.
(These specified periods range from 5 to 10 years.) You will have no discretion
to vary this form of payment, if you choose the guaranteed income benefit under
this rider.

If you exercise your rights under this rider, we guarantee that the amount we
apply to this annuity payment option will be the same amount as if your premium
payments had earned a return prescribed by the rider, rather than the return
they earned in the subaccounts you actually chose. Under this rider, we would
apply that guaranteed amount to the fixed annuity payment option specified in
the rider in the same manner and on the same terms as if you had, in the absence
of this rider, elected to apply total contract value in the same amount to that
same annuity payment option.

There is a monthly charge for this rider, which is described at page 21 under
"Other charges." The rider (and the related charges) automatically terminate if
your contract is surrendered or the annuitant dies. After you've held your
contract for 10 years, you can terminate the rider by written request.

CAN I RETURN MY CONTRACT?

In most cases, you have the right to cancel your contract within 10 days (or
longer in some states ) after you receive it. To cancel your contract, simply
deliver or mail it to:

. JHVLICO at the address shown on page 2, or

. the JHVLICO representative who delivered the contract to you.

In most states, you will receive a refund equal to the total value of your
contract on the date of cancellation, adjusted by any then-applicable market
value adjustments and increased by any charges for premium taxes deducted by us
to that date. In some states, or if your contract was issued as an "IRA", you
will receive a refund of any premiums you've paid. The date of cancellation will
be the date we receive the contract.

ADDITIONAL INFORMATION

This section of the propectus provides additional information that is not
contained in the Basic Information section on pages 13 through 27.

CONTENTS OF THIS SECTION STARTING ON PAGE

Description of JHVLICO ............................................................... 29

Who should purchase a contract? ..................................................... 29

How we support the variable investment options ....................................... 29

How we support the guarantee periods ................................................. 30

How the guarantee periods work ....................................................... 30

The accumulation period .............................................................. 31

The annuity period ................................................................... 31

Variable investment option valuation procedures ...................................... 33

Distributions following death of owner ............................................... 34

Miscellaneous provisions ............................................................. 34

Tax information ...................................................................... 34

Further information about JHVLICO .................................................... 40

Management's discussion and analysis ................................................. 42

Performance information .............................................................. 62

Reports .............................................................................. 63

Voting privileges .................................................................... 63

Certain changes ...................................................................... 63

Distribution of contracts ............................................................ 64

Experts .............................................................................. 64

Registration statement ............................................................... 64

Condensed Financial Information ...................................................... 65

JHVLICO financial statements ......................................................... 70

Appendix A - Details About Our Guarantee Periods ..................................... 107

Appendix B - Examples of Earnings Enhancement Death Benefit Calculations ............. 110

DESCRIPTION OF JHVLICO

We are JHVLICO, a stock life insurance company organized, in 1979, under the
laws of the Commonwealth of Massachusetts. We have authority to transact
business in all states, except New York. We are a wholly-owned subsidiary of
John Hancock Life Insurance Company ("John Hancock"), a Massachusetts stock life
insurance company. On February 1, 2000, John Hancock Mutual Life Insurance
Company (which was chartered in Massachusetts in 1862) converted to a stock
company by "demutualizing" and changed its name to John Hancock Life Insurance
Company. As part of the demutualization process, John Hancock became a
subsidiary of John Hancock Financial Services, Inc., a newly formed
publicly-traded corporation. John Hancock's home office is at John Hancock
Place, Boston, Massachusetts 02117. At year end 2001, John Hancock's assets were
approximately $ 81 billion and it had invested approximately $575 million in
JHVLICO in connection with JHVLICO's organization and operation.

It is anticipated that John Hancock will from time to time make additional
capital contributions to JHVLICO to enable us to meet our reserve requirements
and expenses in connection with our business. John Hancock is committed to make
additional capital contributions if necessary to ensure that we maintain a
positive net worth.

WHO SHOULD PURCHASE A CONTRACT?

We designed these contracts for individuals doing their own retirement
planning, including purchases under plans and trusts that do not qualify for
special tax treatment under the Internal Revenue Code of 1986 (the "Code"). We
also offer the contracts for purchase under:

. traditional individual retirement annuity ("IRA") plans satisfying the
requirements of Section 408 of the Code;

. non-deductible IRA plans ("Roth IRAs") satisfying the requirements of
Section 408A of the Code;

. SIMPLE IRA plans adopted under Section 408(p) of the Code;

. Simplified Employee Pension plans ("SEPs") adopted under Section 408(k)
of the Code; and

. annuity purchase plans adopted under Section 403(b) of the Code by public
school systems and certain other tax-exempt organizations.

We do not currently offer the contracts to every type of tax qualified plan,
and may not offer the contracts for all types of tax-qualified plans in the
future. In certain circumstances, we may also make the contracts available for
purchase under deferred compensation plans maintained by a state or political
subdivision or tax exempt organization under Section 457 of the Code or by
pension or profit-sharing plans qualified under section 401(a) of the Code. We
provide general federal income tax information for contracts purchased in
connection with tax qualified retirement plans beginning on page 36.

When a contract forms part of a tax-qualified plan it becomes subject to
special tax law requirements, as well as the terms of the plan documents
themselves, if any. Additional requirements may apply to plans that cover a
"self-employed individual" or an "owner-employee". Also, in some cases, certain
requirements under "ERISA" (the Employee Retirement Income Security Act of 1974)
may apply. Requirements from any of these sources may, in effect, take
precedence over (and in that sense modify) the rights and privileges that an
owner otherwise would have under a contract. Some such requirements may also
apply to certain retirement plans that are not tax-qualified.

We may include certain requirements from the above sources in endorsements or
riders to the affected contracts. In other cases, we do not. In no event,
however, do we undertake to assure a contract's compliance with all plan, tax
law, and ERISA requirements applicable to a tax-qualified or non tax-qualified
retirement plan. Therefore, if you use or plan to use a contract in connection
with such a plan, you must consult with competent legal and tax advisers to
ensure that you know of (and comply with) all such requirements that apply in
your circumstances.

To accommodate "employer-related" pension and profit-sharing plans, we provide
"unisex" purchase rates. That means the annuity purchase rates are the same for
males and females. Any questions you have as to whether you are participating in
an "employer-related" pension or profit-sharing plan should be directed to your
employer. Any question you or your employer have about unisex rates may be
directed to the John Hancock Annuity Servicing Office.

HOW WE SUPPORT THE VARIABLE INVESTMENT OPTIONS

We hold the fund shares that support our variable investment options in John
Hancock Variable Annuity Account JF (the "Account"), a separate account
established by JHVLICO under Massachusetts law. The Account is registered as a
unit investment trust under the Investment Company Act of 1940 ("1940 Act").

The Account's assets, including the Series Funds' shares, belong to JHVLICO.
Each contract provides that amounts we hold in the Account pursuant to the
contracts cannot be reached by any other persons who may have claims against us.

All of JHVLICO's general assets also support JHVLICO's obligations under the
contracts, as well as all of its other obligations and liabilities. These
general assets consist of all

JHVLICO's assets that are not held in the Account (or in another separate
account) under variable annuity or variable life insurance contracts that give
their owners a preferred claim on those assets.

HOW WE SUPPORT THE GUARANTEE PERIODS

All of JHVLICO's general assets (discussed above) support its obligations
under the guarantee periods (as well as all of its other obligations and
liabilities). To hold the assets that support primarily the guarantee periods,
we have established a "non-unitized" separate account. With a non-unitized
separate account, you have no interest in or preferential claim on any of the
assets held in the account. The investments we purchase with amounts you
allocated to the guarantee periods belong to us; any favorable investment
performance on the assets allocated to the guarantee periods belongs to us.
Instead, you earn interest at the guaranteed interest rate you selected,
provided that you don't surrender, transfer, or withdraw your assets prior to
the end of your selected guarantee period.

HOW THE GUARANTEE PERIODS WORK

Amounts you allocate to the guarantee periods earn interest at a guaranteed
rate commencing with the date of allocation. At the expiration of the guarantee
period, we will automatically transfer its total value to the Money Market
option under your contract, unless you elect to:

. withdraw all or a portion of any such amount from the contract,

. allocate all or a portion of such amount to a new guarantee period or periods
of the same or different duration as the expiring guarantee period, or

. allocate all or a portion of such amount to one or more of the variable
investment options.

You must notify us of any such election, by mailing a request to us at the
John Hancock Annuity Servicing Office at least 30 days prior to the end of the
expiring guarantee period. We will notify you of the end of the guarantee period
at least 30 days prior to its expiration. The first day of the new guarantee
period or other reallocation will begin the day after the end of the expiring
guarantee period.

We currently make available guarantee periods with durations up to ten years.
If you select a guarantee period that extends beyond your contract's date of
maturity, your maturity date will automatically be changed to the annuitant's
95th birthday (or a later date, if we approve). We reserve the right to add or
delete guarantee periods for new allocations to or from those that are available
at any time.

Guaranteed interest rates

Each guarantee period has its own guaranteed rate. 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 time you allocate or transfer money to a guarantee period, a new
guarantee period, with a new interest rate, begins to run with respect to that
amount. The amount allocated or transferred earns a guaranteed rate that will
continue unchanged until the end of that period.

- --------------------------------------------------------------------------------
We make the final determination of guaranteed rates and guarantee periods to be
declared. We cannot predict or assure the level of any future guaranteed rates
or the availability of any future guaranteed periods.
- --------------------------------------------------------------------------------

You may obtain information concerning the guaranteed rates applicable to the
various guarantee periods, and the durations of the guarantee periods offered at
any time, by calling the John Hancock Annuity Servicing Office at the telephone
number shown on page 2.

Calculation of market value adjustment ("MVA")

If you withdraw, surrender, transfer, or otherwise remove money from a
guarantee period prior to its expiration date, we will apply a market value
adjustment. A market value adjustment also generally applies to:

. death benefits pursuant to your contract,

. amounts you apply to an annuity option, and

. amounts paid in a single sum in lieu of an annuity.

The market value adjustment increases or decreases your remaining value in the
guarantee period. If the value in that guarantee period is insufficient to pay
any negative MVA, we will deduct any excess from the value in your other
investment options pro-rata based on the value in each. If there is insufficient
value in your other investment options, we will in no event pay out more than
the surrender value of the contract.

Here is how the MVA works:

- --------------------------------------------------------------------------------
We compare

. the guaranteed rate of the guarantee period from which
the assets are being taken WITH

. the guaranteed rate we are currently offering for guarantee periods of
the same duration as remains on the guarantee period from which the
assets are being taken.

If the first rate exceeds the second by more than 1/2 %, the market value
adjustment produces an increase in your contract's value.

If the first rate does not exceed the second by at least 1/2 %, the market value
adjustment produces a decrease in your contract's value.
- --------------------------------------------------------------------------------

For this purpose, we consider that the amount withdrawn from the guarantee
period includes the amount of any negative MVA and is reduced by the amount of
any positive MVA.

The mathematical formula and sample calculations for the market value
adjustment appear in Appendix A.

THE ACCUMULATION PERIOD

Your value in our variable investment options

Each premium payment or transfer that you allocate to a variable investment
option purchases "accumulation units" of that variable investment option.
Similarly, each withdrawal or transfer that you take from a variable investment
option (as well as certain charges that may be allocated to that option) result
in a cancellation of such accumulation units.

Valuation of accumulation units

To determine the number of accumulation units that a specific transaction will
purchase or cancel, we use the following formula:

-----------------------------------------------------
dollar amount of transaction
DIVIDED BY
value of one accumulation unit for the applicable
variable investment option at the time of such
transaction
-----------------------------------------------------

The value of each accumulation unit will change daily depending upon the
investment performance of the fund that corresponds to that variable investment
option and certain charges we deduct from such investment option. (See below
under "Variable investment option valuation procedures.")

Therefore, at any time prior to the date of maturity, the total value of your
contract in a variable investment option can be computed according to the
following formula:

-----------------------------------------------------
number of accumulation units in the variable
investment options
TIMES
value of one accumulation unit for the applicable
variable investment option at that time
-----------------------------------------------------

Your value in the guarantee periods

On any date, the total value of your contract in a guarantee period equals:

. the amount of premium payments or transferred amounts allocated to the
guarantee period, MINUS

. the amount of any withdrawals or transfers paid out of the guarantee
period, MINUS

. the amount of any negative market value adjustments resulting from such
withdrawals or transfers, PLUS

. the amount of any positive market value adjustments resulting from such
withdrawals and transfers, MINUS

. the amount of any charges and fees deducted from that guarantee period,
PLUS

. interest compounded daily on any amounts in the guarantee period from time to
time at the effective annual rate of interest we have declared for that
guarantee period.

THE ANNUITY PERIOD

Annuity payments are made to the annuitant, if still living. If more than one
annuitant is living at the date of maturity, the payments are made to the
younger of them.

Date of maturity

Your contract specifies the date of maturity, when payments from one of our
annuity options are scheduled to begin. You initially choose a date of maturity
when you complete your application for a contract. Unless we otherwise permit,
the date of maturity must be:

. at least 6 months after the date the first premium payment is applied to
your contract, and

. no later than the maximum age specified in your contract (normally age
95).

Subject always to these requirements, you may subsequently change the date of
maturity. The John Hancock Annuity Servicing Office must receive your new
selection at least 31 days prior to the new date of maturity, however. Also, if
you are selecting or changing your date of maturity for a contract issued under
a tax qualified plan, special limits apply. (See "Contracts purchased for a
tax-qualified plan," beginning on page 36.)

Choosing fixed or variable annuity payments

During the annuity period, the total value of your contract must be allocated
to no more than four investment options. During the annuity period, we do not
offer the guarantee periods. Instead, we offer annuity payments on a fixed basis
as one investment option, and annuity payments on a variable basis for EACH
variable investment option.

We will generally apply (1) amounts allocated to the guarantee periods as of
the date of maturity to provide annuity payments on a fixed basis and (2)
amounts allocated to variable investment options to provide annuity payments on
a variable basis. If you are using more than four investment options on the date
of maturity, we will divide your contract's value among the four investment
options with the largest values (considering all guarantee periods as a single
option), pro-rata based on the amount of the total value of your contract that
you have in each.

We will make a market value adjustment to any remaining guarantee period
amounts on the date of maturity, before we apply such amounts to an annuity
payment option. We will also deduct any premium tax charge.

Once annuity payments commence, you may not make transfers from fixed to
variable or from variable to fixed.

Selecting an annuity option

Each contract provides, at the time of its issuance, for annuity payments to
commence on the date of maturity pursuant to Option A: "life annuity with 10
years guaranteed" (discussed under "Annuity options" on page 33).

Prior to the date of maturity, you may select a different annuity option.
However, if the total value of your contract on the date of maturity is less
than $5,000, Option A: "life annuity with 10 years guaranteed" will apply,
regardless of any other election that you have made. You may not change the form
of annuity option once payments commence.

If the initial monthly payment under an annuity option would be less than $50,
we may make a single sum payment equal to the total surrender value of your
contract on the date the initial payment would be payable. Such single payment
would replace all other benefits.

. Subject to that $50 minimum limitation, your beneficiary may elect an annuity
option if:

. you have not made an election prior to the annuitant's death;

. the beneficiary is entitled to payment of a death benefit of at least
$5,000 in a single sum; and

. the beneficiary notifies us of the election prior to the date the
proceeds become payable.

Variable monthly annuity payments

We determine the amount of the first variable monthly payment under any
variable investment option by using the applicable annuity purchase rate for the
annuity option under which the payment will be made. The contract sets forth
these annuity purchase rates. In most cases they vary by the age and gender of
the annuitant or other payee.

The amount of each subsequent variable annuity payment under that variable
investment option depends upon the investment performance of that variable
investment option.

Here's how it works:

. we calculate the actual net investment return of the variable investment
option (after deducting all charges) during the period between the dates for
determining the current and immediately previous monthly payments.

. if that actual net investment return exceeds the "assumed investment rate"
(explained below), the current monthly payment will be larger than the
previous one.

. if the actual net investment return is less than the assumed investment rate,
the current monthly payment will be smaller than the previous one.

Assumed investment rate

The assumed investment rate for any variable portion of your annuity payments
will be 3 1/2 % per year, except as follows.

You may elect an assumed investment rate of 5% or 6%, provided such a rate is
available in your state. If you elect a higher assumed investment rate, your
initial variable annuity payment will also be higher. Eventually, however, the
monthly variable annuity payments may be smaller than if you had elected a lower
assumed investment rate.

Fixed monthly annuity payments

The dollar amount of each fixed monthly annuity payment is specified during
the entire period of annuity payments,

according to the provisions of the annuity option selected. To determine such
dollar amount we first, in accordance with the procedures described above,
calculate the amount to be applied to the fixed annuity option as of the date of
maturity. We then divide the difference by $1,000 and multiply the result by the
greater of:
- -------

. the applicable fixed annuity purchase rate shown in the appropriate table
in the contract; or

. the rate we currently offer at the time of annuitization. (This current rate
may be based on the sex of the annuitant, unless prohibited by law.)

Annuity options

Here are some of the annuity options that are available, subject to the terms
and conditions described above. We reserve the right to make available optional
methods of payment in addition to those annuity options listed here and in your
contract.

OPTION A: LIFE ANNUITY WITH PAYMENTS FOR A GUARANTEED PERIOD - We will make
monthly payments for a guaranteed period of 5, 10, or 20 years, as selected by
you or your beneficiary, and after such period for as long as the payee lives.
If the payee dies prior to the end of such guaranteed period, we will continue
payments for the remainder of the guarantee period to a contingent payee,
subject to the terms of any supplemental agreement issued.

Federal income tax requirements currently applicable to contracts used with
H.R. 10 plans and individual retirement annuities 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.

OPTION B: LIFE ANNUITY WITHOUT FURTHER PAYMENT ON DEATH OF PAYEE - We will
make monthly payments to the payee as long as he or she lives. We guarantee no
minimum number of payments.

OPTION C: JOINT AND LAST SURVIVOR - We will provide payments monthly,
quarterly, semiannually, or annually, for the payee's life and the life of the
payee's spouse/joint payee. Upon the death of one payee, we will continue
payments to the surviving payee. All payments stop at the death of the surviving
payee.

OPTION D: JOINT AND 1/2 SURVIVOR; OR JOINT AND 2/3 SURVIVOR - We will provide
payments monthly, quarterly, semiannually, and annually for the payee's life and
the life of the payee's spouse/joint payee. Upon the death of one payee, we will
continue payments (reduced to 1/2 or 2/3 the full payment amount) to the
surviving payee. All payments stop at the death of the surviving payee.

OPTION E: LIFE INCOME WITH CASH REFUND - We will provide payments monthly,
quarterly, semiannually, or annually for the payee's life. Upon the payee's
death, we will provide a contingent payee with a lump-sum payment, if the total
payments to the payee were less than the accumulated value at the time of
annuitization. The lump-sum payment, if any, will be for the balance.

OPTION F: INCOME FOR A FIXED PERIOD - We will provide payments monthly,
quarterly, semiannually, or annually for a pre-determined period of time to a
maximum of 30 years. If the payee dies before the end of the fixed period,
payments will continue to a contingent payee until the end of the period.

OPTION G: INCOME OF A SPECIFIC AMOUNT - We will provide payments for a
specific amount. Payments will stop only when the amount applied and earnings
have been completely paid out. If the payee dies before receiving all the
payments, we will continue payments to a contingent payee until the end of the
contract.

With Options A, B, C, and D, we offer both fixed and/or variable annuity
payments. With Options E, F, and G, we offer only fixed annuity payments.
Payments under Options F and G must continue for 10 years, unless your contract
has been in force for 5 years or more.

If the payee is more than 85 years old on the date of maturity, the following
two options are not available without our consent:

. Option A: "life annuity with 5 years guaranteed" and

. Option B: "life annuity without further payment on the death of payee."

VARIABLE INVESTMENT OPTION VALUATION PROCEDURES

We compute the net investment return and accumulation unit values for each
variable investment option as of the end of each business day. A business day is
any date on which the New York Stock Exchange is open for regular trading. Each
business day ends at the close of regular trading for the day on that exchange.
Usually this is 4:00 p.m., Eastern time. On any date other than a business day,
the accumulation unit value or annuity unit value will be the same as the value
at the close of the next following business day.

DISTRIBUTION REQUIREMENTS FOLLOWING DEATH OF OWNER

- --------------------------------------------------------------------------------
IF DEATH BENEFITS ARE PAYABLE UPON YOUR DEATH BEFORE ANNUITY PAYMENTS HAVE
BEGUN:
. if the contract's designated beneficiary is your surviving spouse, your spouse
may elect to continue the contract in force as the owner. In that case:
(1) we will not pay a death benefit, but the total value of your contract will
equal the death benefit that would have been payable under your contract
(including amounts payable under any optional death benefit riders). Any
additional amount that we credit to your contract will be allocated to the
investment options in the same ratio as the investment allocations held at the
time of death and will not be subject to any future surrender or withdrawal
charges; and
(2) your spouse may elect to add or continue any optional death benefit riders
under his or her name, subject to our then current underwriting standards and
the deduction of rider charges at our then current rates. For purposes of
calculating the amount of your spouse's Death Benefit, we will treat the total
value of your contract (including any step-up in value) as the initial premium
and the date the rider is added or continued as the rider's date of issue.
. if the beneficiary is not your surviving spouse OR if the beneficiary is your
surviving spouse but chooses not to continue the contract, the "entire
interest" (as discussed below) in the contract on the date of your death must
be:
(1) paid out in full within five years of your death or
(2) applied in full towards the purchase of a life annuity on the beneficiary
with payments commencing within one year of your death.
. the "entire interest" in the contract on the date of your death equals the
standard death benefit (or any enhanced death benefit) and, if an earnings
enhancement benefit rider is then in force, any earnings enhancement death
benefit amount, that may then be payable.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
IF YOU DIE ON OR AFTER ANNUITY PAYMENTS HAVE BEGUN:

. any remaining amount that we owe must be paid out at least as rapidly as under
the method of making annuity payments that is then in use.
- --------------------------------------------------------------------------------

The Code imposes very similar distribution requirements on contracts used to
fund tax qualified plans. We provide the required provisions for tax qualified
plans in separate disclosures and endorsements.

Notice of the death of an owner or annuitant should be furnished promptly to
the John Hancock Annuity Servicing Office.

MISCELLANEOUS PROVISIONS

Assignment; change of owner or beneficiary

To qualify for favorable tax treatment, certain contracts can't be sold;
assigned; discounted; or pledged as collateral for a loan, as security for the
performance of an obligation, or for any other purpose, unless the owner is a
trustee under section 401(a) of the Internal Revenue Code.

Subject to these limits, while the annuitant is alive, you may designate
someone else as the owner by written notice to the John Hancock Annuity
Servicing Office. You choose the beneficiary in the application for the
contract. You may change the beneficiary by written notice no later than receipt
of due proof of the death of the annuitant. Changes of owner or beneficiary will
take effect when we receive them, whether or not you or the annuitant is then
alive. However, these changes are subject to:

. the rights of any assignees of record and

. certain other conditions referenced in the contract.

An assignment, pledge, or other transfer may be a taxable event. See "Tax
information" below. Therefore, you should consult a competent tax adviser before
taking any such action.

TAX INFORMATION

Our income taxes

We are taxed as a life insurance company under the Internal Revenue Code (the
"Code"). The Account is taxed as part of our operations and is not taxed
separately.

The contracts permit us to deduct a charge for any taxes we incur that are
attributable to the operation or existence of the contracts or the Account.
Currently, we do not anticipate making a charge for such taxes. If the level of
the current taxes increases, however, or is expected to increase in the future,
we reserve the right to make a charge in the future.

Special Considerations for Optional Benefit Riders

If you have elected an optional death benefit rider, it is our understanding
that the charges relating to these riders are not subject to current taxation.
The Internal Revenue Service ("IRS") might take the position, however, that each
charge associated with the rider is deemed a partial withdrawal from the
contract subject to current income tax to the extent of any gains and, if
applicable, the 10% penalty tax for premature distributions from annuities. We
understand that you are not prevented from adding any of our optional death
benefit riders to your contract if it is issued as an IRA. However, the law is
unclear because IRAs generally may not invest in "life insurance contracts."
Therefore, it is possible that a contract may be disqualified as an IRA if it
has an optional death benefit rider added to it. If so, you may be subject to
increased taxes.

At present, the IRS has not provided guidance as to the tax effect of adding
an optional Accumulated value enhancement rider to an annuity contract. The IRS
might take the position that each charge associated with this rider is deemed a
withdrawal from the contract subject to current income tax to the extent of any
gains and, if applicable, the 10% penalty tax for premature withdrawals.

We do not currently report rider charges as partial withdrawals, but we may do
so in the future if we believe that the IRS would require us to report them as
such. You should consult a competent tax adviser before electing any of these
optional benefit riders.

Contracts not purchased to fund a tax qualified plan

Undistributed gains

We believe the contracts will be considered annuity contracts under Section 72
of the Code. This means that, ordinarily, you pay no federal income tax on any
gains in your contract until we actually distribute assets to you. However, a
contract owned other than by a natural person (e.g., corporations, partnerships,
limited liability companies and other such entities) does not generally qualify
as an annuity for tax purposes. Any increase in value therefore would constitute
ordinary taxable income to such an owner in the year earned.

Annuity payments

When we make payments under a contract in the form of an annuity, each payment
will result in taxable ordinary income to you, to the extent that each such
payment exceeds an allocable portion of your "investment in the contract" (as
defined in the Code). In general, your "investment in the contract" equals the
aggregate amount of premium payments you have made over the life of the
contract, reduced by any amounts previously distributed from the contract that
were not subject to tax.

The Code prescribes the allocable portion of each such annuity payment to be
excluded from income according to one formula if the payments are variable and a
somewhat different formula if the payments are fixed. In each case, speaking
generally, the formula seeks to allocate an appropriate amount of the investment
in the contract to each payment. After the entire "investment in the contract"
has been distributed, any remaining payment is fully taxable.

Surrenders, withdrawals and death benefits

When we make a single sum payment from a contract, you have ordinary taxable
income, to the extent the payment exceeds your "investment in the contract"
(discussed above). Such a single sum payment can occur, for example, if you
surrender your contract before the date of maturity or if no annuity payment
option is selected for a death benefit payment.

When you take a partial withdrawal from a contract before the date of
maturity, including a payment under a systematic withdrawal plan, all or part of
the payment may constitute taxable ordinary income to you. If, on the date of
withdrawal, the total value of your contract exceeds the investment in the
contract, the excess will be considered "gain" and the withdrawal will be
taxable as ordinary income up to the amount of such "gain". Taxable withdrawals
may also be subject to the special penalty tax for premature withdrawals as
explained below. When only the investment in the contract remains, any
subsequent withdrawal made before the date of maturity will be a tax-free return
of investment. If you assign or pledge any part of your contract's value, the
value so pledged or assigned is taxed the same way as if it were a partial
withdrawal.

For purposes of determining the amount of taxable income resulting from a
single sum payment or a partial withdrawal, all annuity contracts issued by John
Hancock or its affiliates to the owner within the same calendar year will be
treated as if they were a single contract.

All or part of any death benefit proceeds may constitute a taxable payout of
earnings. A death benefit payment generally results in taxable ordinary income
to the extent such payment exceeds your "investment in the contract."

Under the Code, an annuity must provide for certain required distributions.
For example, if the owner dies on or after the maturity date, and before the
entire annuity value has been paid, the remaining value must be distributed at
least as rapidly as under the method of distribution being used at the date of
the owner's death. We discuss other distribution requirements in the

preceding section entitled "Distribution following death of owner."

Penalty for premature withdrawals

The taxable portion of any withdrawal, single sum payment and certain death
benefit payments may also trigger an additional 10% penalty tax. The penalty tax
does not apply to payments made to you after age 59 1/2, or on account of your
death or disability. Nor will it apply to withdrawals in substantially equal
periodic payments over the life of the payee (or over the joint lives of the
payee and the payee's beneficiary).

Puerto Rico annuity contracts not purchased to fund a tax qualified plan

Under the Puerto Rico tax laws, distributions from a contract not purchased to
fund a tax qualified plan ("Non-Qualified Contract") before annuitization are
treated as non-taxable return of principal until the principal is fully
recovered. Thereafter, all distributions are fully taxable. Distributions after
annuitization are treated as part taxable income and part non-taxable return of
principal. The amount excluded from gross income after annuitization is equal to
the amount of the distribution in excess of 3% of the total purchase payments
paid, until an amount equal to the total purchase payments paid has been
excluded. Thereafter, the entire distribution from a Non-Qualified Contract is
included in gross income. Puerto Rico does not currently impose an early
withdrawal penalty tax. Generally, Puerto Rico does not require income tax to be
withheld from distributions of income.

Diversification requirements

Each of the funds of the Series Funds intends to qualify as a regulated
investment company under Subchapter M of the Code and meet the investment
diversification tests of Section 817(h) of the Code and the underlying
regulations. Failure to do so could result in current taxation to you on gains
in your contract for the year in which such failure occurred and thereafter.

The Treasury Department or the Internal Revenue Service may, at some future
time, issue a ruling or regulation presenting situations in which it will deem
contract owners to exercise "investor control" over the fund shares that are
attributable to their contracts. The Treasury Department has said informally
that this could limit the number or frequency of transfers among variable
investment options. This could cause you to be taxed as if you were the direct
owner of your allocable portion of fund shares. We reserve the right to amend
the contracts or the choice of investment options to avoid, if possible, current
taxation to the owners.

Contracts purchased for a tax qualified plan

We have no responsibility for determining whether a particular retirement plan
or a particular contribution to the plan satisfies the applicable requirements
of the Code, or whether a particular employee is eligible for inclusion under a
plan. In general, the Code imposes limitations on the amount of annual
compensation that can be contributed into a tax-qualified plan, and contains
rules to limit the amount you can contribute to all of your tax-qualified plans.
Trustees and administrators of tax qualified plans may, however, generally
invest and reinvest existing plan assets without regard to such Code imposed
limitations on contributions. Certain distributions from tax qualified plans may
be transferred directly to another plan, unless funds are added from other
sources, without regard to such limitations.

The Code generally requires tax-qualified plans (other than Roth IRAs) to
begin making annual distributions of at least a minimum amount each year after a
specified point. For example, minimum distributions to an employee under an
employer's pension and profit sharing plan qualified under Section 401(a) of the
Code must begin no later than April 1 of the year following the year in which
the employee reaches age 70 1/2 or, if later, retires. On the other hand,
distributions from a traditional IRA, SIMPLE IRA or SEP IRA must begin no later
than April 1 of the year following the year in which the contract owner attains
age 70 1/2. The minimum amount of a distribution and the time when distributions
start will vary by plan.

Tax-free rollovers

For tax years beginning in 2002, if permitted under your plans, you may make
a tax-free rollover from:

. a traditional IRA to another traditional IRA,

. a traditional IRA to another tax-qualified plan, including a Section
403(b) plan

. any tax-qualified plan (other than a Section 457 deferred compensation plan
maintained by a tax-exempt organization) to a traditional IRA,

. any tax-qualified plan (other than a Section 457 deferred compensation plan
maintained by a tax exempt organization) to another tax-qualified plan,
including a roll-over of amounts from your prior plan derived from your
"after-tax" contributions from "involuntary" distributions,

. a Section 457 deferred compensation plan maintained by a tax-exempt
organization to another Section 457 deferred compensation plan maintained by
a tax-exempt organization and

. a traditional IRA to a Roth IRA, subject to special restrictions discussed
below.

In addition, if your spouse survives you, he or she is permitted to rollover
your tax-qualified retirement account to another tax-qualified retirement
account in which your surviving spouse participates, to the extent permitted by
your surviving spouse' plan.

Traditional IRAs

Annual contribution limit. A traditional individual retirement annuity (as
-------------------------
defined in Section 408 of the Code) generally permits an eligible purchaser to
make annual contributions which cannot exceed the lesser of:

. 100% of compensation includable in your gross income, or

. the IRA annual limit for that tax year. For tax years beginning in 2002, 2003
and 2004, the annual limit is $3,000 per year. For tax years beginning in
2005, 2006 and 2007, the annual limit is $4,000 per year and, for the tax
year beginning in 2008, the annual limit is $5,000. After that, the annual
limit is indexed for inflation in $500 increments as provided in the Code.

Catch-Up Contributions. An IRA holder age 50 or older may increase
----------------------
contributions from compensation to an IRA by an amount up to $500 a year for tax
years beginning in 2002, 2003, 2004 and 2005, and by an amount up to $1,000 for
the tax year beginning in 2006.

Spousal IRA. You may also purchase an IRA contract for the benefit of your
-----------
spouse (regardless of whether your spouse has a paying job). You can generally
contribute up to the annual limit for each of you and your spouse (or, if less,
your combined compensation).

Deductibility of contributions. You may be entitled to a full deduction, a
------------------------------
partial deduction or no deduction for your traditional IRA contribution on your
federal income tax return.

The amount of your deduction is based on the following factors:

. whether you or your spouse is an active participant in an employer
sponsored retirement plan,

. your federal income tax filing status, and

. your "Modified Adjusted Gross Income."

Your traditional IRA deduction is subject to phase out limits, based on your
Modified Adjusted Gross Income, which are applicable according to your filing
status and whether you or your spouse are active participants in an employer
sponsored retirement plan. You can still contribute to a traditional IRA even if
your contributions are not deductible.

Distributions. In general, all amounts paid out from a traditional IRA
-------------
contract (in the form of an annuity, a single sum, death benefits or partial
withdrawal), are taxable to the payee as ordinary income. As in the case of a
contract not purchased under a tax-qualified plan, you may incur additional
adverse tax consequences if you make a surrender or withdrawal before you reach
age 59 1/2 (unless certain exceptions apply as specified in Code section 72(t)).
If you have made any non-deductible contributions to an IRA contract, all or
part of any withdrawal or surrender proceeds, single sum death benefit or
annuity payment, may be excluded from your taxable income when you receive the
proceeds.

The tax law requires that annuity payments under a traditional IRA contract
begin no later than April 1 of the year following the year in which the owner
attains age 70 1/2.

Roth IRAs

Annual contribution limit. A Roth IRA is a type of non-deductible IRA. In
-------------------------
general, you may make purchase payments of up to the IRA annual limit ($3,000
per year for tax years beginning in 2002, 2003 and 2004; $4,000 per year for tax
years beginning in 2005, 2006 and 2007, and $5,000 for the tax year beginning in
2008). After that, the annual limit is indexed for inflation in $500 increments
as provided in the Code.

The IRA annual limit for contributions to a Roth IRA phases out (i.e., is
reduced) for single taxpayers with adjusted gross incomes between $95,000 and
$110,000, for married taxpayers filing jointly with adjusted gross incomes
between $150,000 and $160,000, and for a married taxpayer filing separately with
adjusted gross income between $0 and $10,000.

Catch-Up Contributions. A Roth IRA holder age 50 or older may increase
----------------------
contributions from compensation to an IRA by an amount up to $500 a year for tax
years beginning in 2002, 2003, 2004 and 2005, and by an amount up to $1,000 for
the tax year beginning in 2006.

Spousal IRA. You may also purchase a Roth IRA contract for the benefit of
-----------
your spouse (regardless of whether your spouse has a paying job). You can
generally contribute up to the annual limit for each of you and your spouse (or,
if less, your combined compensation), subject to the phase-out rules discussed
above.

Distributions. If you hold your Roth IRA for at least five years the payee
-------------
will not owe any federal income taxes or early withdrawal penalties on amounts
paid out from the contract:

. after you reach age 59 1/2,

. on your death or disability, or

. to qualified first-time home buyers (not to exceed a lifetime limitation of
$10,000) as specified in the Code.

The Code treats payments you receive from Roth IRAs that do not qualify for
the above tax free treatment first as a tax-free return of the contributions you
made. However, any amount of such non-qualifying payments or distributions that
exceed the amount of your contributions is taxable to you as ordinary income and
possibly subject to the 10% penalty tax (unless certain exceptions apply as
specified in Code section 72(t).

Conversion to a Roth IRA. You can convert a traditional IRA to a Roth IRA,
------------------------
unless

. you have adjusted gross income over $100,000, or

. you are a married taxpayer filing a separate return.

The Roth IRA annual contribution limit does not apply to converted amounts.

You must, however, pay tax on any portion of the converted amount that would
have been taxed if you had not converted to a Roth IRA. No similar limitations
apply to rollovers from one Roth IRA to another Roth IRA.

SIMPLE IRA plans

In general, a small business employer may establish a SIMPLE IRA retirement
plan if the employer employed 100 or fewer employees earning at least $5,000
during the preceding year. As an eligible employee of the business, you may make
pre-tax contributions to the SIMPLE IRA plan. You may specify the percentage of
compensation that you want to contribute under a qualified salary reduction
arrangement, provided the amount does not exceed the SIMPLE IRA annual
contribution limit. The SIMPLE IRA annual limit is $7,000 for tax years
beginning in 2002, $8,000 for 2003, $9,000 for 2004, and $10,000 for 2005. After
that, the annual limit is indexed for inflation in $500 increments as provided
in the Code. Your employer must elect to make a matching contribution of up to
3% of your compensation or a non-elective contribution equal to 2% of your
compensation.

Catch-Up Contributions. A SIMPLE IRA holder age 50 or older may increase
----------------------
contributions of compensation by an amount up to $500 for tax years beginning in
2002, $1,000 for 2003, $1,500 for 2004, $2,000 for 2005 and $2,500 for 2006.
After that, for tax years beginning in 2007, the SIMPLE IRA catch-up
contribution limit is indexed annually for inflation in $500 increments as
provided in the Code.

Distributions. The requirements for minimum distributions from a SIMPLE IRA
-------------
retirement plan, and rules on taxation of distributions from a SIMPLE retirement
plan, are generally the same as those discussed above for distributions from a
traditional IRA.

Simplified Employee Pension plans (SEPs)

SEPs are employer sponsored plans that may accept an expanded rate of
contributions from one or more employers. Employer contributions are flexible,
subject to certain limits under the Code, and are made entirely by the business
owner directly to a SEP-IRA owned by the employee. Contributions are
tax-deductible by the business owner and are not includable in income by
employees until withdrawn. The maximum deductible amount that may be contributed
to a SEP is 25% of compensation, up to the SEP compensation limit specified in
the Code for the year ($200,000 for the year 2002) with a cap of $40,000.

Distributions. The requirements for minimum distributions from a SEP-IRA, and
-------------
rules on taxation of distributions from a SEP-IRA, are generally the same as
those discussed above for distributions from a traditional IRA.

Section 403(b) plans

Under these tax-sheltered annuity arrangements, public school systems and
certain tax-exempt organizations can make premium payments into "403(b)
contracts" owned by their employees that are not taxable currently to the
employee.

Annual Contribution Limit. In general, the amount of the non-taxable
contributions made for a 403(b) contract each year may not, together with all
other deferrals the employee elects under other tax-qualified plans, exceed an
annual "elective deferral limit" (see "Elective Deferral Limits," below). The
annual contribution limit is subject to certain other limits described in
Section 415 of the Code and the regulations thereunder. Special rules apply for
certain organizations that permit participants to increase their elective
deferrals.

Catch-Up Contributions. A Section 403(b) plan participant age 50 or older
----------------------
may increase contributions to a 403(b) plan by an amount that, together with all
other catch-up contributions made to other tax-qualified plans, does not exceed
an annual "elective catch-up limit." (See "Elective Catch-Up Limits," below.)

Distributions. When we make payments from a 403(b) contract on surrender of
-------------
the contract, partial withdrawal, death of the annuitant, or commencement of an
annuity option, the payee ordinarily must treat the entire payment as ordinary
taxable income. Moreover, the Code prohibits distributions from a 403(b)
contract before the employee reaches age 59 1/2, except:

. on the employee's separation from service, death, or disability,

. with respect to distributions of assets held under a 403(b) contract as
of December 31, 1988, and

. transfers and exchanges to other products that qualify under Section 403(b).

Minimum distributions under a 403(b) contract must begin no later than April 1
of the year following the year in which the employee reaches age 70 1/2 or, if
later, retires

Pension and profit sharing plans qualified under Section 401(a)

In general, an employer may deduct from its taxable income premium payments it
makes under a qualified pension or profit-sharing plan described in Section
401(a) of the Code. Employees participating in the plan generally do not have to
pay tax on such contributions when made. Special requirements apply if a 401(a)
plan covers an employee classified under the Code as a "self-employed
individual" or as an "owner-employee."

Annuity payments (or other payments, such as upon withdrawal, death or
surrender) generally constitute taxable income to the payee; and the payee must
pay income tax on the amount by which a payment exceeds its allocable share of
the employee's "investment in the contract" (as defined in the Code), if any. In
general, an employee's "investment in the contract" equals the aggregate amount
of premium payments made by the employee.

The non-taxable portion of each annuity payment is determined, under the Code,
according to one formula if the payments are variable and a somewhat different
formula if the payments are fixed. In each case, speaking generally, the formula
seeks to allocate an appropriate amount of the investment in the contract to
each payment. Favorable procedures may also be available to taxpayers who had
attained age 50 prior to January 1, 1986.

Minimum distributions to the employee under an employer's pension and profit
sharing plan qualified under Section 401(a) of the Code must begin no later than
April 1 of the year following the year in which the employee (except an employee
who is a "5-percent owner" as defined in Code section 416) reaches age 70 1/2
or, if later, retires.

"Top-heavy" plans

Certain plans may fall within the definition of "top-heavy plans" under
Section 416 of the Code. This can happen if the plan holds a significant amount
of its assets for the benefit of "key employees" (as defined in the Code). You
should consider whether your plan meets the definition. If so, you should take
care to consider the special limitations applicable to top-heavy plans and the
potentially adverse tax consequences to key employees.

Section 457 deferred compensation plans

Under the provisions of Section 457 of the Code, you can exclude a portion of
your compensation from gross income if you participate in a deferred
compensation plan maintained by:

. a state,

. a political subdivision of a state,

. an agency or instrumentality or a state or political subdivision of a state,
or

. a tax-exempt organization.

As a "participant" in such a deferred compensation plan, any amounts you
exclude (and any income on such amounts) will 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.

The deferred compensation plan must satisfy several conditions, including the
following:

. the plan must not permit distributions prior to your separation from service
(except in the case of an unforeseen emergency), and

. all compensation deferred under the plan shall remain solely the employer's
property and may be subject to the claims of its creditors.

Annual contribution limit. The amount of the non-taxable contributions made
-------------------------
for a Section 457 plan each year may not, together with all other deferrals the
employee elects under other tax-qualified plans, exceed an annual "elective
deferral limit," and is subject to certain other limits described in Section
402(g) of the Code. (See "Elective Deferral Limits," below.)

Catch-Up Contributions. A 457 plan participant age 50 or older may increase
----------------------
contributions to a 457 plan by an amount that, together with all other catch-up
contributions made to other tax-qualified plans, does not exceed an annual
"elective catch-up limit." (See "Elective Catch-Up Limits," below.)

Distributions. When we make payments under your contract in the form of an
-------------
annuity, or in a single sum such as on surrender, withdrawal or death of the
annuitant, the payment is taxed as ordinary income. Minimum distributions under
a Section 457 plan must begin no later than April 1 of the year following the
year in which the employee reaches age 70 1/2 or, if later, retires.

Elective Deferral Limits

A participant in a Section 403(b) plan, a Section 457 Plan or in certain other
types of tax-qualified pension and profit sharing plans that are commonly
referred to as "401(k)" plans and "SARSEPS" may elect annually to defer current
compensation so that it can be contributed to the applicable plan or plans. The
annual elective deferral limit is $11,000 for tax years beginning in 2002,
$12,000 for 2003, $13,000 for 2004, $14,000 for 2005 and $15,000 for 2006. After
that, for the tax years beginning in 2007, 2008 and 2009, the annual elective
deferral limit is indexed for inflation in $500 increments as provided in the
Code.

Elective Catch-up Limits

A participant in a Section 403(b) plan, a Section 457 Plan or in certain other
types of tax-qualified pension and profit sharing plans that are commonly
referred to as "401(k)" plans and "SARSEPS" who is age 50 or older may increase
contributions by an amount up to $1,000 for tax years beginning in 2002, $2,000
for 2003, $3,000 for 2004, $4,000 for 2005 and $5,000 for 2006. After that, for
the tax years beginning in 2007, the elective catch-up contribution limit is
indexed for inflation in $500 increments as provided in the Code.

Withholding on rollover distributions

The tax law requires us to withhold 20% from certain distributions from tax
qualified plans. We do not have to make the withholding, however, if you
rollover your entire distribution to another plan and you request us to pay it
directly to the successor plan. Otherwise, the 20% mandatory withholding will
reduce the amount you can rollover to the new plan, unless you add funds to the
rollover from other sources. Consult a qualified tax adviser before making such
a distribution.

Puerto Rico annuity contracts purchased to fund a tax-qualified plan

The provisions of the tax laws of Puerto Rico vary significantly from those
under the Internal Revenue Code of the United States with respect to the various
"tax qualified" plans described above. Although we may offer variable annuity
contracts in Puerto Rico in connection with "tax qualified" plans, the text of
the prospectus under the subsection "Contracts purchased for a tax qualifed
plan" is inapplicable in Puerto Rico and should be disregarded.

See your own tax adviser

The above description of Federal (and Puerto Rico) income tax consequences to
owners of and payees under contracts, 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 under the Code governing tax
qualified plans are extremely complex and often difficult to understand. Changes
to the tax laws may be enforced retroactively. 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. 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 you should consult a qualified tax
adviser.

FURTHER INFORMATION ABOUT JHVLICO

We are JHVLICO, a stock life insurance company, organized in 1979 under the
laws of the Commonwealth of Massachusetts. JHVLICO commenced operations in 1980.
Currently, JHVLICO writes term, whole, variable and universal life insurance
policies and variable annuity contracts in all states except New York. JHVLICO
is wholly-owned by John Hancock Life Insurance Company (formerly known as John
Hancock Mutual Life Insurance Company, hereinafter referred to as "JHLICO" or
"John Hancock"), a life insurance company organized under the laws of
Massachusetts in 1862. Pursuant to a Plan of Reorganization approved by the
policyholders of John Hancock and the Commonwealth of Massachusetts Division of
Insurance, effective February 1, 2000, John Hancock converted from a mutual life
insurance company to a stock life insurance company (i.e. demutualized) and
became a wholly owned subsidiary of John Hancock Financial Services, Inc. which
is a holding company. In connection with the reorganization, John Hancock
changed its name to John Hancock Life Insurance Company. In addition, on
February 1, 2000, John Hancock Financial Services, Inc. completed its initial
public offering in which 102 million shares of common stock were issued at an
initial public offering price of $17 per share. At December 31, 2001, JHVLICO
had $119.3 billion of gross life insurance in force.

JHVLICO markets its policies through

. John Hancock's sales organization, which includes a career agency system
composed of company-supported independent general agencies and,

. various unaffiliated broker-dealers and certain financial institutions
with which John Hancock and JHVLICO have sales agreements.

In 1993, JHVLICO acquired Colonial Penn Annuity and Life Insurance Company
and renamed it John Hancock Life Insurance Company of America. On March 5, 1998,
the name of the company was changed from John Hancock Life Insurance Company of
America to Investors Partner Life Insurance Company ("IPL").

Selected financial data

- --------------------------------------------------------------------------------
The following table sets forth certain selected historical financial data. The
selected income statement data for each of the years in the three year period
ended December 31, 2001 and balance sheet data as of December 31, 2001 and
2000 are presented in accordance with accounting principles generally accepted
in the United States (referred to as "GAAP") and have been derived from the
audited financial statements included elsewhere in this prospectus. The
selected balance sheet data as of December 31, 1999 is presented on a GAAP
basis. These balances have been determined by adjusting the previously audited
statements that were prepared on a basis prescribed or permitted by the
Commonwealth of Massachusetts Division of Insurance ("statutory" or "Stat"
basis) to a GAAP basis, and are unaudited. The financial statements from which
this data has been derived are not included in this prospectus. The income
statement data for each of the years in the two year period ended December 31,
1998 and 1997 and balance sheet data as of December 31, 1998 and 1997 is
presented on a statutory basis. The audited statutory basis financial
statements from which the selected data has been derived are not included in
this prospectus.

You should read the following selected historical financial data along with
other information including "Management's Discussion and Analysis" immediately
following this section and our financial statements and the notes to the
financial statements beginning on page 69.

Certain prior year amounts have been reclassified to conform to the current
year presentation.

Past results are not necessarily indicative of future results.
- --------------------------------------------------------------------------------

Year Year Year Year Year
ended ended ended ended ended
December December December December December
31, 2001 31, 2000 31, 1999 31, 1998 31, 1997
(GAAP) (GAAP) (GAAP) (Stat) (Stat)
(in millions) (in millions) (in millions) (in millions) (in millions)
------------- ------------- ------------- ------------- -------------

INCOME STATEMENT DATA:
Premiums ............................................ $ 60.1 $ 28.6 $ 8.9 $1,272.3 $ 872.7
Universal life and investment-type product charges .. 365.4 337.1 341.5 -- --
Net investment income ............................... 227.0 213.4 174.6 122.8 89.7
Net realized investment and other gains (losses) .... (9.0) (10.6) (4.8) -- --
Other revenue ....................................... 24.0 0.2 0.2 618.1 449.1
--------- --------- --------- -------- --------
TOTAL REVENUES ...................................... 667.5 568.7 520.4 2,013.2 1,411.5

Total benefits and expenses ......................... 458.8 425.5 416.8 1,963.9 1,342.5
Federal income tax expense (credit) ................. 62.2 43.8 35.2 33.1 38.5
Net realized capital gains (losses) ................. -- -- -- (0.6) (3.0)
Cumulative effect of accounting change, net of tax .. (1.6) -- -- -- --
--------- --------- --------- -------- --------
NET INCOME/NET GAIN ................................. $ 144.9 $ 99.4 $ 68.4 $ 15.6 $ 27.5
========= ========= ========= ======== ========

BALANCE SHEET DATA:
Total assets ........................................ $11,713.2 $12,194.7 $11,974.2 $8,599.0 $6,521.5
Total liabilities/obligations ....................... 10,747.6 11,389.1 11,279.2 8,268.2 6,199.8
Total stockholder's equity/policyholders' contingency
reserve ........................................... $ 965.6 $ 805.6 $ 695.0 $ 330.8 $ 321.7

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following narrative reviews our consolidated and segment financial
condition as of December 31, 2001 and 2000 and results of operations for the
years ended December 31, 2001, 2000 and 1999 and, where appropriate, factors
that may affect future financial performance. This discussion should be read in
conjunction with the consolidated financial statements and accompanying notes,
included elsewhere in this prospectus.

Forward-Looking Information

The statements, analyses, and other information contained herein relating to
trends in the John Hancock Variable Life Insurance Company's operations and
financial results, the markets for JHVLICO's products, the future development of
JHVLICO's business, and the contingencies and uncertainties to which JHVLICO may
be subject, as well as other statements including words such as "anticipate,"
"believe," "plan," "estimate," "expect," "intend," "will," "should," "may," and
other similar expressions, are "forward-looking statements" under the Private
Securities Litigation Reform Act of 1995. Such statements are made based upon
management's current expectations and beliefs concerning future events and their
effects on JHVLICO. Future events and their effects on JHVLICO may not be those
anticipated by management. JHVLICO's actual results may differ materially from
the results anticipated in these forward-looking statements.

These forward-looking statements are subject to risks and uncertainties
including, but not limited to, the risks that (1) a significant downgrade in our
ratings for claims-paying ability and financial strength may lead to policy and
contract withdrawals and materially harm our ability to market our products; (2)
changes to or elimination of Federal tax benefits for our products and other
changes in laws and regulations (including those relating to the Federal Estate
Tax Laws) which JHVLICO expects would adversely affect sales of our insurance
and investment advisory products; (3) we face increasing competition in our
retail businesses from mutual fund companies, banks and investment management
firms as well as from other insurance companies; (4) a decline or increased
volatility in the securities markets, and other economic factors, may adversely
affect our variable life insurance and variable annuity business; (5) due to
acts of terrorism or other hostilities, there could be business disruption,
economic contraction, increased mortality, morbidity and liability risks,
generally, or investment losses that could adversely affect our business; (6)
our life insurance and annuity sales are highly dependent on a third party
distribution relationship; (7) customers may not be responsive to new or
existing products or distribution channels, (8) interest rate volatility may
adversely affect our profitability; (9) our net income and revenues will suffer
if customers surrender annuities and variable and universal life insurance
policies; (10) we will face losses if the claims on our insurance products, or
reductions in rates of mortality on our annuity products, are greater than we
projected; (11) we face investment and credit losses relating to our investment
portfolio (12) we may experience volatility in net income due to changes in
standards for accounting for derivatives and other changes; (13) we are subject
to risk-based capital requirements and possible guaranty fund assessments; (14)
we may be unable to retain personnel who are key to our business; (15) we face
risks from ceded reinsurance business in respect to life insurance; (16)
litigation and regulatory proceedings may result in financial losses, harm our
reputation and divert management resources, and (17) we face unforeseen
liabilities arising from our acquisitions and dispositions of businesses.

Readers are also directed to other risks and uncertainties discussed, as well
as to further discussion of the risks described above, in other documents that
may be filed by JHVLICO with the United States Securities and Exchange
Commission from time to time. JHVLICO specifically disclaims any obligation to
update or revise any forward-looking information, whether as a result of new
information, future developments, or otherwise.

Overview

We are a leading life insurance company providing a broad range of products
and services in one major business, the retail business, which offers insurance
protection and asset gathering products and services primarily to retail
consumers.

Our revenues are derived principally from:

. premiums on individual life insurance and annuities with life contingencies;

. product charges from variable and universal life insurance products and
annuities;

. net investment income and net realized investment and other gains (losses) on
general account assets.

Our expenses consist principally of insurance benefits provided to
policyholders, interest credited on policyholders' account balances, dividends
to policyholders, other operating costs and expenses, which include commissions
and general business expenses, net of expenses deferred, amortization of
deferred policy acquisition costs, and premium and income taxes.

Our profitability depends in large part upon: (1) the adequacy of our product
pricing, which is primarily a function of competitive conditions, our ability to
assess and manage trends in mortality and morbidity experience, our ability to
generate investment earnings and our ability to maintain

expenses in accordance with pricing assumptions; (2) the amount of assets under
management; and (3) the maintenance of our target spreads between the rate of
earnings on our investments and rates credited on policyholders' account
balances. Overall, financial market conditions have a significant impact on all
these profit drivers.

The sales and other financial results of our business over the last several
years have been affected by general economic and industry trends. Variable
products, including variable life insurance and variable annuities, have
accounted for the majority of recent increases in total premiums and deposits
for the insurance industry as a result of the strong equity market growth in
recent years and the "baby boom" generation reaching its high-earnings years and
seeking tax-advantaged investments to prepare for retirement. This trend has
been challenged recently by fluctuations in stock market performance and we have
seen investors return to stable investment products. Our diverse distribution
network and product offerings will assist in the maintenance of assets and
provide for sales growth. Although sales of traditional life insurance products
have experienced continued declines, sales of fixed annuity products and
corporate owned life insurance have increased.

Premiums and deposits of our individual annuity products were $113.0 million,
$94.3 million and $231.3 million in 2001, 2000 and 1999. Our total life
insurance product deposits were $1,540.7 million, $1,188.2 million and $1,000.8
million in 2001, 2000 and 1999, respectively.

Critical Accounting Policies

General

We have identified the policies below as critical to our business operations
and understanding of our results of operation. For a detailed discussion of the
application of these and other accounting policies, see Note 1 in the Notes to
Consolidated Financial Statements. Note that the application of these accounting
policies in the preparation of this report requires management to use judgments
involving assumptions and estimates concerning future results or other
developments including the likelihood, timing or amount of one or more future
transactions or events. There can be no assurance that actual results will not
differ from those estimates. These judgments are reviewed frequently by senior
management, and an understanding of them may enhance the reader's understanding
of JHVLICO's financial statements and Management's Discussion and Analysis.

Amortization of Deferred Policy Acquisition Costs

We amortize deferred policy acquisition costs on term life insurance ratably
with premiums. We amortize our deferred policy acquisition costs on our annuity
products and retail life insurance, other than term, based on a percentage of
the estimated gross profits over the life of the policies, which are generally
twenty years for annuities and thirty years for life policies. Our estimated
gross profits are computed based on assumptions related to the underlying
policies including mortality, lapse, expenses, and asset growth rates. We
amortize deferred policy acquisition costs such that the percentage of gross
profits to the amount of deferred policy acquisition costs amortized is constant
over the life of the policies.

Estimated gross profits are adjusted periodically to take into consideration
the actual experience to date and changes in the remaining gross profits. When
estimated gross profits are adjusted, we also adjust the amortization of
deferred policy acquisition costs to maintain a constant amortization percentage
over the life of the policies. Our current estimated gross profits include
certain judgments concerning mortality, lapse and asset growth that are based on
a combination of actual company experience and historical market experience of
equity and fixed income returns. Short-term variances of actual results from the
judgments made by management can cause quarter to quarter earnings impact.

Investment in Debt and Equity Securities

Impairments on our investment portfolio are recorded as a charge to income in
the period when the impairment is judged by management to occur. See the
discussion of Credit Risk in the Quantitative and Qualitative Information About
Market Risk section of this document for a more detailed discussion of the
judgments involved in determining impairments.

Certain of our fixed income securities classified as held-to-maturity and
available-for-sale are not publicly traded, and quoted market prices are not
available from brokers or investment bankers on these securities. The change in
the fair value of the available-for-sale securities is recorded in other
comprehensive income as an unrealized gain or loss. We calculate the fair value
of these securities ourselves through the use of pricing models and discounted
cash flows calling for a substantial level of management's judgment. See the
discussion in the General Account Investments section of this document for a
more detailed discussion of this process and the judgments used therein.

Income Taxes

We establish reserves for possible penalty and interest payments to various
taxing authorities with respect to the admissability and timing of tax
deductions. Management makes judgments concerning the eventual outcome of these
items and reviews those judgments on an ongoing basis.

Results of Operations

The table below presents our consolidated results of operations for the years
indicated.

FOR THE YEAR ENDED DECEMBER 31
------------------------------

2001 2000 1999
---- ---- ----
(IN MILLIONS)
REVENUES

Premiums .............................. $ 60.1 $ 28.6 $ 8.9
Universal life and investment-type
product charges ...................... 365.4 337.1 341.5
Net investment income ................. 227.0 213.4 174.6
Net realized investment and other gains
(losses), net of related amortization
of deferred policy acquisition
costs /(1)/ ......................... (9.0) (10.6) (4.8)
Other revenues ........................ 24.0 0.2 0.2
------ ------- -------
Total revenues ........................ 667.5 568.7 520.4
------ ------- -------

BENEFITS AND EXPENSES
Benefits to policyholders ............. 294.1 248.6 260.5
Other operating costs and expenses .... 76.2 116.8 117.5
Amortization of deferred policy
acquisition costs, excluding amounts
related to net realized investment
and other gains (losses) /(2)/ ...... 67.1 34.0 13.1
Dividends to policyholders ............ 21.4 26.1 25.7
------ ------- -------
Total benefits and expenses .......... 458.8 425.5 416.8
------ ------- -------
Income before income taxes and
cumulative effect of accounting
change ................................ 208.7 143.2 103.6
Income taxes ........................... 62.2 43.8 35.2
------ ------- -------
Income before cumulative effect of
accounting change ..................... 146.5 99.4 68.4
Cumulative effect of accounting change,
net of tax ............................ (1.6) -- --
------ ------- -------
Net income ............................. $144.9 $ 99.4 $ 68.4
====== ======= =======

(1) Net of related amortization of deferred policy acquisition costs of $(1.5)
million, $(3.8) million, and $(0.5) million for the years ended 2001, 2000, and
1999, respectively.

(2) Excluding amounts related to net realized investment and other gains
(losses) of $(1.5) million, $(3.8) million, and $(0.5) million for the years
ended 2001, 2000 and 1999, respectively.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Consolidated income before income taxes and cumulative effect of accounting
change of $208.7 million for the year ended December 31, 2001 increased by $65.5
million, or 45.7%, as compared to consolidated income before income taxes and
cumulative effect of accounting change of $143.2 million for the year ended
December 31, 2000. The increase was primarily attributable to increases in
income before income taxes and cumulative effect of accounting change of $45.4
million in the Protection Segment and $20.1 million in the Asset Gathering
Segment. The increase in the Protection Segment was primarily due to growth in
universal life investment-type product charges and net investment income and a
decrease in operating expenses due to our expense reduction program. The Asset
Gathering Segment increased compared to the prior year due to the sale of
certain annuity contracts by JHVLICO to its parent at fair value as part of the
safe harbor annuity exchange program and a decrease in operating expenses due to
our expense reduction program.

Revenues of $667.5 million increased $98.8 million, or 17.4%, from $568.7
million in the comparable prior year period. The increase in revenues was
largely driven by growth in premiums in the traditional life insurance business,
which increased $31.5 million. In addition, universal life and investment-type
product charges increased $28.3 million, primarily driven by growth in the
non-traditional life insurance business partially offset by lower fees in the
variable annuity business due to lower average account balances. Other revenue
increased $23.8 million from the comparable prior year period primarily due to
the sale of certain annuity contracts by JHVLICO to its parent at fair value as
part of the safe harbor annuity exchange program.

Benefits and expenses of $458.8 million increased $33.3 million, or 7.8%, from
$425.5 million from the comparable prior year period. The increase in benefits
and expenses was primarily driven by growth in benefits to policyholders of
$45.5 million due to growth in the in-force in the traditional and
non-traditional life insurance businesses. In addition, amortization of deferred
policy acquisition costs increased $33.1 million driven by the non-traditional
life insurance business due to an increase in universal life product charges.
These increases in benefits and expenses were partially offset by a $40.6
million decrease in other operating costs and expenses driven by cost reduction
programs.

Income taxes were $62.2 million in 2001, compared to $43.8 million for 2000.
Our effective tax rate was 29.8% in 2001, as compared to 30.6% in 2000.

Year Ended December 31, 2000 Compared to Year Ended
December 31, 1999

Consolidated income before income taxes of $143.2 million for the year ended
December 31, 2000 increased by $39.6 million, or 38.2%, as compared to
consolidated income before income taxes of $103.6 million for the year ended
December 31, 1999. The increase was primarily attributable to increases in
income before income taxes of $40.2 million in the Protection Segment partially
offset by decreased income before income taxes in the Asset Gathering Segment of
$0.6 million. The increase in the Protection Segment was primarily due to growth
in net investment income and a decrease in benefits to policyholders. The Asset
Gathering Segment remained stable compared to the prior year primarily due to
growth in investment-type product charges partially offset by increased
amortization of deferred policy acquisition costs.

Revenues of $568.7 million increased $48.3 million, or 9.3%, from $520.4
million in the comparable prior year period. The increase in revenues was driven
by growth in net investment income of $38.8 million, primarily in the
non-traditional life insurance business. In addition, premiums increased $19.7
million, primarily in the traditional life insurance business. The increases in
revenues were partially offset by increased net realized investment and other
losses and lower universal life and investment-type product charges.

Benefits and expenses of $425.5 million increased $8.7 million, or 2.1%, from
$416.8 million in the comparable prior year period. The increase in benefits and
expenses was driven by an increase in amortization of deferred policy
acquisition costs of $20.9 million primarily in the non-traditional life
insurance business. Amortization of deferred policy acquisition costs increased
in the non-traditional life insurance business by $13.2 million on revised
projections of estimated gross profit based on changes in estimated future
interest margins. In addition, amortization of deferred policy acquisition costs
increased $7.9 million primarily due to poor separate account performance and
increased surrenders in the variable annuities business which accelerated
current amortization. Partially offsetting the increase in amortization of
deferred policy acquisition costs was a decrease in benefits to policyholders of
$11.9 million, or 4.6%, primarily due to costs incurred related to the
settlement of the class action lawsuit in the prior year period.

Income taxes were $43.8 million in 2000, compared to $35.2 million for 1999.
Our effective tax rate was 30.6% in 2000, as compared to 34.0% in 1999.

Results of Operations by Segment

We operate our business in two business segments, the Protection Segment and
the Asset Gathering Segment. Both of our business segments primarily serve
retail customers. JHVLICO's reportable segments are strategic business units
offering different products and services, and are managed separately, as they
focus on different products, markets or distribution channels.

PROTECTION SEGMENT. Offers a variety of individual life insurance, including
participating whole life, term life, universal life and variable life insurance.
Products are distributed through multiple distribution channels, including
insurance agents and brokers and alternative distribution channels that include
banks, financial planners, direct marketing and the Internet.

ASSET GATHERING SEGMENT. Offers individual variable annuities. This segment
distributes its products through distribution channels including insurance
agents and brokers affiliated with JHVLICO, securities brokerage firms,
financial planners, and banks.

We evaluate segment performance on segment after-tax operating income, which
excludes the effect of net realized investment and other gains and losses and
other unusual or non-recurring events and transactions presented below as
after-tax adjustments. Segment after-tax operating income is determined by
adjusting generally accepted accounting principles (GAAP) net income for net
realized investment and other gains and losses and certain other items which we
believe are not indicative of overall operating trends. While these items may be
significant components in understanding and assessing our consolidated financial
performance, we believe that the presentation of segment after-tax operating
income enhances the understanding of our results of operations by highlighting
net income attributable to the normal, recurring operations of the business.
However, segment after-tax operating income is not a substitute for net income
determined in accordance with GAAP.

A discussion of the adjustments to GAAP reported income, many of which affect
each operating segment, follows the table below. A reconciliation of segment
after-tax operating income, as adjusted, to GAAP reported net income precedes
each segment discussion.

FOR THE YEARS ENDED DECEMBER 31
-------------------------------
2001 2000 1999
---- ---- ----
(IN MILLIONS)

SEGMENT DATA: /(1)/
SEGMENT AFTER-TAX OPERATING INCOME:
Protection Segment ................................................................... $130.0 $ 96.0 $108.0
Asset Gathering Segment .............................................................. 22.2 6.3 6.8
------ ------ ------
Total segment after-tax operating income ............................................ 152.2 102.3 114.8

AFTER-TAX ADJUSTMENTS:
Net realized investment and other gains (losses), net ................................ (5.6) (6.8) (3.1)
Surplus tax .......................................................................... 9.1 5.6 --
Class action lawsuit ................................................................. (9.2) -- (42.9)
Other demutualization related costs .................................................. -- (0.6) (0.4)
Restructuring charges ................................................................ -- (1.1) --
------ ------ ------
Total after-tax adjustments ......................................................... (5.7) (2.9) (46.4)
------ ------ ------

GAAP REPORTED:
Income before cumulative effect of change in accounting principle ..................... 146.5 99.4 68.4
Cumulative effect of change in accounting principle, net of tax ...................... (1.6) -- --
------ ------ ------
Net income ........................................................................... $144.9 $ 99.4 $ 68.4
====== ====== ======

(1) See "Adjustments to GAAP Reported Net Income" set forth below.

Adjustments to GAAP Reported Net Income

Our GAAP reported net income was affected by net realized investment gains and
losses and other unusual or non-recurring events and transactions presented
above as after-tax adjustments. A description of these adjustments follows.

In all periods, net realized investment and other gains and losses have been
excluded from segment after-tax operating income because such data are often
excluded by analysts and investors when evaluating the overall financial
performance of insurers.

Net realized investment and other gains and losses have been reduced by
amortization of deferred policy acquisition costs to the extent that such
amortization results from such gains and losses. We believe presenting net
realized investment and other gains and losses in this format provides
information useful in evaluating our operating performance. This presentation
may not be comparable to presentations made by other insurers. Summarized below
is a reconciliation of (a) net realized investment and other gains and losses
per the audited consolidated financial statements and (b) the adjustment made
for net realized investment and other gains to calculate segment after-tax
operating income for the years ended December 31, 2001, 2000 and 1999.
- --------------------------------------------------------------------------------

FOR THE YEARS ENDED DECEMBER 31
--------------------------------
2001 2000 1999
-------- -------- --------
(IN MILLIONS)

Net realized investment and other
gains (losses) ...................... $(10.5) $(14.4) $(5.3)
Less amortization of deferred policy
acquisition costs related to net
realized investment and other gains
(losses) ............................ 1.5 3.8 0.5
------ ------ -----
Net realized investment and other
gains, net of related amortization of
deferred policy acquisition costs per
audited consolidated financial
statements .......................... (9.0) (10.6) (4.8)
Less income tax effect ............... 3.4 3.8 1.7
------ ------ -----
Net realized investment and other
gains (losses), net - after-tax
adjustment to calculate segment
after-tax operating income .......... $ (5.6) $ (6.8) $(3.1)
====== ====== =====
- --------------------------------------------------------------------------------

Effective within the year 2000, JHVLICO is no longer subject to the surplus
tax imposed on mutual life insurance companies and their wholly-owned stock
subsidiaries. During the years ended December 31, 2001 and 2000, JHVLICO
recognized a reduction in equity based taxes of $9.1 million and $5.6 million,
respectively, resulting from a revised estimated credit that was excluded from
after-tax operating income for these periods. No surplus tax was incurred in the
year ended 1999.

During 1997, JHVLICO entered into a court-approved settlement relating to a
class action lawsuit involving certain individual life insurance policies sold
from 1979 through 1996. In entering into the settlement, JHVLICO specifically
denied any wrongdoing. The total reserve held in connection with the settlement
to provide for relief to class members and for legal and administrative costs
associated with the settlement amounted to $7.0 million and $66.3 million at
December 31, 2001 and 2000, respectively. Costs incurred related to the
settlement were $14.1 million and $66.0 million in 2001 and 1999, respectively.
No such costs were incurred in 2000. The estimated reserve is based on a number
of factors, including the estimated cost per claim and the estimated costs to
administer the claims.

During 2000, JHVLICO incurred expenses to improve its financial analysis and
financial reporting abilities which were made in conjunction with the
demutualization of John Hancock. These charges primarily included consulting
fees and planning and expense management costs. After-tax charges for these
other demutualization related costs were $0.6 million and $0.4 million for the
years ended December 31, 2000 and, 1999 respectively. No such costs were
incurred in the year ended December 31, 2001.

As part of John Hancock's on-going Competitive Position Project, JHVLICO has
incurred restructuring charges to reduce costs and increase future operating
efficiency by consolidating portions of its operations. After-tax restructuring
costs were $1.1 million for the year ended December 31, 2000. JHVLICO incurred
no such costs in the years ended December 31, 2001 and 1999.

Protection Segment

The following table presents certain summary financial data relating to the
Protection Segment for the periods indicated.

- --------------------------------------------------------------------------------

FOR THE YEARS ENDED DECEMBER 31
-------------------------------
2001 2000 1999
---- ---- ----
(IN MILLIONS)

OPERATING RESULTS:
Revenues
Premiums .................................................................................... $ 60.1 $ 28.6 $ 8.9
Universal life and investment-type product charges .......................................... 324.7 286.0 300.8
Net investment income ....................................................................... 229.2 215.9 178.1
Other revenue ............................................................................... 0.3 0.3 0.2
------ ------ ------
Total revenues ............................................................................. 614.3 530.8 488.0
Benefits and expenses
Benefits to policyholders ................................................................... 271.3 242.2 192.3
Other operating costs and expenses .......................................................... 72.8 98.1 100.6
Amortization of deferred policy acquisition costs, excluding amounts related to net realized
investment and other gains (losses) ...................................................... 46.6 17.6 4.6
Dividends to policyholders .................................................................. 21.4 26.1 25.7
------ ------ ------
Total benefits and expenses ................................................................ 412.1 384.0 323.2
Segment pre-tax operating income ............................................................. 202.2 146.8 164.8
Income taxes ................................................................................. 72.2 50.8 56.8
------ ------ ------
Segment after-tax operating income /(1)/ ..................................................... 130.0 96.0 108.0
After-tax adjustments: /(1)/
Net realized investment and other gains (losses), net ....................................... (5.6) (6.8) (3.1)
Surplus tax ................................................................................. 9.1 5.4 --
Class action lawsuit, net ................................................................... (9.2) -- (42.9)
Other demutualization related costs ......................................................... -- (0.5) (0.3)
Restructuring charges ....................................................................... -- (1.1) --
------ ------ ------
Total after-tax adjustments ................................................................ (5.7) (3.0) (46.3)
------ ------ ------

GAAP REPORTED:
Income before cumulative effect of change in accounting principle ............................ 124.3 93.0 61.7
Cumulative effect of change in accounting principle, net of tax .............................. (1.6) -- --
------ ------ ------
Net income ................................................................................... $122.7 $ 93.0 $ 61.7
====== ====== ======
- --------------------------------------------------------------------------------

(1) See "Adjustments to GAAP Reported Net Income" included in this MD&A section
of the prospectus.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Segment after-tax operating income was $130.0 million in 2001, an increase of
$34.0 million, or 35.4%, from $96.0 million in 2000. Traditional life insurance
segment after-tax operating income increased $18.7 million primarily resulting
from increased premiums and lower operating expenses offset by increased
benefits to policyholders. Non-traditional life insurance segment after-tax
operating income increased $15.3 million, or 13.9%, primarily due to higher fee
income and an increase in net investment income offset by increased amortization
of deferred policy acquisition costs.

Total revenues were $614.3 million in 2001, an increase of $83.5 million, or
15.7%, from $530.8 million in 2000. Premiums increased $31.5 million or 110.1%,
primarily due to an increase in renewal premiums related to prior year term life
sales. Universal life and investment-type product charges consist primarily of
cost of insurance fees and separate account fees and were $324.7 million in
2001, an increase of $38.7 million, or 13.5% from $286.0 million in 2000. The
increase was primarily due to growth in average account values and variable life
products fee increases. Net investment income increased $13.3 million, or 6.2%,
primarily due to increased asset balances for non-traditional life insurance
products.

Total benefits and expenses were $412.1 million in 2001, an increase of $28.1
million, or 7.3%, from $384.0 million in 2000. Benefits to policyholders
increased $29.1 million or 12.0%, primarily due to growth in the in-force for
both traditional and non-traditional life insurance products. In addition,
amortization of deferred policy acquisition costs increased $29.0 million or
164.8%, due to a decline in separate account performance. Offsetting these
increases was a decrease

in other operating costs and expenses of $25.3 million due to ongoing cost
reduction programs in both the traditional life insurance and non-traditional
life insurance segments. The segment's effective tax rate increased to 35.7% in
2001 from 34.6% in 2000.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Segment after-tax operating income was $96.0 million in 2000, a decrease of
$12.0 million, or 11.1%, from $108.0 million in 1999. Traditional life insurance
segment after-tax operating income decreased $11.5 million due to higher
benefits and expenses. Non-traditional life insurance segment after-tax
operating income decreased $0.5 million.

Total revenues were $530.8 million in 2000, an increase of $42.8 million, or
8.8%, from $488.0 million in 1999. Traditional life insurance segment's premiums
increased $19.7 million, or 221.3% due to increase in term life sales. Universal
life and investment-type product charges consist primarily of cost of insurance
fees and separate account fees and were $286.0 million in 2000, a decrease of
$14.8 million, or 4.9%, from $300.8 million in 1999. The decrease was primarily
due to lower fees resulting from a decline in separate account performance in
2000. Net investment income increased $37.8 million, or 21.2%, primarily due to
increases in average net invested assets for the non-traditional life insurance
segment.

Total benefits and expenses were $384.0 million in 2000, an increase of $60.8
million, or 18.8%, from $323.2 million in 1999. Benefits to policyholders
increased $49.9 million, or 25.9%, primarily due to increase in reserves related
to growth in term life business for the traditional life insurance segment.
Amortization of deferred policy acquisition costs of $17.6 million in 2000
increased $13.0 million, or 282.6%, from $4.6 million in 1999. Amortization
expense increased primarily due to revised projections of estimated gross
profits on non-traditional life insurance products based upon changes in
estimated future interest margins. The segment's effective tax rate increased to
34.6% in 2000 from 34.5% in 1999.

Asset Gathering Segment

The following table presents certain summary financial data relating to the
Asset Gathering Segment for the periods indicated.

- --------------------------------------------------------------------------------

FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
2001 2000 1999
---- ---- ----
(IN MILLIONS)

OPERATING RESULTS:
Revenues
Universal life and investment-type product charges .......................................... $40.7 $51.1 $40.7
Net investment income ....................................................................... (2.2) (2.5) (3.5)
Other revenue ............................................................................... 23.7 (0.1) --
----- ----- -----
Total revenues ............................................................................. 62.2 48.5 37.2
Benefits and expenses
Benefits to policyholders ................................................................... 8.7 6.4 2.2
Other operating costs and expenses .......................................................... 3.4 16.1 16.3
Amortization of deferred policy acquisition costs, excluding amounts related to net realized
investment and other gains (losses) ...................................................... 20.5 16.4 8.5
----- ----- -----
Total benefits and expenses ................................................................ 32.6 38.9 27.0
Segment pre-tax operating income ............................................................. 29.6 9.6 10.2
Income taxes ................................................................................. 7.4 3.3 3.4
----- ----- -----
Segment after-tax operating income /(1)/ ..................................................... 22.2 6.3 6.8
After-tax adjustments: /(1)/
Surplus tax ................................................................................. -- 0.2 --
Other demutualization related costs ......................................................... -- (0.1) (0.1)
----- ----- -----
Total after-tax adjustments ................................................................ -- 0.1 (0.1)
----- ----- -----
Net income ................................................................................... $22.2 $ 6.4 $ 6.7
===== ===== =====

- --------------------------------------------------------------------------------

(1) See "Adjustments to GAAP Reported Net Income" included in this MD&A section
of the prospects.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Segment after-tax operating income was $22.2 million in 2001, an increase of
$15.9 million, or 252.4%, from $6.3 million in 2000. The increase in the Asset
Gathering Segment is primarily driven by growth in other revenue of $23.8
million and a decrease in other operating costs and expenses of $12.7 million
from the comparable prior year period. These changes were partially offset by a
decrease in investment-type product fees of $10.4 million and an increase in
amortization of deferred policy acquisition costs of $4.1 million.

Total revenues increased $13.7 million, or 28.2%, to $62.2 million in 2001
from $48.5 million in 2000. Investment-type product charges decreased $10.4
million, or 20.4%. Investment-type product charges on variable annuity products
decreased due to deteriorating market conditions for separate accounts.
Partially offsetting the decline in average variable annuity reserves, JHVLICO
increased its product fees in the fourth quarter of 2000, which were effective
for the year ended December 31, 2001. Other revenue increased $23.8 million from
the comparable prior year period primarily due to the sale of certain annuity
contracts by JHVLICO to its parent at fair value as a part of the safe harbor
annuity exchange program.

Total benefits and expenses decreased $6.3 million, or 16.2%, to $32.6 million
in 2001 from the comparable prior year period. The decrease in benefit and
expenses is primarily due to a $12.7 million decrease in other operating costs
and expenses resulting from our on-going cost reduction program. Partially
offsetting the decrease in other operating costs and expenses was a $4.1 million
increase in amortization of deferred policy acquisition costs and a $2.3 million
increase in benefits to policyholders. Amortization of deferred policy
acquisition costs increased primarily due to poor separate account performance
and increased surrenders in the variable annuity business in 2001. Benefits to
policyholders increased primarily due to higher surrender benefits on higher
lapses. The segment's effective tax rate was 25.0% and 34.4% in 2001 and 2000,
respectively. The change in the segment's effective tax rate is primarily due to
increased dividend received deductions in variable annuity separate accounts.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Segment after-tax operating income was $6.3 million in 2000, a decrease of
$0.5 million, or 7.4%, from $6.8 million in 1999. The decrease in the Asset
Gathering Segment is primarily driven by an increase of $7.9 million in
amortization of deferred policy acquisitions costs and a $4.2 million increase
in benefits to policyholders, partially offset by growth in investment-type
product charges of $10.4 million from the comparable prior year period.

Total revenues increased $11.3 million, or 30.4%, to $48.5 million in 2000
from $37.2 million in 1999. Investment-type product charges increased $10.4
million, or 25.6%, primarily due to higher average account balances in 2000.

Total benefits and expenses increased $11.9 million, or 44.1%, to $38.9
million in 2000 from the comparable prior year period. The increase in benefits
and expenses was primarily driven by a $7.9 million increase in amortization of
deferred policy acquisition costs and a $4.2 million increase in benefits to
policyholders. Benefits to policyholders increased $4.2 million, primarily due
to growth in the annuity business, including bonus interest on new variable
annuity products introduced in the fourth quarter of 1999. Amortization of
deferred policy acquisition costs increased $7.9 million, or 92.9%, to $16.4
million in 2000 from $8.5 million in 1999, primarily due to poor separate
account performance and increased surrenders in the variable annuities business
which accelerated current amortization. The segment's effective tax rate was
34.4% and 33.3% in 2000 and 1999, respectively.

General Account Investments

Overall Composition of the General Account

Invested assets, excluding separate accounts, totaled $3.6 billion and $3.0
billion as of December 31, 2001 and December 31, 2000, respectively. The
portfolio composition has not significantly changed at December 31, 2001 as
compared to December 31, 2000. The following table shows the composition of
investments in the general account portfolio.

- --------------------------------------------------------------------------------

AS OF DECEMBER 31, AS OF DECEMBER 31,
2001 2000
------------------------- ------------------------
CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL
------------ ----- ------------ -----
(IN MILLIONS) (IN MILLIONS)

Fixed maturity securities /(1)/ .......... $2,496.2 69.0% $1,727.2 57.9%
Mortgage loans /(2)/ ..................... 580.9 16.0 554.8 18.6
Real estate .............................. 20.6 0.6 23.9 0.8
Policy loans /(3)/ ....................... 352.0 9.7 334.2 11.2
Equity securities ........................ 13.1 0.4 8.1 0.3
Other invested assets .................... 39.6 1.1 34.8 1.2
Short-term investments ................... 0.0 0.0 21.7 0.7
Cash and cash equivalents /(4)/ .......... 115.4 3.2 277.3 9.3
-------- ----- -------- -----
Total invested assets ................... $3,617.8 100.0% $2,982.0 100.0%
======== ===== ======== =====

- --------------------------------------------------------------------------------

(1) In addition to bonds, the fixed maturity security portfolio contains
redeemable preferred stock with a carrying value of $45.6 million and $42.4
million as of December 31, 2001 and December 31, 2000, respectively. The total
fair value of the fixed maturity security portfolio was $2,494.6 and $1,698.6
million, at December 31, 2001 and December 31, 2000, respectively.

(2) The fair value of the mortgage loan portfolio was $604.3 million and $467.3
million as of December 31, 2001 and December 31, 2000, respectively.

(3) Policy loans are secured by the cash value of the underlying life insurance
policies and do not mature in a conventional sense, but expire in conjunction
with the related policy liabilities.

(4) Cash and cash equivalents are included in total invested assets for the
purposes of calculating yields on the income producing assets for JHVLICO.

Consistent with the nature of JHVLICO's product liabilities, assets are
heavily oriented toward fixed maturity securities. JHVLICO determines the
allocation of assets primarily on the basis of cash flow and return requirements
of its products and by the level of investment risk.

FIXED MATURITY SECURITIES. The fixed maturity securities portfolio is
predominantly comprised of low risk, investment grade, publicly and privately
traded corporate bonds and senior tranches of asset-backed securities (ABS) and
mortgage-backed securities (MBS), with the balance invested in government bonds.
The fixed maturity securities portfolio also includes redeemable preferred
stock. As of December 31, 2001, fixed maturity securities represented 69.0% of
general account investment assets with a carrying value of $2.5 billion, roughly
comprised of 61% public securities and 39% private securities. Each year JHVLICO
directs the majority of its net cash inflows into investment grade fixed
maturity securities. Typically between 5% and 15% of funds allocated to fixed
maturity securities are invested in below-investment-grade bonds while
maintaining a policy to limit the overall level of these bonds to no more than
10% of invested assets and the majority of that balance are rated BB, or
category 3 the highest Securities Valuation Office quality rating below
investment grade. Allocations are based on an assessment of relative value and
the likelihood of enhancing risk-adjusted portfolio returns. While JHVLICO has
profited from the below-investment-grade asset class in the past, care is taken
to manage its growth strategically by limiting its size relative to JHVLICO's
net worth.

The following table shows the composition by issuer of the fixed maturity
securities portfolio.

FIXED MATURITY SECURITIES -- BY ISSUER

AS OF DECEMBER 31, AS OF DECEMBER 31,
2001 2000
---------------------- ----------------------
CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL
----- ----- ----- -----
(IN MILLIONS) (IN MILLIONS)

Corporate securities ...................................... $1,955.8 78.3% $1,428.6 82.7%
MBS/ABS ................................................... 317.1 12.7 268.2 15.5
U.S. Treasury securities and obligations of
U.S. government agencies ................................. 214.8 8.6 16.7 1.0
Debt securities issued by foreign governments ............. 7.6 0.3 10.9 0.6
Obligations of states and political
subdivisions ............................................. 0.9 0.1 2.8 0.2
Total ..................................................... $2,496.2 100.0% $1,727.2 100.0%
======== ====== ======== ======

In keeping with the investment philosophy of tightly managing interest rate
risk, JHVLICO's MBS & ABS holdings are heavily concentrated in commercial MBS
where the underlying loans are largely call protected, which means they

are not pre-payable without penalty prior to maturity at the option of the
issuer. By investing in MBS and ABS securities with relatively predictable
repayments, JHVLICO adds high quality, liquid assets to the portfolios without
incurring the risk of cash flow variability.

The Securities Valuation Office (SVO) of the National Association of Insurance
Commissioners evaluates all public and private bonds purchased as investments by
insurance companies. The SVO assigns one of six investment categories to each
security it reviews. Category 1 is the highest quality rating, and Category 6 is
the lowest. Categories 1 and 2 are the equivalent of investment grade debt as
defined by rating agencies such as Standard & Poors (S&P) and Moody's (i.e.,
BBB-/Baa3 or higher), while Categories 3-6 are the equivalent of
below-investment grade securities. SVO ratings are reviewed and may be revised
at least once a year.

The following table sets forth the SVO ratings for JHVLICO's bond portfolio
along with an equivalent S&P rating agency designation. The majority of bonds
are investment grade, with 87.7% invested in Category 1 and 2 securities as of
December 31, 2001. Below investment grade bonds were 12.3 % of fixed maturity
securities and 8.4% of total invested assets as of December 31, 2001. This
allocation reflects JHVLICO's strategy of avoiding the unpredictability of
interest rate risk in favor of relying on the bond analysts' ability to better
predict credit or default risk. The bond analysts operate in an industry-based,
team-oriented structure that permits the evaluation of a wide range of below
investment grade offerings in a variety of industries resulting in a
well-diversified high yield portfolio. A majority, 62.9% of our below investment
grade bonds are rated BB, or category 3, the highest quality below investment
grade. Category 6 bonds, those in or near default, represent securities that
were originally acquired as long-term investments, but subsequently became
distressed.

Valuation techniques for the bond portfolio vary by security type and the
availability of market data. Pricing models and their underlying assumptions
impact the amount and timing on unrealized gains and losses recognized, and the
use of different pricing models or assumptions could produce different financial
results. External pricing services are used where available, broker dealer
quotes are used for thinly traded securities, and a spread pricing matrix is
used when price quotes are not available. When utilizing the spread pricing
matrix, securities are valued by utilizing a discounted cash flow method where
each bond is assigned a spread, that is added to the current U.S. Treasury rates
to discount the cash flows of the security. The spread assigned to each security
is derived from external market data. Certain market events that could impact
the valuation of securities include issuer credit ratings, business climate,
management changes, litigation, and government actions among others. JHVLICO's
pricing analysts take appropriate actions to reduce valuations of securities
where such an event occurs which negatively impacts the securities' value. To
the extent that bonds have longer maturity dates, management's estimate of fair
value may involve greater subjectivity since they involve judgment about events
well into the future.

FIXED MATURITY SECURITIES -- BY CREDIT QUALITY
- --------------------------------------------------------------------------------

AS OF AS OF
DEC. 31, DEC. 31,
2001 2000
--------------------- ---------------------
SVO S&P
RATING /(1)/ EQUIVALENT CARRYING % OF CARRYING % OF
- ------ DESIGNATION/(2)/ VALUE/(3)/ TOTAL VALUE/(3)/ TOTAL
------------------ ------------ ------ ------------ -------
(IN MILLIONS) (IN MILLIONS)

1 AAA/AA/A ............ $ 910.4 37.2% $ 634.2 37.6%
2 BBB ................. 1,237.9 50.5 774.5 46.0
3 BB .................. 190.2 7.8 187.2 11.1
4 B ................... 59.7 2.4 61.4 3.7
5 CCC and lower ....... 27.7 1.1 9.2 0.5
6 In or near default .. 24.7 1.0 18.3 1.1
-------- ----- -------- -----
Total ............. $2,450.6 100.0% $1,684.8 100.0%
======== ===== ======== =====

- --------------------------------------------------------------------------------

(1) For securities that are awaiting an SVO rating, JHVLICO has assigned a
rating based on an analysis that it believes is equivalent to that used by the
SVO.

(2) Comparisons between SVO and S&P ratings are published by the National
Association of Insurance Commissioners.

(3) Does not include redeemable preferred stock with a carrying value of $45.6
million and $42.4 million as of December 31, 2001 and December 31, 2000,
respectively.

MORTGAGE LOANS. As of December 31, 2001 and 2000, we held mortgage loans with
carrying values of $0.6 billion, which included $0.2 billion of agricultural
loans.

The following table shows the distribution of JHVLICO's mortgage loan
portfolio by property type as of the dates indicated. JHVLICO's commercial
mortgage loan portfolio consists primarily of non-recourse fixed-rate mortgages
on fully, or nearly fully, leased commercial properties.

AS OF AS OF
DEC. 31 DEC. 31,
2001, 2000
-------------------- --------------------
CARRYING % OF CARRYING % OF
VALUES TOTAL VALUES TOTAL
------------- ------ ------------- --------
(IN MILLIONS) (IN MILLIONS)
Apartments .................... $114.4 19.7% $128.3 23.1%
Office Buildings .............. 145.3 25.0 98.0 17.8
Retail ........................ 35.3 6.1 45.4 8.2
Agricultural .................. 166.3 28.6 163.9 29.5
Industrial .................... 71.6 12.3 76.8 13.8
Hotels ........................ 24.6 4.2 15.0 2.7
Mixed Use ..................... 4.9 0.9 13.4 2.4
Other ......................... 18.5 3.2 14.0 2.5
------ ----- ------ -----
Total ........................ $580.9 100.0% $554.8 100.0%
====== ===== ====== =====

The following table shows the distribution of JHVLICO's mortgage loan
portfolio by geographical region.

MORTGAGE LOANS -- BY ACLI REGION

AS OF DEC. 31, 2001 AS OF DEC. 31, 2000
----------------------------------- ----------------------
NUMBER CARRYING % OF CARRYING % OF
OF LOANS VALUES TOTAL VALUES TOTAL
---------- ---------- ------- ---------- -------
(IN MILLIONS) (IN MILLIONS)

East North Central .......... 18 $ 63.1 10.9% $ 67.6 12.2%
East South Central .......... 17 24.3 4.2 27.5 5.0
Middle Atlantic ............. 12 50.3 8.6 26.8 4.8
Mountain .................... 13 35.3 6.1 35.4 6.4
New England ................. 13 54.7 9.4 44.2 8.0
Pacific ..................... 48 110.5 19.0 119.3 21.5
South Atlantic .............. 41 151.7 26.1 155.2 28.0
West North Central .......... 6 20.5 3.5 16.8 3.0
West South Central .......... 21 67.3 11.6 58.8 10.5
Canada ...................... 1 3.2 0.6 3.2 0.6
--- ------ ----- ------ -----
Total ...................... 190 $580.9 100.0% $554.8 100.0%
=== ====== ===== ====== =====

The allowance for losses on mortgage loans on real estate and real estate to
be disposed of is maintained at a level that we believe to be adequate to absorb
estimated probable credit losses. JHVLICO's periodic evaluation of the adequacy
of the allowance for losses is based on past experience, known and inherent
risks, adverse situations that may affect the borrower's ability to repay
(including the timing of future payments), the estimated value of the underlying
security, the general composition of the portfolio, current economic conditions
and other factors. This evaluation is inherently subjective and is susceptible
to significant changes and no assurance can be given that the allowances taken
will in fact be adequate to cover all losses or that additional valuation
allowances or asset write-downs will not be required in the future. The portion
of the investment valuation allowance for JHVLICO's mortgage loan portfolio was
$5.5 million, or 0.9% of carrying value before reserves and $5.0 million, or
0.9% of carrying value before reserves as of December 31, 2001 and 2000,
respectively. The portion of the investment valuation allowance for JHVLICO's
real estate to be disposed of was $0.8 million, or 3.9% of carrying value before
reserves and $0.7 million, or 2.9% of carrying value before reserves as of
December 31, 2001 and 2000, respectively.

Investment Results

The following table summarizes JHVLICO's investment results for the periods
indicated. Overall, the yield, net of investment expenses, on the general
account portfolio decreased from the year ended December 31, 2001 compared to
December 31, 2000. New cash flows in 2001 were invested at lower rates than the
prior year period which benefited from higher US Treasury rates and wider
spreads in both the public and private sector. Indicative of this environment,
the 10-year U.S. Treasury rate decreased 101 basis points from 2000 to 2001,
while Moody's seasoned BAA spreads narrowed by 11 basis points from 2000 to
2001.

The yield, net of investment expenses, on the general account portfolio
increased for the year ended December 31, 2000 compared to the prior year
period. The interest rate environment during this period is evidenced by the
increase in

the 10-year U.S. Treasury rate of 34 basis points from December 31, 1999 to
December 31, 2000.

FOR THE YEAR ENDED
DECEMBER 31,
-------------------------------------------------------------------------------
2001 2000 1999
---- ---- ----

YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT
----- -------- ----- -------- ----- --------
(IN MILLIONS) (IN MILLIONS) (IN MILLIONS)

GENERAL ACCOUNT
ASSETS-EXCLUDING
POLICY LOANS
Gross income ................... 7.26% $ 214.6 8.23% $ 207.5 7.56% $ 172.8
Ending
assets-excluding
policy loans .................. 3,265.8 2,647.8 2,397.2
POLICY LOANS
Gross income ................... 6.15 21.1 5.50 17.1 5.08 13.7
Ending assets .................. 352.0 334.2 287.4
Total gross income ............ 7.14 235.7 7.93 224.6 7.29 186.5
Less: investment
expenses ...................... (8.7) (11.2) (11.9)
---- ----- -----

Net investment
income ........................ 6.88% $ 227.0 7.53% $ 213.4 6.83% $ 174.6
======== ======== ========

Liquidity and Capital Resources

Liquidity describes the ability of a company to generate sufficient cash flows
to meet the cash requirements of business operations. Historically, JHVLICO's
principal cash flow sources have been premiums, deposits and charges on
policies, investment income, maturing investments and proceeds from sales of
investment assets. In addition to the need for cash flow to meet operating
expenses, our liquidity requirements relate principally to the liabilities
associated with our various life insurance and annuity products and to the
funding of investments in new products, processes and technologies. Product
liabilities include the payment of benefits under life insurance, policies and
annuity contracts and the payment of policy surrenders, withdrawals and policy
loans. JHVLICO periodically adjusts its investment policy to respond to changes
in short-term and long-term cash requirements and provide adequate funds to pay
benefits without forced sales of investments.

The liquidity of our insurance operations is also related to the overall
quality of our investments. As of December 31, 2001, $2,148.3 million, or 87.7%
of the fixed maturity securities held by us and rated by Standard & Poor's
Ratings Services, a division of the McGraw-Hill Companies, Inc. (S&P) or the
National Association of Insurance Commissioners were rated investment grade (BBB
or higher by S&P or 1 or 2 by the National Association of Insurance
Commissioners). The remaining $302.3 million, or 12.3%, of fixed maturity
investments, and 8.4% of invested assets, were rated non-investment grade. For
additional discussion of our investment portfolio see the General Account
Investments section above in this Management's Discussion and Analysis of
Financial Condition and Results of Segment Operations.

We employ an asset/liability management approach tailored to the specific
requirements of each of our product lines. Each product line has an investment
strategy based on the specific characteristics of the liabilities in the product
line. As part of this approach, we develop investment policies and operating
guidelines for each portfolio based upon the return objectives, risk tolerance,
liquidity, and tax and regulatory requirements of the underlying products and
business segments.

Net cash provided (used) by operating activities was $314.2 million, $(349.3)
million, and $(459.4) million for the years ended December 31, 2001, 2000 and
1999, respectively. The increase in 2001 as compared to 2000 of $663.5 million
resulted primarily from a decrease in benefits paid of $644.7 million and
decrease in operating costs and expenses paid of $74.9 million from the prior
year period. In addition, premiums received increased $25.7 million, fees
received increased $28.3 million, and net investment income received increased
by $16.7 million. The primary increase in cash provided by operations in 2000 as
compared to 1999 is primarily due to the net decrease in other assets and other
liabilities offset somewhat by a larger decrease in policy liabilities as
compared with prior year.

Net cash used in investing activities was $782.6 million, $269.5 million and
$101.9 million for the years ended December 31, 2001, 2000, and 1999,
respectively. The increase in net cash used in 2001 as compared to 2000 of
$513.1 million, resulted primarily from an increase in purchases of fixed
maturities of $565.5 million. Offsetting the cash used by increases in fixed
maturities purchases were increases in cash provided by the maturity, prepayment
and scheduled redemptions of short-term and other invested assets of $36.4
million and a decrease in purchases of mortgage loans of $15.5 million. The
increase in net cash used in 2000 as compared to 1999 resulted primarily from an
increase in fixed maturities purchases, offset somewhat by an increase in the
maturities, prepayments or scheduled redemptions of fixed maturities.

Net cash provided by financing activities was $306.5 million, $636.5 million
and $778.6 million, for the years ended December 31, 2001, 2000 and 1999,
respectively. The decrease in cash provided by financing activities in 2001 as
compared to 2000 of $330.0 million resulted from increase in maturities and
withdrawals from universal life and investment-type contracts in excess of
increases in deposits. The decrease in 2000 as compared to 1999 is the result of
no financing activities in 2000,

after JHVLICO received a capital contribution in 1999 and repaid its short-term
notes payable. Increases in deposits to universal life and investment-type
contracts in 2000 as compared to 1999 approximately offset the increase in
withdrawals and maturities.

A primary liquidity concern with respect to life insurance and annuity
products is the risk of early policyholder and contractholder withdrawal. The
following table summarizes our annuity policy reserves and deposit fund
liabilities for the contractholder's ability to withdraw funds for the indicated
periods:

AS OF AS OF
DEC. 31, 2001 DEC. 31, 2000
------------- -------------

AMOUNT % AMOUNT %
------ - ------ -

(IN MILLIONS) (IN MILLIONS)
Subject to discretionary
withdrawal at contract
value less surrender
charge ........................ $45.4 75.0% $54.7 75.1%
Not subject to
discretionary withdrawal
provisions .................... 7.6 12.6 7.1 9.8
Subject to discretionary
withdrawal adjustment:
At contract value ............. 7.5 12.4 11.0 15.1
----- ----- ----- -----
Total annuity reserves and
deposit funds liability ....... $60.5 100.0% $72.8 100.0%
===== ===== ===== =====

Individual life insurance policies are less susceptible to withdrawal than are
individual annuity contract because policyholders in later policy years may
incur surrender charges and undergo a new underwriting process in order to
obtain a new insurance policy. As indicated in the table above, there is a
substantial percentage of annuity reserves and deposit fund liabilities that are
subject to discretionary withdrawal at the contract value less a surrender
charge. Of the remaining percentage, a little over half are not subject to
withdrawal. In addition, none of these obligations can be accelerated based on
any change in JHVLICO's credit rating.

Individual life insurance policies (other than term life insurance) increase
in cash value over their lives. Policyholders have the right to borrow from us
an amount generally up to the cash value of their policy at any time. As of
December 31, 2001, we had approximately $7.1 billion in cash values in which
policyholders have rights to policy loans. The majority of cash values eligible
for policy loans are at variable interest rates which are reset annually on the
policy anniversary. Moreover, a portion of our fixed interest rate policy loans
have features that provide for reduced crediting rates on the portion of cash
values loaned. Policy loans were $352.0 million and $334.2 million at December
31, 2001 and 2000, respectively.

JHVLICO reviewed its financial information about contractual obligations and
commercial commitments by due date and expiration date as of December 31, 2001.
Contractual obligations of JHVLICO are those obligations fixed by agreement as
to dollar amount and date of payment. Other commercial commitments are those
commitments entered into by JHVLICO with known expiration dates. JHVLICO
identified investment purchase commitments of $55.8 million due in less than one
year as its primary contractual obligation. No other contractual obligation or
commercial commitment was identified by JHVLICO.

The risk-based capital standards for life insurance companies, as prescribed
by the National Association of Insurance Commissioners, establish a risk-based
capital ratio comparing adjusted surplus to required surplus for each of our
United States domiciled insurance subsidiaries. If the risk-based capital ratio
falls outside of acceptable ranges, regulatory action may be taken ranging from
increased information requirements to mandatory control by the domiciliary
insurance department. The risk-based capital ratios of our insurance subsidiary
as of December 31, 2001, were above the ranges that would require regulatory
action.

We maintain reinsurance programs designed to protect against large or unusual
losses. Based on our review of our reinsurers' financial statements and
reputations in the reinsurance marketplace, we believe that our reinsurers are
financially sound, and, therefore, that we have no significant exposure to
uncollectable reinsurance in excess of uncollectable amounts already recognized
in our audited consolidated financial statements. JHVLICO has also entered into
reinsurance agreements which transfers risks and profits to John Hancock Life
Insurance Company, the parent. The reinsurance agreements provide reinsurance
expense allowances to reimburse JHVLICO for the related expenses. The agreements
cover variable annuity, variable life insurance and term life insurance
contracts issued by JHVLICO.

Based on current trends, JHVLICO expects to generate sufficient positive
operating cash to meet all short-term and long-term cash requirements. In
addition, JHVLICO has a line of credit with John Hancock Capital Corporation, a
subsidiary of John Hancock Life Insurance Company, totaling $250 million. John
Hancock Capital Corporation will commit, when requested, to loan funds at
prevailing interest rates as agreed to from time to time between John Hancock
Capital Corporation and JHVLICO.

Quantitative and Qualitative Disclosures About Market Risk

Capital Markets Risk Management

JHVLICO maintains a disciplined, comprehensive approach to managing capital
market risks inherent in its business operations. To mitigate these risks, and
effectively

support Company objectives, investment operations are organized and staffed to
focus investment management expertise on specific classes of investments, with
particular emphasis placed on private placement markets. In addition, a
dedicated unit of asset/liability risk management (ALM) professionals
centralizes the implementation of its interest rate risk management program. As
an integral component of its ALM program, derivative instruments are used in
accordance with risk reduction techniques established through Company policy and
with formal approval granted from the New York Insurance Department. JHVLICO's
use of derivative instruments is monitored on a regular basis by the Parent's
Investment Compliance Department and reviewed quarterly with senior management
and the Committee of Finance of the Parent, (the Parent Company's Committee of
Finance).

JHVLICO's principal capital market exposures are credit and interest rate
risk, which includes the impact of inflation, although we have certain exposures
to changes in equity prices and foreign currency exchange rates. Credit risk
pertains to the uncertainty associated with the ability of an obligor or
counterparty to continue to make timely and complete payments of contractual
principal and interest. Interest rate risk pertains to the change in fair value
that occurs within fixed maturity securities or liabilities as market interest
rates move. Equity and foreign currency risk pertain to price fluctuations,
associated with JHVLICO's ownership of equity investments or non-US dollar
denominated investments and liabilities, driven by dynamic market environments.

Credit Risk

JHVLICO manages the credit risk inherent in its fixed maturity securities by
applying strict credit and underwriting standards, with specific limits
regarding the proportion of permissible below investment grade holdings. We also
diversify our fixed maturity securities with respect to investment quality and
credit concentration. Concentrations are monitored with respect to issuer,
industry, geographic location, and loan property-type. Where possible,
consideration of external measures of creditworthiness, such as ratings assigned
by nationally recognized rating agencies, supplement our internal credit
analysis. JHVLICO uses simulation models to examine the probability distribution
of credit losses to ensure that it can readily withstand feasible adverse
scenarios. In certain limited circumstances JHVLICO may use the credit
derivatives market to exchange credit risk for fixed rate payments if it
believes this approach is more efficient than entering into a cash-based
security transaction. In addition, JHVLICO periodically examines, on various
levels of aggregation, its actual default loss experience on significant asset
classes to determine if the losses are consistent with the (1) levels assumed in
product pricing, (2) ACLI loss experience and (3) rating agencies'
quality-specific cohort default data. These tests have generally found JHVLICO's
aggregate experience to be favorable relative to these external benchmarks and
consistent with priced-for-levels.

JHVLICO evaluates fixed income securities on a case by case basis for issues
of collectibility. The bond analysts operate in an industry-based, team-oriented
structure that facilitates the evaluation of JHVLICO's entire fixed income
holdings quarterly and formal presentations to management twice annually. In
addition, trading levels of publicly traded securities and other market factors
and industry trends are followed and their impact on individual credits are
assessed as they occur. Indenture covenants which provide JHVLICO additional
protection in the event of credit deterioration are also monitored continuously.
When as a result of any of these analyses, management believes that the
collectibility of any amounts owed is other than temporarily impaired, the
underlying asset is written down to fair value.

As of December 31, 2001, JHVLICO's fixed maturity portfolio was comprised of
87.7% investment grade securities and 12.3% below-investment-grade securities.
These percentages are consistent with recent experience and indicative of
JHVLICO's long-standing investment philosophy of pursuing moderate amounts of
credit risk in anticipation of earning higher expected returns. We believe that
credit risk can be successfully managed given our proprietary credit evaluation
models and experienced personnel. For additional information regarding the
credit quality of JHVLICO's portfolio, see Note 3 to our consolidated financial
statements and Management's Discussion and Analysis of Financial Condition and
Results of Segment Operations.

Interest Rate Risk

JHVLICO maintains a tightly controlled approach to managing its potential
interest rate risk. Interest rate risk arises from many of our primary
activities, as we invest substantial funds in interest-sensitive assets to
support the issuance of our various interest-sensitive liabilities.

We manage interest rate sensitive segments of our business, and their
supporting investments, under one of two broadly defined risk management methods
designed to provide an appropriate matching of assets and liabilities. For
guaranteed rate products, where contractual liability cash flows are highly
predictable we apply sophisticated duration-matching techniques to manage the
segment's exposure to both parallel and non-parallel yield curve movements.
Typically this approach involves a duration mismatch tolerance of less than +/-
.05 years, with other techniques used for limiting exposure to non-parallel
risk. Duration measures the sensitivity of the fair value of assets and
liabilities to changes in interest rates. For example, should interest rates
increase by 100 basis points, the fair value of an asset with a 5-year duration
is expected to decrease in value by approximately 5.0%. For non-guaranteed rate
products we apply scenario-modeling techniques to develop

investment policies with what we believe to be the optimal risk/return tradeoff
given our risk constraints. Each scenario is based on near term reasonably
possible hypothetical changes in interest rates that illustrate the potential
impact of such events.

We project asset and liability cash flows on guaranteed rate products and then
discount them against credit-specific interest rate curves to attain fair
values. Duration is then calculated by re-pricing these cash flows against a
modified or "shocked" interest rate curve and evaluating the change in fair
value versus the base case. As of December 31, 2001, the fair value of fixed
maturity securities and mortgage loans supporting duration-managed liabilities
was approximately $1,226.1 million.

The risk management method for non-guaranteed rate products, such as whole
life insurance is less formulaic, but more complex, due to the less predictable
nature of the liability cash flows. For these products, we manage interest rate
risk based on scenario-based portfolio modeling that seeks to identify the most
appropriate investment strategy given probable policyholder behavior and
liability crediting needs under a wide range of interest rate environments. As
of December 31, 2001, the fair value of fixed maturity securities and mortgage
loans supporting liabilities managed under this modeling was approximately
$1,587.2 million.

Derivative Instruments

JHVLICO uses a variety of derivative financial instruments, including swaps,
caps, floors, and exchange traded futures contracts, in accordance with Company
investment policy. Permissible derivative applications include the reduction of
economic risk (i.e., hedging) related to changes in yields, prices, cash flows,
and currency exchange rates. In addition, certain limited applications of
"income generation" are allowed. Examples of this type of use include the
purchase of call options to offset the sale of embedded options in Company
liability issuance or the purchase of swaptions to offset the purchase of
embedded put options in certain investments. JHVLICO does not make a market or
trade derivatives for speculative purposes.

As of January 1, 2001, Financial Accounting Standard No. 133 ("Accounting for
Derivative Instruments and Hedging Activities") became effective for all
companies reporting under accounting principles generally accepted in the United
States (GAAP). Briefly stated, SFAS No. 133 requires that all derivative
instruments must be recorded as either assets or liabilities on JHVLICO's
balance sheet, with quarterly recognition thereafter of changes in derivative
fair values through its income statement. The income effect of derivatives that
meet all requirements of a "qualified hedge" under SFAS No. 133 guidance may be
offset, in part or in its entirety, by recognition of changes in fair value on
specifically identified underlying hedged-items. These hedged-items must be
identified at the inception of the hedge and may consist of assets, liabilities,
firm commitments or forecasted transactions. Depending upon the designated form
of the hedge (i.e., fair value or cash flow), changes in fair value must either
be recorded immediately through income or through shareholders' equity (Other
Comprehensive Income) for subsequent amortization into income.

In preparing for the implementation of SFAS No. 133, JHVLICO invested
significant time and resources to achieve two primary objectives. First,
preserving the ability to hedge economic risks inherent in its business
operations, with assurance that such hedges were structured in a SFAS No. 133
compliant fashion. Second, the reduction of income volatility arising from
"ineffective" or less than perfect hedges, whereby income from hedged-item fair
value recognition only partially offsets income from derivatives fair value
recognition. In the course of achieving these objectives JHVLICO undertook an
extensive examination of its derivatives hedging program. The examination
identified one area where JHVLICO's risk management applications required
adjustment to accommodate the mandates of SFAS No. 133. Each of these hedging
applications was modified so as to retain its economic effectiveness and achieve
compliance with SFAS No. 133. In addition, the examination proved beneficial in
several other ways, including the implementation and customization of a vendor
derivatives valuation and accounting software, improved front and back office
derivatives capabilities, refinement of responsibilities to ensure appropriate
separation of duties, and enhanced derivatives compliance procedures.

The Parent's Investment Compliance Unit monitors all derivatives activity for
consistency with internal policies and guidelines. All derivatives trading
activity is reported monthly to the Parent Company's Committee of Finance for
review, with a comprehensive governance report provided jointly each quarter by
the Parent's Derivatives Supervisory Officer and Chief Investment Compliance
Officer. The table below reflects JHVLICO's derivative positions hedging
interest rate risk as of December 31, 2001. The notional amounts in the table
represent the basis on which pay or receive amounts are calculated and are not
reflective of credit risk. These fair value exposures represent only a point in
time and will be subject to change as a result of ongoing portfolio and risk
management activities.

AS OF DECEMBER 31, 2001
-------------------------------------------------------
FAIR VALUE
----------------------------------
WEIGHTED- -100 +100
AVERAGE BASIS BASIS
NOTIONAL TERM POINT AS OF POINT
AMOUNT (YEARS) CHANGE/(2)/ 12/31/01 CHANGE/(2)/
-------- --------- ----------- -------- -------------
(IN MILLIONS, EXCEPT FOR WEIGHTED-AVERAGE TERM)

Interest rate swaps ............. $1,341.8 3.9 $(24.0) $(4.2) $14.0
Futures contracts /(1)/ ......... 33.8 8.1 (1.4) (0.2) 1.0
Interest rate floors ............ 239.4 5.8 1.8 3.5 6.4
Interest rate caps .............. 361.4 8.4 1.9 1.2 0.2
-------- ------ ----- -----
Totals .......................... $1,976.4 5.0 $(21.7) $ 0.3 $21.6
======== ====== ===== =====

(1) Represents the notional value on open contracts as of December 31, 2001.

(2) The selection of a 100 basis point immediate change in interest rates should
not be construed as a prediction by us of future market events but rather as an
illustration of the potential impact of such an event.

Our non-exchange-traded derivatives are exposed to the possibility of loss
from a counterparty failing to perform its obligations under terms of the
derivative contract. We believe the risk of incurring losses due to
nonperformance by our counterparties is remote. To manage this risk, Company
procedures include the (a) on-going evaluation of each counterparty's credit
ratings, (b) the application of credit limits and monitoring procedures based on
an internally developed, scenario-based risk assessment system, (c) quarterly
reporting of each counterparty's "potential exposure", (d) master netting
agreements, and (e) the use of collateral agreements. Futures contracts trade on
organized exchanges and have effectively no credit risk.

As of December 31, 2001, JHVLICO had no outstanding fixed income obligations.

Separate Accounts

State laws permit insurers to establish separate accounts in which to hold
assets backing certain policies or contracts, including variable life insurance
policies and variable annuity contracts. The insurance company maintains the
investments in each separate account apart from other separate accounts and the
general account. The investment results of the separate account assets are
passed through directly to the account's policyholders or contract owners. The
insurance company derives certain fees from, but bears no investment risk on,
these assets. Other than amounts derived from or otherwise attributable to
JHVLICO's general account, assets of its separate accounts are not available to
fund the liabilities of its general account.

Competition

The life insurance business is highly competitive. There are numerous stock
and other types of insurers in the life/health insurance business in the United
States.

Rating agency data through December 31, 2001, affirms JHVLICO's financial
stability rating from A.M. Best Company, Inc. of A++, its highest, based on the
strength of John Hancock and the capital guarantee discussed below. Standard &
Poor's Corporation and Fitch, Inc. have assigned insurance claims-paying ability
ratings to JHVLICO of AA+ and AAA, respectively, which place JHVLICO in the
second highest and highest categories, respectively, by these rating agencies.
Moody's Investors Service, Inc. has assigned JHVLICO a financial strength rating
of Aa2, which is its third highest rating.

Employees and Facilities

John Hancock provides JHVLICO with personnel, property, and facilities for the
performance of certain of JHVLICO's corporate and operational functions. John
Hancock annually determines a fee for these services and facilities based on a
number of criteria, which are periodically revised to reflect continuing changes
in JHVLICO's operations. The amount of service fee charged to JHVLICO was $159.9
million for the year ended December 31, 2001.

Transactions with John Hancock

As indicated, property, personnel, and facilities are provided, at a service
fee, by John Hancock for purposes of JHVLICO's operations. In addition, John
Hancock has contributed all of JHVLICO'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 Note 2 to our audited consolidated GAAP financial statements included
elsewhere in this prospectus for additional information on related party
transactions.

Legal Proceedings

We are regularly involved in litigation, both as a defendant and as a
plaintiff. The litigation naming us as a defendant ordinarily involves our
activities as a provider of insurance protection products, as well as an
employer and taxpayer. In addition, state regulatory bodies, the Unites States
Securities and Exchange Commission and other regulatory bodies regularly make
inquiries and, from time to time conduct examinations concerning our compliance
with, among other things, insurance laws and securities laws. We do not believe
that the ultimate resolution of the litigation referred to above or any of these
other matters that are currently pending, either individually or in the
aggregate, will have a material adverse effect on our business, financial
condition or results of operations.

Sales Practice Class Action Settlement

Over the past several years, companies engaged in the life insurance business
have faced extensive claims, including class-action lawsuits, alleging improper
marketing and sales of individual life insurance policies or annuities. On
December 31, 1997, the United States District Court for the District of
Massachusetts approved a settlement of a nationwide class action lawsuit
regarding sales practices against John Hancock Mutual Life Insurance Company,
John Hancock Variable Life Insurance Company and John Hancock Distributors,
Inc., captioned Duhaime, et al. v. John Hancock Mutual Life Insurance Company,
John Hancock Variable Life Insurance

Company and John Hancock Distributors, Inc. With certain limited exceptions, the
class that is bound by the terms of the settlement includes persons and entities
who at any time during the class period (January 1, 1979 through December 31,
1996) had an ownership interest in one or more of our whole life, universal life
or variable life insurance policies (and certain annuities and mutual funds)
issued during the class period.

In conjunction with this settlement, we had a total reserve that stood at $7.0
million and $66.3 million at December 31, 2001and 2000, respectively. We
incurred settlement related costs of $14.1 million and $66.0 million in 2001 and
1999, respectively. No such costs were incurred in 2000. In 1999, JHVLICO
updated its estimate of the cost of claims subject to alternative dispute
resolution (ADR) relief and revised its reserve estimate accordingly. The
reserve estimate was further evaluated quarterly, and was adjusted as noted
above in 2001. The adjustment to the reserve in 2001 was the result of JHVLICO
being able to better estimate the cost of settling the remaining claims, which
on average tend to be the larger more complicated claims. The better estimate is
from experience with actual settlement of similar claims.

Administration of the ADR component of the settlement continues to date.
Although some uncertainty remains as to the cost of claims in the final phase
(i.e. arbitration) of the ADR process, it is expected that the final cost of the
settlement will not differ materially from the amounts presently provided for by
JHVLICO.

Regulation

Our business is subject to extensive regulation at both the state and Federal
level, including regulation under state insurance and Federal and state
securities laws.

State Insurance Regulation

JHVLICO complies with extensive state regulation in the jurisdictions in which
it does business. Most states have laws and regulations governing such issues
as: what lines of business a company may engage in; underwriting practices,
including a company's ability to request results of applicants' genetic tests;
what premium rates may be charged in various lines of business; what products a
company may sell; mandating certain insurance benefits and policy forms; minimum
rates for accumulation of cash values and maximum rates for policy loans;
licensing of insurance companies and agents; advertising and marketing
practices; statutory accounting and reporting requirements; reserve requirements
and solvency standards; admitted statutory assets; the appropriate mix of
investments; dividend payments; transactions with affiliates; and level of
ownership regarding acquisitions of control. State insurance departments
periodically review the business and operations of an insurance company by
examining its financial condition and how its agents sell its products.

State insurance regulatory authorities and other state law enforcement
agencies and attorneys general from time to time make inquiries concerning
whether our insurance business is in compliance with applicable regulations. We
reasonably and promptly respond to such inquiries and take corrective action if
warranted.

State insurance regulators and the National Association of Insurance
Commissioners are continually re-examining existing laws and regulations. Among
other things, these laws and regulations may focus on insurance company
investments, financial reporting and solvency issues, risk-adjusted capital
guidelines, interpretations of existing laws, the development of new laws, the
implementation of non-statutory guidelines and the circumstances under which
dividends may be paid.

Regulation Governing Potential Acquisitions of Control

We are subject to regulation under the insurance holding company statutes of
Massachusetts, which is our state of domicile. The Massachusetts insurance law
contains provisions which, in general, provide that the acquisition or change of
"control" of a domestic insurer or of any person that controls a domestic
insurer cannot be consummated without the prior approval of the Massachusetts
Commissioner of Insurance. In general, a presumption of "control" arises from
the ownership, control, possession with the power to vote or possession of
proxies with respect to, 10% or more of the voting securities of an insurer or
of a person that controls an insurer. A person seeking to acquire control,
directly or indirectly, of a Massachusetts insurance company or of any person
controlling a Massachusetts insurance company must file an application for
approval of the acquisition of control with the Massachusetts Commissioner of
Insurance and obtain the approval of the Massachusetts Commissioner of Insurance
before consummating the acquisition.

Surplus and Capital Requirements

Insurance regulators have the discretionary authority, in connection with the
ongoing licensing of our insurance businesses, to limit or prohibit the ability
to issue new policies if, in the regulators' judgment, the insurer is not
maintaining a minimum amount of surplus or is in hazardous financial condition.
Limits may also be established on the ability to issue new life insurance
policies and annuity contracts above an amount based upon the face amount and
premiums of policies of a similar type issued in the prior year.

Risk-Based Capital

The National Association of Insurance Commissioners (NAIC) has established
risk-based capital (RBC) standards for life insurance companies as well as a
model act to apply such standards at the state level. The model act provides
that life insurance companies must submit an annual risk-based capital report to
state regulators reporting their risk-based capital based on five categories of
risk: asset risk-affiliates, asset risk-other, insurance risk, interest rate
risk and business risk. The formula is intended to be used by insurance
regulators as an early warning tool to identify possible weakly capitalized
companies for purposes of initiating further regulatory action.

In 2001, the NAIC changed the risked-based capital formula which resulted in
RBC charges or a higher risk-based capital ratio. The most significant change
made by NAIC is to tax effect the RBC, which is similar to reducing the risk
factors being applied to the different risk categories. One other change was the
creation of a common stock asset risk category and its treatment in the
covariance calculation. This change also lowered RBC.

Statutory Investment Valuation Reserves

Life insurance companies are required to establish an asset valuation reserve
(AVR) consisting of two components: (i) a "default component," which provides
for future credit-related losses on fixed maturity investments, and (ii) an
"equity component," which provides for losses on all types of equity
investments, including equity securities and real estate. Insurers also are
required to establish an interest maintenance reserve (IMR) for net realized
capital gains and losses on fixed maturity securities, net of tax, related to
changes in interest rates. The IMR is required to be amortized into statutory
earnings on a basis reflecting the remaining period to maturity of the fixed
maturity securities sold. These reserves are required by state insurance
regulatory authorities to be established as a liability on a life insurer's
statutory financial statements, but do not affect our financial statements
prepared in accordance with GAAP. Although future additions to AVR will reduce
the future statutory capital and surplus of JHVLICO, we do not believe that the
impact under current regulations of such reserve requirements will materially
affect the ability of JHVLICO to increase its statutory capital and surplus.

IRIS Ratios

The National Association of Insurance Commissioners has developed a set of
financial tests known as the Insurance Regulatory Information System (IRIS) for
early identification of companies which may require special attention by
insurance regulators. Insurance companies submit data on an annual basis to the
National Association of Insurance Commissioners. This data is used to calculate
ratios covering various categories of financial data, with defined "usual
ranges" for each category. IRIS consists of 13 key financial ratios for life
insurance companies. An insurance company may fall out of the usual range with
respect to one or more ratios because of specific transactions that are in
themselves immaterial or eliminated at the consolidated level. Departure from
the usual range on four or more of the ratios may lead to inquiries from
individual states' insurance departments. During the five-year period ended
December 31, 2001, John Hancock Variable Life Insurance Company and its
subsidiary, Investors Partner Life Insurance Company, had several ratios outside
of the usual range. John Hancock Variable Life Insurance Company had eight
unusual ratios, all of which resulted from growth in the business and the effect
of reinsurance contracts with John Hancock Life Insurance Company. Investors
Partner Life Insurance Company had ten unusual ratios due to the fact it writes
no new business.

Regulation of Investments

Our insurance businesses are subject to state laws and regulations that
require diversification of their investment portfolios. Some of these laws and
regulations also limit the amount of investments in specified investment
categories, such as below investment grade fixed maturity securities, equity
real estate, other equity investments and derivatives. Failure to comply with
these laws and regulations would cause investments exceeding regulatory
limitations to be treated as nonadmitted assets for purposes of measuring
statutory surplus, in some instances, requiring divestiture. State regulatory
authorities from the domiciliary states of our insurance subsidiaries have not
indicated any non-compliance with any such regulations.

Valuation of Life Insurance Policies Model Regulation

The National Association of Insurance Commissioners has adopted a revision to
the Valuation of Life Insurance Policies Model Regulation (known as Revised
XXX). This model regulation established new minimum statutory reserve
requirements for certain individual life insurance policies written in the
future. Before the new reserve standards can become effective, individual states
must adopt the model regulation. Massachusetts adopted the Regulation effective
January 1, 2001.

Federal Insurance Initiatives and Legislation

Although the Federal government generally does not directly regulate the
insurance business, federal initiatives often have an impact on our business.
Current and proposed measures that may significantly affect the insurance
business generally include limitations on anti-trust immunity, minimum solvency
requirements and health care reform.

On November 12, 1999, the Gramm-Leach-Bliley Act of 1999 became law,
implementing fundamental changes in the regulation of the financial services
industry in the United States. The act permits the transformation of the already
converging banking, insurance and securities industries by permitting mergers
that combine commercial banks, insurers and securities firms under one holding
company. Under the act, national banks retain their existing ability to sell
insurance products in some circumstances. In addition, bank holding companies
that qualify and elect to be treated as "financial holding companies" may engage
in activities, and acquire companies engaged in activities, that are "financial"
in nature or "incidental" or "complementary" to such financial activities,
including acting as principal, agent or broker in selling life, property and
casualty and other forms of insurance, including annuities. A financial holding
company can own any kind of insurance company or insurance broker or agent, but
its bank subsidiary cannot own the insurance company. Under state law, the
financial holding company would need to apply to the insurance commissioner in
the insurer's state of domicile for prior approval of the acquisition of the
insurer, and the act provides that the commissioner, in considering the
application, may not discriminate against the financial holding company because
it is affiliated with a bank. Under the act, no state may prevent or interfere
with affiliations between banks and insurers, insurance agents or brokers, or
the licensing of a bank or affiliate as an insurer or agent or broker.

On October 26, 2001, the International Money Laundering Abatement and
Anti-Terrorist Financing Act of 2001 was enacted into law as part of the USA
PATRIOT Act. Among its many provisions the law requires that financial
institutions adopt anti-money laundering programs that include policies,
procedures and controls to detect and prevent money laundering, designate a
compliance officer to oversee the program and provide for employee training, and
periodic audits in accordance with regulations to be issued by the U.S. Treasury
Department. JHVLICO is actively developing a program in order to fully comply
with the applicable provisions of the Act and the related Treasury Regulations.

Tax Legislation

Currently, under the Internal Revenue Code, holders of many life insurance and
annuity products, including both traditional and variable products, are entitled
to tax-favored treatment on these products. For example, income tax payable by
policyholders on investment earnings under traditional and variable life
insurance and annuity products which are owned by natural persons is deferred
during the product's accumulation period and is payable, if at all, only when
the insurance or annuity benefits are actually paid or to be paid. Also, for
example, interest on loans up to $50,000 secured by the cash value of life
insurance policies owned by businesses on key employees is eligible for
deduction even though investment earnings during the accumulation period are
tax-deferred.

In the past, legislation has been proposed that would have curtailed the
tax-favored treatment of some of our insurance and annuity products. If any such
proposals were enacted, market demand for such products would be adversely
affected. In addition, the Economic Growth and Tax Relief Reconciliation Act of
2001 (EGTRRA), enacted by Congress in 2001, provides for the gradual reduction
and eventual elimination of Federal estate taxes by the year 2010. But EGTRRA
also contains a sunset provision which would reinstate Federal estate taxes in
the year 2011, based on the Internal Revenue Code in effect prior to the
enactment of EGTRRA. Many insurance products are designed and sold to help
policyholders reduce the effect of Federal estate taxation on their estates.
The enactment of EGTRRA has adversely affected sales of certain of our
insurance and investment advisory products, but this effect is mitigated
somewhat by the sunset provision. If the sunset provision of EGTRRA is
eliminated in the future, the adverse affect on the sales of these products
could increase. In addition, sales of split dollar life insurance products have
been adversely affected by proposed changes being considered by the Internal
Revenue Service.

Securities Laws

All of our separate investment accounts that fund retail variable annuity
contracts and retail variable life insurance products issued by us, other than
those which fund private placement investment options that are exempt from
registration or support fixed rate investment options that are also exempt from
registration, are registered both under the Securities Act and the Investment
Company Act. Products sold to sophisticated investors as "private placements"
are exempt from registration under both acts but may be subject to other
requirements of those laws, such as antifraud provisions and the terms of
applicable exemptions.

Directors and Executive Officers

The directors and executive officers of JHVLICO and their principal
occupations during the past five years are as follows:

Directors and Executive Officers Principal Occupations
- -------------------------------- ---------------------

David F. D'Alessandro ................ Chairman of the Board of JHVLICO; Chairman, President and Chief
Executive Officer, John Hancock Life Insurance Company.
Michele G. Van Leer .................. Vice Chairman of the Board and President of JHVLICO; Senior Vice
President, John Hancock Life Insurance Company
Ronald J. Bocage ..................... Director, Vice President and Counsel of JHVLICO; Vice
President and Counsel, John Hancock Life Insurance Company.
Todd G. Engelsen ..................... Director and Vice President of JHVLICO; Vice
President, John Hancock Life Insurance Company
Bruce M. Jones ....................... Director and Vice President of JHVLICO; Senior
Vice President, John Hancock Life Insurance Company.
Daniel L. Ouellette .................. Director and Vice President of JHVLICO; Senior
Vice President, John Hancock Life Insurance Company.
Barbara L. Luddy ..................... Director, Vice President and Actuary of JHVLICO;
Senior Vice President, John Hancock Life Insurance Company.
Robert R. Reitano .................... Director, Vice President and Chief Investment
officer of JHVLICO; Senior Vice President and
Chief Investment Strategist, John Hancock LifeInsurance Company.
Paul Strong .......................... Director and Vice President of JHVLICO; Vice
President, John Hancock Life Insurance Company.
Roger G. Nastou ...................... Vice President, Investments, of JHVLICO; Vice
President, John Hancock Life Insurance Company
Julie H. Indge ....................... Treasurer of JHVLICO; Assistant Treasurer, John
Hancock Life Insurance Company
Earl W. Baucom ....................... Controller of JHVLICO; Senior Vice President and
Controller, John Hancock Life Insurance Company.
Peter Scavongelli .................... Secretary of JHVLICO; State Compliance Officer,
John Hancock Life Insurance Company

The business address of all directors and executive officers of JHVLICO is
John Hancock Place, Boston, Massachusetts 02117.

Executive Compensation

The following table provides information on the allocated compensation paid
to the chief executive officer for 2001. There were no other executive officers
of JHVLICO whose allocated compensation exceeded $100,000 during 2001. Executive
officers of JHVLICO also serve one or more of the affiliated companies of
JHLICO. Allocations have been made as to each individual's time devoted to his
or her duties as an executive officer of JHVLICO.

Directors of JHVLICO receive no compensation in addition to their compensation
as employees of JHLICO.

- -------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
------------------- ----------------------
Name Title Salary Bonus Other LTIP All Other
---- ----- ------ ----- ----- ---- ---------

D. F. D'Alessandro Chairman $37,632 $61,555 $3,041 $49,428 $0
- -------------------------------------------------------------------------------------------------

PERFORMANCE INFORMATION

We may advertise total return information about investments made in the
variable investment options. We refer to this information as "Account level"
performance. In our Account level advertisements, we usually calculate total
return for 1, 5, and 10 year periods or since the beginning of the applicable
variable investment option.

Total return at the Account level is the percentage change between:

. the value of a hypothetical investment in a variable investment option at the
beginning of the relevant period, and

. the value at the end of such period.

At the Account level, total return reflects adjustments for:

. the mortality and expense risk charges, and

. the annual contract fee.

Total return at the Account level does not, however, reflect any premium tax
charges or any charges for optional benefit riders. Total return at the Account
level will be lower than that at the Series Fund level where comparable charges
are not deducted.

We may advertise "current yield" and "effective yield" for investments in the
Money Market investment option. Current yield refers to the income earned on
your investment in the Money Market investment option over a 7-day period and
then annualized. In other words, the income earned in the period is assumed to
be earned every 7 days over a 52-week period and stated as a percentage of the
investment.

Effective yield is calculated in a similar manner but, when annualized, the
income earned by your investment is assumed to be reinvested and thus compounded
over the 52-week period. Effective yield will be slightly higher than current
yield because of this compounding effect of reinvestment.

Current yield and effective yield reflect all the recurring charges at the
Account level, but will not reflect any premium tax charge or any charge for
optional benefit riders.

REPORTS

At least annually, we will send you (1) a report showing the number and value
of the accumulation units in your contract and (2) the financial statements of
the Series Funds.

VOTING PRIVILEGES

At meetings of the Series Funds' shareholders, we will generally vote all the
shares of each Fund that we hold in the Account in accordance with instructions
we receive from the owners of contracts that participate in the corresponding
variable investment option.

CERTAIN CHANGES

Changes to the Account

We reserve the right, subject to applicable law, including any required
shareholder approval,

. to transfer assets that we determine to be your assets from the Account to
another separate account or investment option by withdrawing the same
percentage of each investment in the Account with proper adjustments to avoid
odd lots and fractions,

. to add or delete variable investment options,

. to change the underlying investment vehicles,

. to operate the Account in any form permitted by law, and

. to terminate the Account's registration under the 1940 Act, if such
registration should no longer be legally required.

Unless otherwise required under applicable laws and regulations, notice to or
approval of owners will not be necessary for us to make such changes.

Variations in charges or rates for eligible classes

We may allow a reduction in or the elimination of any contract charges, or an
increase in a credited interest rate for a guarantee period. The affected
contracts would involve sales to groups or classes of individuals under special
circumstances that we expect to result in a reduction in our expenses associated
with the sale or maintenance of the contracts, or that we expect to result in
mortality or other risks that are different from those normally associated with
the contracts.

The entitlement to such variation in charges or rates will be determined by us
based upon such factors as the following:

. the size of the initial premium payment,

. the size of the group or class,

. the total amount of premium payments expected to be received from the group
or class and the manner in which the premium payments are remitted,

. 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 or morbidity risks associated with that group or class;

. the purpose for which the contracts are being purchased and whether that
purpose makes it likely that the costs and expenses will be reduced, or

. the level of commissions paid to selling broker-dealers or certain financial
institutions with respect to contracts within the same group or class.

We will make any reduction in charges or increase in initial guarantee rates
according to our rules in effect at the time an application for a contract is
approved. We reserve the right to change these rules from time to time. Any
variation in charges or rates 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.
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.

DISTRIBUTION OF CONTRACTS

Signator Investors, Inc.("Signator") acts as principal distributor of the
contracts sold through this prospectus. Signator is registered as a
broker-dealer under the Securities Exchange Act of 1934, and a member of the
National Association of Securities Dealers, Inc. Signator's address is 200
Clarendon Street, John Hancock Place, Boston, Massachusetts 02117. Signator is a
subsidiary of John Hancock Life Insurance Company.

You can purchase a contract through registered representatives of
broker-dealers and certain financial institutions who have entered into selling
agreements with JHVLICO and Signator. We pay broker-dealers compensation for
promoting, marketing and selling our variable insurance and variable annuity
products. In turn, the broker-dealers pay a portion of the compensation to their
registered representatives, under their own arrangments. Signator will also pay
its own registered representatives for sales of the contracts to their
customers. We do not expect the compensation we pay to such broker-dealers
(including Signator) and financial institutions to exceed 8.0% of premium
payments (on a present value basis) for sales of the contracts described in this
prospectus. For limited periods of time, we may pay additional compensation to
broker-dealers as part of special sales promotions. We offer these contracts on
a continuous basis, but neither JHVLICO nor Signator is obligated to sell any
particular amount of contracts. We also reimburse Signator for direct and
indirect expenses actually incurred in connection with the marketing of these
contracts.

From time to time, Signator, at its expense, may provide significant
additional compensation to financial services firms which sell or arrange for
the sale of the contracts. Such compensation may include, for example, financial
assistance to financial services firms in connection with their conferences or
seminars, sales or training programs for invited registered representatives and
other employees, payment for travel expenses, including lodging, incurred by
registered representatives and other employees for such seminars or training
programs, seminars for the public, advertising and sales campaigns regarding the
contracts, and/or other financial services firms-sponsored events or activities.

EXPERTS

Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements and schedules of John Hancock Variable Life Insurance
Company at December 31, 2001 and 2000, and for each of the three years in the
period ended December 31, 2001, and the financial statements of John Hancock
Variable Annuity Account JF at December 31, 2001 and for each of the periods
indicated therein, as set forth in their reports. We've included the financial
statements and schedules of JHVLICO in this prospectus, and the financial
statements of the Account in the Statement of Additional Information, which also
is a part of the registration statement that contains this prospectus. These
financial statements are included in the registration statement in reliance on
Ernst & Young LLP's reports, given on their authority as experts in accounting
and auditing.

REGISTRATION STATEMENT

JHVLICO complies with the reporting requirements of the Securities Act of
1934. You can get more details from the SEC upon payment of prescribed fees or
through the SEC's internet web site (www.sec.gov).

This prospectus omits certain information contained in the registration
statement that we filed with the SEC. Among other things, the registration
statement contains a "Statement of Additional Information" that we will send you
without charge upon request. The Table of Contents of the Statement of
Additional Information lists the following subjects that it covers:

page of SAI

DISTRIBUTION ......................................... 2

CALCULATION OF PERFORMANCE
DATA ............................................... 2

CALCULATION OF ANNUITY PAYMENTS ...................... 9

ADDITIONAL INFORMATION ABOUT
DETERMINING UNIT VALUES ............................ 11

PURCHASES AND
REDEMPTIONS OF FUND SHARES. ........................ 12

THE ACCOUNT ......................................... 12

DELAY OF CERTAIN PAYMENTS ........................... 12

LIABILITY FOR TELEPHONE TRANSFERS ................... 13

VOTING PRIVILEGES ................................... 13

FINANCIAL STATEMENTS ................................ 15

CONDENSED FINANCIAL INFORMATION

JOHN HANCOCK VARIABLE ANNUITY ACCOUNT JF

The following table provides selected data for Revolution accumulation shares
for each investment option that was available during the period shown.
Revolution commenced operations on August 10, 1999.

Period from
Year Ended Year Ended August 10, 1999
December 31, December 31, to December 31,
2001 2000 1999
------------ ------------ ----------------

EQUITY INDEX
Accumulation share value:
Beginning of period ....................................................... $20.22 $22.54 $10.00
End of period ............................................................. $17.58 $20.22 $22.54
Number of Accumulation Shares outstanding at end of period .................. 804,600 507,320 76,098
GROWTH & INCOME
Accumulation share value:
Beginning of period (Note 2) .............................................. $8.82 $10.00 --
End of period ............................................................. $7.36 $8.82 --
Number of Accumulation Shares outstanding at end of period .................. 1,817,947 12,749 --
LARGE CAP VALUE
Accumulation share value:
Beginning of period (Note 3) ............................................. $10.00 -- --
End of period ............................................................. $11.38 -- --
Number of Accumulation Shares outstanding at end of period .................. 334,667 -- --
LARGE CAP VALUE CORE/SM/
Accumulation share value:
Beginning of period ....................................................... $10.71 $10.31 $10.00
End of period ............................................................. $10.07 $10.71 $10.31
Number of Accumulation Shares outstanding at end of period .................. 1,056,790 520,128 92,493
LARGE CAP GROWTH
Accumulation share value:
Beginning of period (Note 3) .............................................. $10.00 -- --
End of period ............................................................. $8.13 -- --
Number of Accumulation Shares outstanding at end of period .................. 77,662 -- --
LARGE CAP AGGRESSIVE GROWTH
Accumulation share value:
Beginning of period ....................................................... $9.60 $11.97 $10.00
End of period ............................................................. $8.09 $9.60 $11.97
Number of Accumulation Shares outstanding at end of period .................. 1,205,414 1,040,129 178,388
FUNDAMENTAL VALUE
Accumulation share value:
Beginning of period ....................................................... $11.68 $10.43 $10.00
End of period ............................................................. $10.73 $11.68 $10.43
Number of Accumulation Shares outstanding at end of period .................. 802,605 347,760 64,904
MULTI CAP GROWTH
Accumulation share value:
Beginning of period (Note 1) .............................................. $7.11 $10.00 --
End of period ............................................................. $4.43 $7.11 --
Number of Accumulation Shares outstanding at end of period .................. 1,636,323 629,910 --
FUNDAMENTAL GROWTH
Accumulation share value:
Beginning of period ....................................................... $14.74 $15.39 $10.00
End of period ............................................................. $9.86 $14.74 $15.39
Number of Accumulation Shares outstanding at end of period .................. 589,572 525,081 38,912
SMALL/MID CAP CORE/SM/
Accumulation share value:
Beginning of period ....................................................... $13.16 $12.73 $11.00
End of period ............................................................. $13.06 $13.16 $12.73
Number of Accumulation Shares outstanding at end of period .................. 220,092 114,891 9,532

Period from
Year Ended Year Ended August 10, 1999
December 31, December 31, to December 31,
2001 2000 1999
------------ ------------ ----------------

SMALL/MID CAP GROWTH
Accumulation share value:
Beginning of period ....................................................... $20.47 $18.98 $18.07
End of period ............................................................. $20.79 $20.47 $18.98
Number of Accumulation Shares outstanding at end of period .................. 242,085 136,439 14,779
SMALL CAP EQUITY
Accumulation share value:
Beginning of period (Note 2) .............................................. $8.30 $10.00 --
End of period ............................................................. $7.90 $ 8.30 --
Number of Accumulation Shares outstanding at end of period .................. 79,406 535 --
SMALL CAP VALUE
Accumulation share value:
Beginning of period ....................................................... $13.87 $10.46 $10.00
End of period ............................................................. $16.31 $13.87 $10.46
Number of Accumulation Shares outstanding at end of period .................. 546,648 241,338 --
SMALL CAP GROWTH
Accumulation share value:
Beginning of period ....................................................... $16.44 $21.19 $14.27
End of period ............................................................. $14.19 $16.44 $21.19
Number of Accumulation Shares outstanding at end of period .................. 715,728 608,753 59,529
V.A. RELATIVE VALUE
Accumulation share value:
Beginning of period (Note 1) .............................................. $9.20 $10.00 --
End of period ............................................................. $8.84 $9.20 --
Number of Accumulation Shares outstanding at end of period .................. 560,990 172,283 --
AIM V.I. PREMIER EQUITY
Accumulation share value:
Beginning of period ....................................................... $9.92 $11.77 $10.00
End of period ............................................................. $8.57 $9.92 $11.77
Number of Accumulation Shares outstanding at end of period .................. 3,090,645 2,548,369 302,772
FIDELITY VIP GROWTH - SERVICE CLASS
Accumulation share value:
Beginning of period ....................................................... $10.57 $12.04 $10.00
End of period ............................................................. $8.59 $10.57 $12.04
Number of Accumulation Shares outstanding at end of period .................. 2,501,361 1,875,307 205,097
FIDELITY VIP CONTRAFUND(R) - SERVICE CLASS
Accumulation share value:
Beginning of period ....................................................... $10.69 $11.61 $10.00
End of period ............................................................. $9.25 $10.69 $11.61
Number of Accumulation Shares outstanding at end of period .................. 1,645,859 1,447,471 237,990
MFS INVESTORS GROWTH STOCK - INITIAL CLASS
Accumulation share value:
Beginning of period ....................................................... $11.45 $12.36 $10.00
End of period ............................................................. $8.58 $11.45 $12.36
Number of Accumulation Shares outstanding at end of period .................. 1,280,675 971,077 158,192
MFS RESEARCH - INITIAL CLASS
Accumulation share value:
Beginning of period ....................................................... $11.14 $11.86 $10.00
End of period ............................................................. $8.67 $11.14 $11.86
Number of Accumulation Shares outstanding at end of period .................. 970,571 672,010 73,452
MFS NEW DISCOVERY - INITIAL CLASS
Accumulation share value:
Beginning of period ....................................................... $14.77 $15.26 $10.00
End of period ............................................................. $13.85 $14.77 $15.26
Number of Accumulation Shares outstanding at end of period .................. 533,377 431,090 36,557

Period from
Year Ended Year Ended August 10, 1999
December 31, December 31, to December 31,
2001 2000 1999
------------ ------------ ----------------

INTERNATIONAL OPPORTUNITIES
Accumulation share value:
Beginning of period (Note 3) .............................................. $10.00 -- --
End of period ............................................................. $8.33 -- --
Number of Accumulation Shares outstanding at end of period .................. 20,457 -- --
FIDELITY VIP OVERSEAS - SERVICE CLASS
Accumulation share value:
Beginning of period ....................................................... $9.97 $12.48 $10.00
End of period ............................................................. $7.75 $9.97 $12.48
Number of Accumulation Shares outstanding at end of period .................. 960,931 1,107,608 30,517
EMERGING MARKETS EQUITY
Accumulation share value:
Beginning of period (Note 3) .............................................. $10.00 -- --
End of period ............................................................. $9.85 -- --
Number of Accumulation Shares outstanding at end of period .................. 7,941 -- --
JANUS ASPEN WORLDWIDE GROWTH - SERVICE SHARES CLASS
Accumulation share value:
Beginning of period (Note 2) .............................................. $9.03 $10.00 --
End of period ............................................................. $6.90 $9.03 --
Number of Accumulation Shares outstanding at end of period .................. 322,018 128,709 --
REAL ESTATE EQUITY
Accumulation share value:
Beginning of period (Note 2) .............................................. $10.95 $10.00 --
End of period ............................................................. $11.43 $10.95 --
Number of Accumulation Shares outstanding at end of period .................. 138,332 1,766 --
HEALTH SCIENCES
Accumulation share value:
Beginning of period (Note 3) .............................................. $10.00 -- --
End of period ............................................................. $9.73 -- --
Number of Accumulation Shares outstanding at end of period .................. 100,786 -- --
V.A. FINANCIAL INDUSTRIES
Accumulation share value:
Beginning of period ....................................................... $17.90 $14.25 $10.00
End of period ............................................................. $14.58 $17.90 $14.25
Number of Accumulation Shares outstanding at end of period .................. 855,100 642,376 113,876
V.A. TECHNOLOGY
Accumulation share value:
Beginning of period (Note 1) .............................................. $7.28 $10.00 --
End of period ............................................................. $4.02 $7.28 --
Number of Accumulation Shares outstanding at end of period .................. 1,348,542 679,427 --
MANAGED
Accumulation share value:
Beginning of period (Note 2) .............................................. $9.73 $10.00 --
End of period ............................................................. $9.34 $9.73 --
Number of Accumulation Shares outstanding at end of period .................. 868,814 89 --
GLOBAL BALANCED
Accumulation share value:
Beginning of period ....................................................... $11.65 $12.98 $12.24
End of period ............................................................. $10.76 $11.65 $12.98
Number of Accumulation Shares outstanding at end of period .................. 128,318 63,735 5,361
SHORT TERM BOND
Accumulation share value:
Beginning of period ....................................................... $13.30 $12.48 $12.34
End of period ............................................................. $14.20 $13.30 $12.48
Number of Accumulation Shares outstanding at end of period .................. 440,240 126,421 15,433

Period from
Year Ended Year Ended August 10, 1999
December 31, December 31, to December 31,
2001 2000 1999
------------ ------------ ----------------

BOND INDEX
Accumulation share value:
Beginning of period ........................................................ $10.63 $9.63 $9.65
End of period ............................................................. $11.31 $10.63 $9.63
Number of Accumulation Shares outstanding at end of period ................. 833,929 327,502 47,232
ACTIVE BOND
Accumulation share value:
Beginning of period (Note 3) ............................................... $10.00 -- --
End of period ............................................................. $10.39 -- --
Number of Accumulation Shares outstanding at end of period ................. 1,154,989 -- --
V.A. STRATEGIC INCOME
Accumulation share value:
Beginning of period ........................................................ $12.64 $12.62 $12.25
End of period ............................................................. $13.05 $12.64 $12.62
Number of Accumulation Shares outstanding at end of period ................. 813,003 535,897 58,942
HIGH YIELD BOND
Accumulation share value:
Beginning of period ........................................................ $9.04 $10.27 $10.00
End of period ............................................................. $9.12 $9.04 $10.27
Number of Accumulation Shares outstanding at end of period ................. 644,021 333,028 48,898
GLOBAL BOND
Accumulation share value:
Beginning of period (Note 2) ............................................... $10.60 $10.00 --
End of period ............................................................. $10.31 $10.60 --
Number of Accumulation Shares outstanding at end of period ................. 71,857 -- --
MONEY MARKET
Accumulation share value:
Beginning of period (Note 3) ............................................... $10.00 -- --
End of period ............................................................. $10.12 -- --
Number of Accumulation Shares outstanding at end of period ................. 4,289,180 -- --

(1) Values shown for 2000 begin on May 1, 2000.

(2) Values shown for 2000 begin on November 1, 2000.

(3) Values shown for 2001 begin on May 1, 2001.

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
John Hancock Variable Life Insurance Company

We have audited the accompanying consolidated balance sheets of John Hancock
Variable Life Insurance Company as of December 31, 2001 and 2000, and the
related consolidated statements of income, changes in shareholder's equity and
comprehensive income, and cash flows for each of the three years in the period
ended December 31, 2001. Our audits also included the financial statement
schedules. These financial statements and schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of John Hancock
Variable Life Insurance Company at December 31, 2001 and 2000, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.

As discussed in Note 1 to the consolidated financial statements, in 2001 the
Company changed its method of accounting for derivatives.

/s/ ERNST & YOUNG LLP

Boston, Massachusetts
March 21, 2002

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS

DECEMBER 31

2001 2000
---------- ----------

(IN MILLIONS)

ASSETS
Investments--Notes 3 and 4
Fixed maturities:
Held-to-maturity--at amortized cost
(fair value: 2001--$82.1; 2000--$686.8) ............................. $ 83.7 $ 715.4
Available-for-sale--at fair value
(cost: 2001--$2,391.9; 2000--$1,018.8) ............................. 2,412.5 1,011.8
Equity securities:
Available-for-sale--at fair value
(cost: 2001--$12.1; 2000--$7.1) ..................................... 13.1 8.1
Mortgage loans on real estate ......................................... 580.9 554.8
Real estate ........................................................... 20.6 23.9
Policy loans .......................................................... 352.0 334.2
Short-term investments ................................................ -- 21.7
Other invested assets ................................................. 39.6 34.8
--------- ---------
Total Investments ................................................... 3,502.4 2,704.7

Cash and cash equivalent .............................................. 115.4 277.3
Accrued investment income ............................................. 60.8 52.1
Premiums and accounts receivable ...................................... 12.5 7.0
Deferred policy acquisition costs ..................................... 1,060.8 994.1
Reinsurance recoverable--Note 6 ....................................... 110.4 48.4
Other assets .......................................................... 121.8 28.2
Separate accounts assets .............................................. 6,729.1 8,082.9
--------- ---------
Total Assets ........................................................ $11,713.2 $12,194.7
========= =========

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS (CONTINUED)

DECEMBER 31

2001 2000
---------- ----------

(IN MILLIONS)

LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities
Future policy benefits ................................................ $ 3,335.4 $ 2,754.2
Policyholders' funds .................................................. 3.0 14.2
Unearned revenue ...................................................... 221.0 212.0
Unpaid claims and claim expense reserves .............................. 25.0 11.1
Dividends payable to policyholders .................................... 0.3 0.1
Income taxes--Note 5 .................................................. 191.1 64.2
Other liabilities ..................................................... 242.7 250.4
Separate accounts liabilities ......................................... 6,729.1 8,082.9
--------- ---------
Total Liabilities ................................................... 10,747.6 11,389.1
Shareholder's Equity--Note 8
Common stock, $50 par value; 50,000 shares
authorized;
50,000 shares issued and outstanding ................................. 2.5 2.5
Additional paid in capital ............................................ 572.4 572.4
Retained earnings ..................................................... 377.8 232.9
Accumulated other comprehensive loss .................................. 12.9 (2.2)
--------- ---------
Total Shareholder's Equity .......................................... 965.6 805.6
--------- ---------
Total Liabilities and Shareholder's Equity .......................... $11,713.2 $12,194.7
========= =========

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31

2001 2000 1999
------ ------ ------

(IN MILLIONS)

REVENUES
Premiums ................................................................................. $ 60.1 $ 28.6 $ 8.9
Universal life and investment-type product charges ....................................... 365.4 337.1 341.5
Net investment income--Note 3 ............................................................ 227.0 213.4 174.6
Net realized investment and other gains (losses), net of related
amortization of deferred policy acquisition costs of $(1.5), $(3.8)
and $(0.5), respectively--Notes 1, 3, and 9 ............................................. (9.0) (10.6) (4.8)
Other revenue ............................................................................ 24.0 0.2 0.2
------ ------ ------
Total revenues ........................................................................... 667.5 568.7 520.4
BENEFITS AND EXPENSES
Benefits to policyholders ................................................................ 294.1 248.6 260.5
Other operating costs and expenses ....................................................... 76.2 116.8 117.5
Amortization of deferred policy acquisition costs, excluding
amounts related to net realized investment and other
gains (losses) of $(1.5), $(3.8) and $(0.5), respectively
--Notes 1, 3 and 9 ...................................................................... 67.1 34.0 13.1
Dividends to policyholders ............................................................... 21.4 26.1 25.7
------ ------ ------
Total benefits and expenses .............................................................. 458.8 425.5 416.8
------ ------ ------
Income before income taxes and cumulative effect of
accounting change ....................................................................... 208.7 143.2 103.6
Income taxes--Note 5 .................................................................... 62.2 43.8 35.2
------ ------ ------
Income before cumulative effect of accounting change ..................................... 146.5 99.4 68.4
Cumulative effect of accounting change, net of tax ....................................... (1.6) -- --
------ ------ ------
Net income ............................................................................... $144.9 $ 99.4 $ 68.4
====== ====== ======

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY

AND COMPREHENSIVE INCOME

ACCUMULATED
ADDITIONAL OTHER TOTAL OUTSTANDING
COMMON PAID IN RETAINED COMPREHENSIVE SHAREHOLDER'S SHARES (IN
STOCK CAPITAL EARNINGS INCOME EQUITY THOUSANDS)
-------- ------------ ---------- --------------- --------------- -------------
(IN MILLIONS)

BALANCE AT JANUARY 1, 1999 ...................... $2.5 $377.5 $ 65.1 $ 12.3 $457.4 50.0
Comprehensive income:
Net income ...................................... 68.4 68.4
Other comprehensive income, net of tax:
Net unrealized losses .......................... (25.7) (25.7)
------
Comprehensive income ............................ 42.7
Capital contribution ............................ 194.9 194.9
---- ------ ------ ------ ------ ----
BALANCE AT DECEMBER 31, 1999 .................... $2.5 $572.4 $133.5 $(13.4) $695.0 50.0
==== ====== ====== ====== ====== ====
Comprehensive income:
Net income ...................................... 99.4 99.4
Other comprehensive income, net of tax:
Net unrealized gains ........................... 11.2 11.2
------
Comprehensive income ............................ 110.6
---- ------ ------ ------ ------ ----
BALANCE AT DECEMBER 31, 2000 .................... $2.5 $572.4 $232.9 $ (2.2) $805.6 50.0
==== ====== ====== ====== ====== ====
Comprehensive income:
Net income ..................................... 144.9 144.9
Other comprehensive income, net of tax:
Net unrealized gains ........................... 7.9 7.9
------
Comprehensive income ............................ 152.8
Change in accounting principle .................. 7.2 7.2
---- ------ ------ ------ ------ ----
BALANCE AT DECEMBER 31, 2001 .................... $2.5 $572.4 $377.8 $ 12.9 $965.6 50.0
==== ====== ====== ====== ====== ====

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31

2001 2000 1999
-------- -------- --------
(IN MILLIONS)

Cash flows from operating activities:
Net income ................................................................ $ 144.9 $ 99.4 $ 68.4
Adjustments to reconcile net income to net cash provided (used) by
operating activities:
Amortization of discount - fixed maturities ............................ (0.4) (1.9) 1.2
Realized investment losses, net ........................................ 9.0 10.6 4.8
Change in deferred policy acquisition costs ............................ (74.1) (141.5) (126.5)
Depreciation and amortization .......................................... 0.3 1.9 0.6
Increase in accrued investment income .................................. (8.6) (10.2) (3.5)
Decrease (increase) in premiums and accounts receivable ................ (5.5) 0.3 (2.4)
(Increase) decrease in other assets and other liabilities, net ......... (159.2) 70.7 (58.2)
Increase (decrease) in policy liabilities and accruals, net ............ 289.1 (401.1) (377.6)
Increase in income taxes ............................................... 118.7 22.5 33.8
--------- ------- -------
Net cash provided (used) by operating activities ....................... 314.2 (349.3) (459.4)
Cash flows from investing activities:
Sales of:
Fixed maturities available-for-sale ...................................... 184.6 194.6 204.3
Equity securities available-for-sale ..................................... 6.0 1.0 0.6
Real estate .............................................................. 3.3 0.2 17.9
Short-term investments and other invested assets ......................... -- 1.3 1.5
Maturities, prepayments and scheduled redemptions of:
Fixed maturities held-to-maturity ........................................ 4.5 79.9 75.8
Fixed maturities available-for-sale ...................................... 180.4 91.5 53.6
Short-term investments and other invested assets ......................... 46.5 10.1 --
Mortgage loans on real estate ............................................ 66.4 85.6 35.8
Purchases of:
Fixed maturities held-to-maturity ........................................ (5.1) (127.2) (98.8)
Fixed maturities available-for-sale ...................................... (1,112.3) (424.7) (250.9)
Equity securities available-for-sale ..................................... (6.1) (0.6) (4.0)
Real estate .............................................................. (0.6) (0.4) (2.2)
Short-term investments and other invested assets ......................... (39.6) (38.8) (14.6)
Mortgage loans on real estate issued ..................................... (85.0) (100.5) (90.3)
Other, net ............................................................... (25.6) (41.5) (30.6)
--------- ------- -------
Net cash used in investing activities ................................... (782.6) (269.5) (101.9)

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

YEAR ENDED DECEMBER 31

2001 2000 1999
-------- -------- --------
(IN MILLIONS)

Cash flows from financing activities:
Capital contribution from parent company .............................. -- -- $ 194.9
Universal life and investment-type contract deposits .................. $1,220.7 $1,067.2 1,026.3
Universal life and investment-type contract maturities
and withdrawals ..................................................... (914.2) (430.7) (380.7)
Repayment of long term debt ........................................... -- -- (61.9)
-------- -------- --------
Net cash provided by financing activities ............................. 306.5 636.5 778.6
-------- -------- --------
Net (decrease) increase in cash and cash equivalents .................. (161.9) 17.7 217.3
Cash and cash equivalents at beginning of year ......................... 277.3 259.6 42.3
-------- -------- --------
Cash and cash equivalents at end of year ............................... $ 115.4 $ 277.3 $ 259.6
======== ======== ========

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

John Hancock Variable Life Insurance Company (the Company) is a wholly-owned
subsidiary of John Hancock Life Insurance Company (John Hancock or the Parent).
The Company, domiciled in the Commonwealth of Massachusetts, issues variable and
universal life insurance policies, individual whole and term life policies and
fixed and variable annuity contracts. Those policies primarily are marketed
through John Hancock's sales organization, which includes a career agency system
composed of Company-supported independent general agencies and a direct
brokerage system that markets directly to external independent brokers. Policies
are also sold through various unaffiliated securities broker-dealers and certain
other financial institutions. Currently, the Company writes business in all
states except New York.

Basis of Presentation

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States (GAAP) requires management to
make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. Actual results could
differ from those estimates.

The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Investors Partner Life Insurance
Company (IPL). All significant intercompany transactions and balances have been
eliminated.

Partnerships, joint venture interests and other equity investments in which
the Company does not have a controlling interest, but has significant influence,
are recorded using the equity method of accounting and included in other
invested assets.

Certain prior year amounts have been reclassified to conform to the current
year presentation.

Reorganization and Initial Public Offering

Pursuant to a Plan of Reorganization approved by the policyholders and the
Commonwealth of Massachusetts Division of Insurance, effective February 1, 2000,
John Hancock converted from a mutual life insurance company to a stock life
insurance company (i.e., demutualized) and became a wholly owned subsidiary of
John Hancock Financial Services, Inc., which is a holding company. In connection
with the reorganization, John Hancock changed its name to John Hancock Life
Insurance Company. In addition, on February 1, 2000, John Hancock Financial
Services, Inc. completed its initial public offering and 102.0 million shares of
common stock were issued at an initial public offering price of $17 per share.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Investments

The Company classifies its debt and equity investment securities into one of
three categories: held-to-maturity, available-for-sale or trading. The Company
determines the appropriate classification of debt securities at the time of
purchase and re-evaluates such designation as of each balance sheet date. Fixed
maturity investments include bonds, mortgage-backed securities, and redeemable
preferred stock and are classified as held-to-maturity or available-for-sale.
Those bonds and mortgage-backed securities that the Company has the positive
intent and ability to hold to maturity are classified as held-to-maturity and
carried at amortized cost. Fixed maturity investments not classified as
held-to-maturity are classified as available-for-sale and are carried at fair
value. Unrealized gains and losses related to available-for-sale securities are
reflected in shareholder's equity, net of related amortization of deferred
policy acquisition costs and applicable taxes. The amortized cost of debt
securities is adjusted for amortization of premiums and accretion of discounts
to maturity. Such amortization is included in investment income. The amortized
cost of fixed maturity investments is adjusted for impairments in value deemed
to be other than temporary, and such adjustments are reported as a component of
net realized investment and other gains (losses).

For the mortgage-backed bond portion of the fixed maturity investment
portfolio, the Company recognizes income using a constant effective yield based
on anticipated prepayments and the estimated economic life of the securities.
When actual prepayments differ significantly from anticipated prepayments, the
effective yield is recalculated to reflect actual payments to date plus
anticipated future payments, and any resulting adjustment is included in net
investment income.

Equity securities include common stock and non-redeemable preferred stock.
Equity securities that have readily determinable fair values are carried at
fair value. For equity securities which the Company has classified as
available-for-sale, unrealized gains and losses are reflected in shareholder's
equity, as described above for fixed maturity securities. Impairments in value
deemed to be other than temporary are reported as a component of net realized
investment and other gains (losses).

Mortgage loans on real estate are carried at unpaid principal balances
adjusted for amortization of premium or discount, less allowance for probable
losses. When it is probable that the Company will be unable to collect all
amounts of principal and interest due according to the contractual terms of the
mortgage loan agreement, the loan is deemed to be impaired and a valuation
allowance for probable losses is established. The valuation allowance is based
on the present value of the expected future cash flows, discounted at the loan's
original effective interest rate or on the collateral value of the loan if the
loan is collateral dependent. Any change to the valuation allowance for mortgage
loans on real estate is reported as a component of net realized investment and
other gains (losses). Interest received on impaired mortgage loans on real
estate is included in interest income in the period received. If foreclosure
becomes probable, the measurement method used is collateral value. Foreclosed
real estate is then recorded at the collateral's fair value at the date of
foreclosure, which establishes a new cost basis.

Investment real estate, which the Company has the intent to hold for the
production of income, is carried at depreciated cost, using the straight-line
method of depreciation, less adjustments for impairments in value. In those
cases where it is determined that the carrying amount of investment real estate
is not recoverable, an impairment loss is recognized based on the difference
between the depreciated cost and fair value of the asset. The Company reports
impairment losses as part of net realized investment and other gains (losses).

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Real estate to be disposed of is carried at the lower of cost or fair value
less costs to sell. Any changes to the valuation allowance for real estate to be
disposed of is reported as a component of net realized investment and other
gains (losses). The Company does not depreciate real estate to be disposed of.

Policy loans are carried at unpaid principal balances, which approximate fair
value.

Short-term investments are carried at amortized cost, which approximates fair
value.

Net realized investment and other gains (losses), other than those related to
separate accounts for which the Company does not bear the investment risk, are
determined on the basis of specific identification and are reported net of
related amortization of deferred policy acquisition costs.

Derivative Financial Instruments

The Company uses various derivative instruments to hedge and manage its
exposure to changes in interest rate levels, foreign exchange rates, and equity
market prices, and to manage the duration of assets and liabilities. All
derivatives instruments are carried on the consolidated balance sheets at fair
value.

In certain cases, the Company uses hedge accounting as allowed by Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities," by designating derivative instruments as
either fair value hedges or cash flow hedges. For derivative instruments that
are designated and qualify as fair value hedges, the change in fair value of the
derivative instrument as well as the offsetting change in fair value of the
hedged item are recorded in net realized investment and other gains (losses).
Basis adjustments are amortized into income through net realized investment and
other gains (losses). For derivative instruments that are designated and qualify
as cash flow hedges, the effective portion of the change in fair value of the
derivative instrument is recorded in other comprehensive income, and then
reclassified into income when the hedged item affects income. Hedge
effectiveness is assessed quarterly by a variety of techniques including
regression analysis and cumulative dollar offset. In certain cases, there is no
hedge ineffectiveness because the derivative instrument was constructed such
that all the terms of the derivative exactly match the hedged risk in the hedged
item. If a hedge becomes ineffective, the hedge accounting described above
ceases.

In cases where the Company receives or pays a premium as consideration for
entering into a derivative instrument (i.e., interest rate caps and floors,
swaptions, and equity collars), the premium is amortized into investment income
over the useful life of the derivative instrument. The fair value of such
premiums (i.e., the inherent ineffectiveness of the derivative) is excluded from
the assessment of hedge effectiveness and is included in net realized investment
and other gains (losses). Changes in fair value of derivatives that are not
hedges are included in net realized investment and other gains (losses).

Cash and Cash Equivalents

Cash and cash equivalents include cash and all highly liquid debt investments
with a maturity of three months or less when purchased.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Deferred Policy Acquisition Costs

Costs that vary with, and are related primarily to, the production of new
business have been deferred to the extent that they are deemed recoverable. Such
costs include commissions, certain costs of policy issue and underwriting, and
certain agency expenses. For participating traditional life insurance policies,
such costs are being amortized over the life of the contracts at a constant rate
based on the present value of the estimated gross margin amounts expected to be
realized over the lives of the contracts. Estimated gross margin amounts include
anticipated premiums and investment results less claims and administrative
expenses, changes in the net level premium reserve and expected annual
policyholder dividends. For universal life insurance contracts and
investment-type products, such costs are being amortized generally in proportion
to the present value of expected gross profits arising principally from
surrender charges and investment results, and mortality and expense margins. The
effects on the amortization of deferred policy acquisition costs of revisions to
estimated gross margins and profits are reflected in earnings in the period such
estimated gross margins and profits are revised. For non-participating term life
insurance products, such costs are being amortized over the premium-paying
period of the related policies using assumptions consistent with those used in
computing policy benefit reserves. Amortization of deferred policy acquisition
costs was $68.6 million, $37.8 million and $13.6 million in 2001, 2000 and 1999,
respectively.

Amortization of deferred policy acquisition costs is allocated to: (1) net
realized investment and other gains (losses) for those products in which such
gains (losses) have a direct impact on the amortization of deferred policy
acquisition costs; (2) unrealized investment gains and losses, net of tax, to
provide for the effect on the deferred policy acquisition cost asset that would
result from the realization of unrealized gains and losses on assets backing
participating traditional life insurance and universal life and investment-type
contracts; and (3) a separate component of benefits and expenses to reflect
amortization related to the gross margins or profits, excluding realized gains
and losses, relating to policies and contracts in force.

Net realized investment and other gains (losses) related to certain products
have a direct impact on the amortization of deferred policy acquisition costs as
such gains and losses affect the amount and timing of profit emergence.
Accordingly, to the extent that such amortization results from net realized
investment and other gains and (losses), management believes that presenting
realized investment gains and losses net of related amortization of deferred
policy acquisition costs provides information useful in evaluating the operating
performance of the Company. This presentation may not be comparable to
presentations made by other insurers.

Reinsurance

The Company utilizes reinsurance agreements to provide for greater
diversification of business, allowing management to control exposure to
potential losses arising from large risks and provide additional capacity for
growth.

Assets and liabilities related to reinsurance ceded contracts are reported on
a gross basis. The accompanying statements of income reflect premiums, benefits
and settlement expenses net of reinsurance ceded. 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. The
Company remains liable to its policyholders to the extent that counterparties to
reinsurance ceded contracts do not meet their contractual obligations.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Separate Accounts

Separate account assets and liabilities reported in the accompanying
consolidated balance sheets represent funds that are administered and invested
by the Company to meet specific investment objectives of the contractholders.
Net investment income and net realized investment and other gains (losses)
generally accrue directly to such contractholders who bear the investment risk,
subject in some cases to minimum guaranteed rates. The assets of each separate
account are legally segregated and are not subject to claims that arise out of
any other business of the Company. Separate account assets are reported at fair
value. Deposits, net investment income and net realized investment and other
gains (losses) of separate accounts are not included in the revenues of the
Company. Fees charged to contractholders, principally mortality, policy
administration and surrender charges, are included in universal life and
investment-type product charges.

Future Policy Benefits and Policyholders' Funds

Future policy benefits for participating traditional life insurance policies
are based on the net level premium method. This net level premium reserve is
calculated using the guaranteed mortality and dividend fund interest rates,
which range from 4.5% to 5.0%. The liability for annual dividends represents the
accrual of annual dividends earned. Settlement dividends are accrued in
proportion to gross margins over the life of the contract.

For non-participating traditional life insurance policies, future policy
benefits are estimated using a net level premium method on the basis of
actuarial assumptions as to mortality, persistency, interest and expenses
established at policy issue. Assumptions established at policy issue as to
mortality and persistency are based on the Company's experience, which, together
with interest and expense assumptions, include a margin for adverse deviation.
Benefit liabilities for annuities during the accumulation period are equal to
accumulated contractholders' fund balances and after annuitization are equal to
the present value of expected future payments. Interest rates used in
establishing such liabilities range from 7.5% to 8.0% for life insurance
liabilities, and from 3.5% to 10.3% for individual annuity liabilities.

Policyholders' funds for universal life and investment-type products are equal
to the policyholder account values before surrender charges. Policy benefits
that are charged to expense include benefit claims incurred in the period in
excess of related policy account balances and interest credited to
policyholders' account balances. Interest crediting rates range from 3.0% to
9.0% for universal life products.

Liabilities for unpaid claims and claim expenses include estimates of payments
to be made on reported individual life claims and estimates of incurred but not
reported claims based on historical claims development patterns.

Estimates of future policy benefit reserves, claim reserves and expenses are
reviewed continually and adjusted as necessary; such adjustments are reflected
in current earnings. Although considerable variability is inherent in such
estimates, management believes that future policy benefit reserves and unpaid
claims and claims expense reserves are adequate.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Participating Insurance

Participating business represents approximately 7.6% and 16.3% of the
Company's life insurance in-force at December 31, 2001 and 2000, respectively.

The amount of policyholders' dividends to be paid is approved annually by the
Company's Board of Directors. The determination of the amount of policyholder
dividends is complex and varies by policy type. In general, the aggregate amount
of policyholders' dividends is related to actual interest, mortality, morbidity,
persistency and expense experience for the year and is also based on
management's judgment as to the appropriate level of statutory surplus to be
retained by the Company.

Revenue Recognition

Premiums from participating and non-participating traditional life insurance
and annuity policies with life contingencies are recognized as income when due.

Premiums from universal life and investment-type contracts are reported as
deposits to policyholders' account balances. Revenues from these contracts
consist of amounts assessed during the period against policyholders' account
balances for mortality charges, policy administration charges and surrender
charges.

Premiums for contracts with a single premium or a limited number of premium
payments, due over a significantly shorter period than the total period over
which benefits are provided, are recorded in income when due. The portion of
such premium that is not required to provide for all benefits and expenses is
deferred and recognized in income in a constant relationship to insurance in
force or, for annuities, the amount of expected future benefit payments.

Federal Income Taxes

The provision for federal income taxes includes amounts currently payable or
recoverable and deferred income taxes, computed under the liability method,
resulting from temporary differences between the tax basis and book basis of
assets and liabilities. A valuation allowance is established for deferred tax
assets when it is more likely than not that an amount will not be realized.

Foreign Currency Translation

Gains or losses on foreign currency transactions are reflected in earnings.

Cumulative Effect of Accounting Changes

On January 1, 2001, the Company adopted SFAS No. 133, as amended by SFAS No.
138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities". The adoption of SFAS No. 133, as amended, resulted in a charge to
operations accounted for as a cumulative effect of accounting change of $1.6
million (net of tax of $0.4 million) as of January 1, 2001. In addition, as of
January 1, 2001, a $7.2 million (net of tax of $3.9 million) cumulative effect
of accounting change was recorded in other comprehensive income including (1)
the transition adjustment in the adoption of SFAS 133, as amended, an increase
of $0.8 million (net of tax of $0.4 million), and (2) the reclassification of
$603.1 million in securities from the held-to-maturity category to the
available-for-sale category, an increase of $6.4 million (net of tax of $3.4
million).

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements

In September 2001, the FASB's Emerging Issues Task Force reached a consensus
on Issue 01-10, "Accounting for the Impact of the Terrorist Attacks of September
11, 2001." Issue 01-10 presents guidance relative to accounting for and
financial reporting of the events of September 11, 2001 (the Events), including
both how and when to measure, record and report losses and any resulting
liabilities which are directly attributable to the Events. Based on a
comprehensive review of the Company's operations, the Company believes that the
Events had no material financial impact on the Company's results of operations
or financial position.

In June 2001, the FASB issued SFAS No. 141, "Business Combinations." SFAS No.
141 requires that all business combinations be accounted for under a single
method, the purchase method. Use of the pooling-of-interests method is no longer
permitted. SFAS No. 141 also clarifies the criteria to recognize intangible
assets separately from goodwill, and prohibits the amortization of goodwill
relating to acquisitions completed after July 1, 2001. SFAS No. 141 is
effective for business combinations initiated after June 30, 2001.The adoption
of SFAS No. 141 did not have a material effect on the Company's results of
operations or financial position.

In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 142 requires that goodwill and other intangible assets deemed
to have indefinite lives no longer be amortized to earnings, but instead be
reviewed at least annually for impairment. Intangible assets with definite lives
will continue to be amortized over their useful lives. SFAS No. 142 will be
effective January 1, 2002. The Company has no goodwill, or other purchased
intangibles subject to SFAS No. 142 and, therefore, the Company does not expect
the impact of SFAS No. 142 to have any impact on its results of operations or
financial position.

In January, 2001, the FASB's Emerging Issues Task Force (EITF) reached a
consensus on Issue No. 99-20, "Recognition of Interest Income and Impairment on
Purchased and Retained Beneficial Interests in Securitized Financial Assets".
Issue 99-20 requires investors in certain asset-backed securities to record
changes in their estimated yield on a prospective basis and specifies evaluation
methods with which to evaluate these securities for an other-than-temporary
decline in value. The adoption of EITF 99-20 did not have a material financial
impact on the Company's results of operations or financial position.

In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," which
replaces SFAS No. 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities." SFAS No. 140 provides new accounting
and reporting standards which are based on consistent application of a financial
components approach that focuses on control. Under this approach, after a
transfer of financial assets, the Company recognizes the financial and servicing
assets it controls and the liabilities it has incurred, derecognizes financial
assets when control has been surrendered, and derecognizes liabilities when
extinguished. SFAS No. 140 provides consistent standards for distinguishing
transfers of financial assets that are sales from transfers that are secured
borrowings. SFAS No. 140 is effective for transfers and servicing of financial
assets and extinguishments of liabilities occurring after March 31, 2001. The
adoption of SFAS No. 140 did not have a material impact on the Company's results
of operations or financial position.

In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin 101 (SAB 101), "Revenue Recognition in Financial
Statements." SAB 101 clarifies the SEC staff's views on applying generally
accepted accounting principles to revenue recognition in financial statements.
In March 2000, the SEC issued an amendment, SAB 101A, which deferred the
effective date of SAB 101. In June 2000, the SEC issued a second amendment, SAB
101B, which deferred the effective date of SAB 101 to no later than the fourth
fiscal quarter of fiscal years beginning after December 15, 1999. The Company
adopted SAB 101 in the fourth quarter of fiscal 2000. The adoption of SAB 101
did not have a material impact on the Company's results of operations or
financial position.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Codification

In March 1998, the National Association of Insurance Commissioners (NAIC)
adopted codified statutory accounting principles (Codification) effective
January 1, 2001. Codification changes prescribed statutory accounting practices
and resulted in changes to the accounting practices that the Company and its
domestic life insurance subsidiary uses to prepare their statutory-basis
financial statements. The states of domicile of the Company and its domestic
life insurance subsidiary have adopted Codification as the prescribed basis of
accounting on which domestic insurers must report their statutory-basis results
effective January 1, 2001. The cumulative effect of changes in accounting
principles adopted to conform to the requirements of Codification is reported as
an adjustment to surplus in the statutory-basis financial statements as of
January 1, 2001. The implementation of Codification increased the Company's
statutory-basis capital and surplus and, the Company remains in compliance with
all regulatory and contractual obligations.

NOTE 2. RELATED PARTY TRANSACTIONS

John Hancock provides the Company with personnel, property, and facilities in
carrying out certain of its corporate functions. John Hancock annually
determines a fee (the parent company service fee) for these services and
facilities based on a number of criteria, which are periodically revised to
reflect continuing changes in the Company's operations. The parent company
service fee is included in deferred acquisition costs on the Company's balance
sheets, net investment income and other operating costs and expenses within the
Company's income statements. John Hancock charged the Company a service fee of
$159.9 million, $170.6 million and $199.3 million for the year ended December
31, 2001, 2000 and 1999, respectively. As of December 31, 2001 and 2000,
respectively, the Company owed John Hancock $17.9 million and $56.9 million
related to these services, which is included in other liabilities. John Hancock
has guaranteed that, if necessary, it will make additional capital contributions
to prevent the Company's shareholder's equity from declining below $1.0 million.

In 2001 the Company sold $200 million of corporate owned life insurance (COLI)
to its Parent to provide insurance coverage on key management employees of the
Parent. The death benefit on this COLI product would cover the cost of replacing
these employees, including recruiting, training, and development.

The Company has a modified coinsurance agreement with John Hancock to reinsure
50% of 1994 through 2001 issues of flexible premium variable life insurance and
scheduled premium variable life insurance policies. In connection with this
agreement, John Hancock transferred to the Company $11.8 million, $24.2 million,
and $44.5 million of cash for tax, commission, and expense allowances. This
agreement decreased the Company's net gain from operations by $1.7 million and
$0.9 million in 2001 and 2000, respectively, and increased the Company's net
gain from operations by $20.6 million in 1999.

The Company has a modified coinsurance agreement with John Hancock to reinsure
50% of the Company's 1995 in-force block and 50% of 1996 and all future issue
years of certain retail annuity contracts. In connection with this agreement,
the Company is holding a deposit liability of $107.5 million and $102.2 million
as of December 31, 2001 and 2000, respectively. This agreement had no impact on
the Company's net gain from operations.

Effective January 1, 1997, the Company entered into a stop-loss agreement with
John Hancock to reinsure mortality claims in excess of 100% of expected
mortality claims for all policies that are not reinsured under any other
indemnity agreement. In connection with the agreement, John Hancock received
$0.4 million, $1.0 million and $0.8 million from the Company in 2001, 2000 and
1999, respectively. This agreement decreased the Company's net gain from
operations by $0.8 million, $1.1 million and $0.5 million in 2001, 2000 and
1999, respectively.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2. RELATED PARTY TRANSACTIONS (CONTINUED)

At December 31, 2001, the Company had a $250.0 million line of credit with an
affiliate, John Hancock Financial Services, Inc. At December 31, 2000, the
Company had a $250.0 million line of credit with affiliate, John Hancock Capital
Corp. At December 31, 2001 and 2000, the Company had no outstanding borrowings
under these agreements.

John Hancock allocates a portion of the expenses related to its employee
welfare plans to the Company. The amounts allocated to the Company were credits
of $10.4 million, $16.0 million and $17.5 million in 2001, 2000 and 1999,
respectively. The pension plan prepaid expense allocated to the Company amounted
to $64.3 million and $55.6 million in 2001 and 2000, respectively. Since 1988,
the Massachusetts Division of Insurance has provided the Company with approval
to recognize the pension plan prepaid expense, if any, in accordance with the
requirements of SFAS No. 87, "Employers' Accounting for Pensions."

NOTE 3. INVESTMENTS

The following information summarizes the components of net investment income
and net realized investment and other gains (losses), net:

YEAR ENDED DECEMBER 31,

2001 2000 1999
------ ------ ------
(IN MILLIONS)

NET INVESTMENT INCOME
Fixed maturities ........................................................ $160.1 $138.5 $127.1
Equity securities ....................................................... 0.3 0.2 --
Mortgage loans on real estate ........................................... 42.3 44.3 39.7
Real estate ............................................................. 2.3 4.1 3.6
Policy loans ............................................................ 21.1 17.1 13.7
Short-term investments .................................................. 6.3 19.4 4.5
Other ................................................................... 3.3 1.1 (2.0)
------ ------ ------
Gross investment income ................................................. 235.7 224.7 186.6
Less investment expenses ............................................... 8.7 11.3 12.0
------ ------ ------
Net investment income ................................................. $227.0 $213.4 $174.6
====== ====== ======
NET REALIZED INVESTMENT AND OTHER GAINS (LOSSES), NET OF
RELATED AMORTIZATION OF DEFERRED POLICY ACQUISITION COSTS
Fixed maturities ........................................................ $(25.1) $(16.0) $ (5.9)
Equity securities ....................................................... 3.8 0.8 --
Mortgage loans on real estate and real estate ........................... (1.2) (2.3) 0.9
Derivatives and other invested assets ................................... 12.0 3.1 (0.3)
Amortization adjustment for deferred policy acquisition costs ........... 1.5 3.8 0.5
------ ------ ------
Net realized investment and other losses, net of related
amortization of deferred policy acquisition costs ...................... $ (9.0) $(10.6) $ (4.8)
====== ====== ======

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

Gross gains of $6.5 million, $1.5 million, and $0.5 million and gross losses
of $3.3 million, $6.0 million, and $5.3 million in 2001, 2000 and 1999,
respectively, were realized on the sale of available-for-sale securities.

The Company's investments in held-to-maturity securities and
available-for-sale securities are summarized below:

GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
----------- ------------ ------------ ------------
(IN MILLIONS)

DECEMBER 31, 2001
HELD-TO-MATURITY:
Corporate securities ..................................... $ 65.0 $ -- $ 0.8 $ 64.2
Mortgage-backed securities ............................... 18.7 0.2 1.0 17.9
-------- ----- ----- --------
Total ................................................... $ 83.7 $ 0.2 $ 1.8 $ 82.1
======== ===== ===== ========
AVAILABLE-FOR-SALE:
Corporate securities ..................................... $1,867.5 $67.5 $44.2 $1,890.8
Mortgage-backed securities ............................... 296.7 6.3 4.7 298.3
Obligations of states and
political subdivisions .................................. 0.9 -- -- 0.9
Debt securities issued by foreign governments ............ 7.2 0.5 -- 7.7
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies ............................... 219.6 1.1 5.9 214.8
-------- ----- ----- --------
Total fixed maturities ................................... 2,391.9 75.4 54.8 2,412.5
Equity securities ........................................ 12.1 1.5 0.5 13.1
-------- ----- ----- --------
Total ................................................... $2,404.0 $76.9 $55.3 $2,425.6
======== ===== ===== ========

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

The amortized cost and fair value of fixed maturities at December 31, 2001, by
contractual maturity, are shown below:

GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
----------- ------------ ------------ ------------
(IN MILLIONS)

DECEMBER 31, 2000
HELD-TO-MATURITY:
Corporate securities ..................................... $ 684.2 $23.4 $ 51.0 $ 656.6
Mortgage-backed securities ............................... 29.3 0.2 1.2 28.3
Obligations of states and political subdivisions ......... 1.9 -- -- 1.9
-------- ----- ------- ------
Total .................................................... $ 715.4 $23.6 $ 52.2 $ 686.8
======== ===== ======= ========
AVAILABLE-FOR-SALE:
Corporate securities ..................................... $ 751.6 $20.6 $ 27.8 $ 744.4
Mortgage-backed securities ............................... 239.1 3.6 3.7 239.0
Obligations of states and political subdivisions ......... 0.9 -- -- 0.9
Debt securities issued by foreign governments ............ 11.1 0.3 0.6 10.8
U.S. Treasury securities and obligations of U.S.
government corporations and agencies ................... 16.1 0.7 0.1 16.7
-------- ----- ------- ------
Total fixed maturities ................................... 1,018.8 25.2 32.2 1,011.8
Equity securities ........................................ 7.1 2.8 1.8 8.1
-------- ----- ------- ------
Total ................................................. $1,025.9 $28.0 $ 34.0 $1,019.9
======== ===== ======= ========

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

The amortized cost and fair value of fixed maturities at December 31, 2001, by
contractual maturity, are shown below:

AMORTIZED FAIR
COST VALUE

(IN MILLIONS)
--------------------
HELD-TO-MATURITY:
Due in one year or less ............................. $ -- $ --
Due after one year through five years ............... 3.0 3.0
Due after five years through ten years .............. 8.6 8.6
Due after ten years ................................. 53.4 52.6
-------- --------
65.0 64.2
Mortgage-backed securities .......................... 18.7 17.9
-------- --------
Total ............................................... $ 83.7 $ 82.1
======== ========
AVAILABLE-FOR-SALE:
Due in one year or less ............................. $ 97.5 $ 99.5
Due after one year through five years ............... 772.0 794.2
Due after five years through ten years .............. 935.2 929.4
Due after ten years ................................. 290.5 291.1
-------- --------
2,095.2 2,114.2
Mortgage-backed securities .......................... 296.7 298.3
-------- --------
Total ............................................... $2,391.9 $2,412.5
======== ========

Expected maturities may differ from contractual maturities because eligible
borrowers may exercise their right to call or prepay obligations with or without
call or prepayment penalties.

The Company participates in a securities lending program for the purpose of
enhancing income on securities held. At December 31, 2001 and 2000, $300.0
million and $1.4 million, respectively, of the Company's bonds and stocks, at
market value, were on loan to various brokers/dealers, but were fully
collateralized by cash and U.S. government securities in an account held in
trust for the Company. The market value of the loaned securities is monitored on
a daily basis, and the Company obtains additional collateral when deemed
appropriate.

Mortgage loans on real estate are evaluated periodically as part of the
Company's loan review procedures and are considered impaired when, based on
current information and events, it is probable that the Company will be unable
to collect all amounts due according to the contractual terms of the loan
agreement. The allowance for losses is maintained at a level believed adequate
by management to absorb estimated probable credit losses that exist at the
balance sheet date. Management's periodic evaluation of the adequacy of the
allowance for losses is based on the Company's past loan loss experience, known
and inherent risks in the portfolio, adverse situations that may affect the
borrower's ability to repay (including the timing of future payments), the
estimated value of the underlying collateral, composition of the loan portfolio,
current economic conditions and other relevant factors. This evaluation is
inherently subjective as it requires estimating the amounts and timing of future
cash flows expected to be received on impaired loans that may be susceptible to
significant change.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

Changes in the allowance for probable losses on mortgage loans on real estate
and real estate to be disposed of are summarized below.

BALANCE AT BALANCE AT
BEGINNING END OF
OF YEAR ADDITIONS DEDUCTIONS YEAR
---------- --------- ---------- ------------
(IN MILLIONS)

Year ended December 31, 2001
Mortgage loans on real estate .................... $5.0 $1.7 $1.2 $5.5
Real estate to be disposed of .................... 0.7 0.1 -- 0.8
---- ---- ---- ----
Total ............................................ $5.7 $1.8 $1.2 $6.3
==== ==== ==== ====
Year ended December 31, 2000
Mortgage loans on real estate .................... $3.8 $1.2 $ -- $5.0
Real estate to be disposed of .................... -- 0.7 -- 0.7
---- ---- ---- ----
Total ............................................ $3.8 $1.9 $ -- $5.7
==== ==== ==== ====
Year ended December 31, 1999
Mortgage loans on real estate .................... $3.7 $0.4 $0.3 $3.8
Real estate to be disposed of .................... 0.7 -- 0.7 --
---- ---- ---- ----
Total ............................................ $4.4 $0.4 $1.0 $3.8
==== ==== ==== ====

At December 31, 2001 and 2000 the total recorded investment in mortgage loans
that are considered to be impaired under SFAS No. 114, "Accounting by Creditors
for Impairment of a Loan," along with the related provision for losses were as
follows:

DECEMBER 31

2001 2000
------ ------
(IN MILLIONS)

Impaired mortgage loans on real estate with provision for losses ............ $ 2.4 $ 4.2
Provision for losses ........................................................ (1.2) (1.2)
----- -----
Net impaired mortgage loans on real estate .................................. $ 1.2 $ 3.0
===== =====

The average investment in impaired loans and the interest income recognized on
impaired loans were as follows:

YEAR ENDED DECEMBER 31

2001 2000 1999
------ ------ ------
(IN MILLIONS)
Average recorded investment in impaired loans ........ $3.3 $2.1 $--
Interest income recognized on impaired loans ......... 0.5 0.3 --

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

The payment terms of mortgage loans on real estate may be restructured or
modified from time to time. Generally, the terms of the restructured mortgage
loans call for the Company to receive some form or combination of an equity
participation in the underlying collateral, excess cash flows or an effective
yield at the maturity of the loans sufficient to meet the original terms of the
loans.

There were no restructured commercial mortgage loans at December 31, 2001.
Such loans aggregated $3.4 million as of December 31, 2000. The expected gross
interest income that would have been recorded in 2000 had the loans been current
in accordance with the original loan agreements was $0.34 million, and the
actual interest income recorded was $0.27 million.

At December 31, 2001, the mortgage portfolio was diversified by geographic
region and specific collateral property type as displayed below:

CARRYING GEOGRAPHIC CARRYING
PROPERTY TYPE AMOUNT CONCENTRATION AMOUNT
- ---------------------- ------------- ----------------------- ---------------
(IN MILLIONS) (IN MILLIONS)
Apartments ............. $115.1 East North Central ....... $ 63.6
Hotels ................. 24.8 East South Central ....... 25.8
Industrial ............. 72.1 Middle Atlantic .......... 50.6
Office buildings ....... 146.4 Mountain ................. 35.5
Retail ................. 35.5 New England .............. 55.1
Mixed Use .............. 5.0 Pacific .................. 111.3
Agricultural ........... 168.9 South Atlantic ........... 152.9
Other .................. 18.6 West North Central ....... 20.6
West South Central ....... 67.7
Canada/Other ............. 3.3
Allowance for losses ... (5.5) Allowance for losses ..... (5.5)
------ ------
Total .................. $580.9 Total .................... $580.9
====== ======

Bonds with amortized cost of $24.7 million were non-income producing for year
ended December 31, 2001.

Depreciation expense on investment real estate was $0.3 million in 2001 and
$0.6 million in 2000 and 1999. Accumulated depreciation was $2.8 million, and
$2.5 million at December 31, 2001, and 2000, respectively.

NOTE 4. DERIVATIVES AND HEDGING INSTRUMENTS

The fair value of derivative instruments classified as assets at December 31,
2001 was $16.7 million, and appears on the consolidated balance sheet in other
assets. The fair value of derivative instruments classified as liabilities at
December 31, 2001 was $12.0 million and appears on the consolidated balance
sheet in other liabilities.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. DERIVATIVES AND HEDGING INSTRUMENTS (CONTINUED)

Fair Value Hedges

The Company uses interest rate futures contracts and interest rate swap
agreements as part of its overall strategies of managing the duration of assets
and liabilities or the average life of certain asset portfolios to specified
targets. Interest rate swap agreements are contracts with a counterparty to
exchange interest rate payments of a differing character (e.g., fixed-rate
payments exchanged for variable-rate payments) based on an underlying principal
balance (notional principal). The net differential to be paid or received on
interest rate swap agreements and currency rate swap agreements is accrued and
recognized as a component of net investment income.

The Company uses equity collar agreements to reduce its equity market exposure
with respect to certain common stock investments that the Company holds. A
collar consists of a written call option that limits the Company's potential for
gain from appreciation in the stock price as well as a purchased put option that
limits the Company's potential for loss from a decline in the stock price.

Currency rate swap agreements are used to manage the Company's exposure to
foreign exchange rate fluctuations. Currency rate swap agreements are contracts
to exchange the currencies of two different countries at the same rate of
exchange at specified future dates. The net differential to be paid or received
on currency rate swap agreements is accrued and recognized as a component of net
investment income.

At December 31, 2001, the Company recognized net losses of $3.0 million,
related to the ineffective portion of its fair value hedges, and a net gain of
$0.1 million, related to the portion of the hedging instruments that were
excluded from the assessment of hedge effectiveness. Both of these amounts are
recorded in net realized investment and other gains and losses. At December 31,
2001, all of the Company's hedged firm commitments qualified as fair value
hedges.

Cash Flow Hedges

The Company used interest rate cap and floor agreements to hedge the interest
rate risk associated with minimum interest rate guarantees in certain of its
life insurance and annuity businesses. Amounts are reclassified from other
comprehensive income if interest rates fall below certain levels.

In 2001, the Company recognized no gains or losses related to the ineffective
portion of its cash flow hedges, and a net gain of $0.2 million related to the
portion of the hedging instruments that was excluded from the assessment of
hedge effectiveness. This amount is recorded in net realized investment and
other gains and losses. All of the Company's hedged forecasted transactions
qualified as cash flow hedges in 2001.

No amounts were reclassified from other accumulated comprehensive income to
earnings in 2001 and it is anticipated that no amounts will be reclassified from
other accumulated comprehensive income to earnings within the next twelve
months. The Company does not enter into hedging transactions for variable cash
flows thus the Company currently has no maximum length for which variable cash
flows are hedged.

In 2001, none of the Company's cash flow hedges have been discontinued because
of the probability that the original forecasted transaction would not occur by
the end of the originally specified time period documented at inception of the
hedging relationship.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. DERIVATIVES AND HEDGING INSTRUMENTS (CONTINUED)

There was no transition adjustment for the adoption of SFAS No.133
representing the accumulation in other comprehensive income of the effective
portion of the Company's cash flow hedges as of January 1, 2001. There were no
losses incurred for the effective portion of the change in fair value of
derivative instruments designated as cash flow hedges and added to accumulated
other comprehensive income.

Derivatives Not Designated as Hedging Instruments

The Company enters into interest rate swap agreements, interest rate futures
contracts, and interest rate cap and floor agreements to manage exposure to
interest rates as described above under Fair Value Hedges without designating
the derivatives as hedging instruments.

NOTE 5. INCOME TAXES

The Company is included in the consolidated federal income tax return of John
Hancock Financial Services, Inc. The federal income taxes of the Company are
allocated on a separate return basis with certain adjustments.

The components of income taxes were as follows:

YEAR ENDED DECEMBER 31

2001 2000 1999
------ ------ ------

(IN MILLIONS)

Current taxes:
Federal .................................. $30.1 $15.2 $(1.5)
Foreign .................................. -- 0.6 0.1
----- ----- -----
30.1 15.8 (1.4)
Deferred taxes:
Federal .................................. 32.1 28.0 36.6
----- ----- -----
Total income taxes ....................... $62.2 $43.8 $35.2
===== ===== =====

A reconciliation of income taxes computed by applying the federal income tax
rate to income before income taxes and the consolidated income tax expense
charged to operations follows:

YEAR ENDED DECEMBER 31

2001 2000 1999
------ ------ ------

(IN MILLIONS)

Tax at 35% ............................... $73.0 $50.1 $36.3
Add (deduct):
Equity base tax ......................... (9.0) (5.6) --
Prior years taxes ....................... 2.1 -- (0.3)
Tax credits ............................. (0.4) (0.6) (0.1)
Foreign taxes ........................... -- 0.6 0.1
Tax exempt investment income ............ (5.6) (0.7) (0.7)
Other ................................... 2.1 -- (0.1)
----- ----- -----
Total income taxes ..................... $62.2 $43.8 $35.2
===== ===== =====

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5. INCOME TAXES (CONTINUED)

The significant components of the Company's deferred tax assets and
liabilities were as follows:

DECEMBER 31

2001 2000
------ --------
(IN MILLIONS)
DEFERRED TAX ASSETS:
Policy reserve adjustments ............................... $238.1 $110.0
Other postretirement benefits ............................ 20.1 23.3
Book over tax basis of investments ....................... 12.0 7.8
Interest ................................................. -- 7.5
Unrealized holding losses ................................ -- 1.4
------ ------
Total deferred tax assets ............................... 270.2 150.0
DEFERRED TAX LIABILITIES:
Deferred policy acquisition costs ........................ 373.7 199.1
Depreciation ............................................. 2.1 1.8
Basis in partnerships .................................... 0.6 0.4
Market discount on bonds ................................. 1.2 0.6
Lease income ............................................. 47.0 35.4
Unrealized gains ......................................... 6.8 --
Other .................................................... -- 9.5
------ ------
Total deferred tax liabilities .......................... 431.4 246.8
------ ------
Net deferred tax liabilities ............................ $161.2 $ 96.8
====== ======

The Company received an income tax refund of $32.4 million and made income tax
payments of $62.9 million and $13.2 million in 2001, 2000 and 1999,
respectively.

NOTE 6 - REINSURANCE

The effect of reinsurance on premiums written and earned was as follows:

2001 2000 1999
PREMIUMS PREMIUMS PREMIUMS

WRITTEN EARNED WRITTEN EARNED WRITTEN EARNED
------- ------- ------- ------ ------- --------
(IN MILLIONS)
Life Insurance:
Direct ................ $ 82.0 $ 82.0 $34.1 $34.1 $12.1 $12.1
Ceded ................. (21.9) (21.9) (5.5) (5.5) (3.2) (3.2)
------ ------ ----- ----- ----- -----
Net life insurance
premiums ............ $ 60.1 $ 60.1 $28.6 $28.6 $ 8.9 $ 8.9
====== ====== ===== ===== ===== =====

For the year ended December 31, 2001, 2000 and 1999, benefits to policyholders
under life ceded reinsurance contracts were $3.8 million, $3.0 million and $ --
million, respectively.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6. REINSURANCE (CONTINUED)

Reinsurance ceded contracts do not relieve the Company from its obligations to
policyholders. The Company remains liable to its policyholders for the portion
reinsured to the extent that any reinsurer does not meet its obligations for
reinsurance ceded to it under the reinsurance agreements. Failure of the
reinsurers to honor their obligations could result in losses to the Company;
consequently, estimates are established for amounts deemed or estimated to be
uncollectible. To minimize its exposure to significant losses from reinsurance
insolvencies, the Company evaluates the financial condition of its reinsurers
and monitors concentration of credit risk arising from similar characteristics
of the reinsurer.

NOTE 7. COMMITMENTS AND CONTINGENCIES

The Company has extended commitments to purchase fixed maturity investments,
and other invested assets and issue mortgage loans on real estate totaling $25.3
million, $14.3 million and $16.2 million, respectively, at December 31, 2001.
If funded, loans related to real estate mortgages would be fully collateralized
by related properties. The Company monitors the creditworthiness of borrowers
under long-term bond commitments and requires collateral as deemed necessary.
The estimated fair values of the commitments described above aggregate $57.1
million at December 31, 2001. The majority of these commitments expire in 2002.

In the normal course of its business operations, the Company is involved with
litigation from time to time with claimants, beneficiaries and others, and a
number of litigation matters were pending as of December 31, 2001. 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 or results of operations of the Company.

During 1997, the Company entered into a court-approved settlement relating to
a class action lawsuit involving certain individual life insurance policies sold
from 1979 through 1996. In entering into the settlement, the Company
specifically denied any wrongdoing. The total reserve held in connection with
the settlement to provide for relief to class members and for legal and
administrative costs associated with the settlement amounted to $7.0 million and
$66.3 million at December 31, 2001 and 2000, respectively. Costs incurred
related to the settlement were $14.1 million and $66.0 million in 2001 and 1999,
respectively. No such costs were incurred in 2000. The estimated reserve is
based on a number of factors, including the estimated cost per claim and the
estimated costs to administer the claims.

During 1996, management determined that it was probable that a settlement
would occur and that a minimum loss amount could be reasonably estimated.
Accordingly, the Company recorded its best estimate based on the information
available at the time. The terms of the settlement agreement were negotiated
throughout 1997 and approved by the court on December 31, 1997. In accordance
with the terms of the settlement agreement, the Company contacted class members
during 1998 to determine the actual type of relief to be sought by class
members. The majority of the responses from class members were received by the
fourth quarter of 1998. The type of relief sought by class members differed from
the Company's previous estimates, primarily due to additional outreach
activities by regulatory authorities during 1998 encouraging class members to
consider alternative dispute resolution (ADR) relief. In 1999, the Company
updated its estimate of the cost of claims subject to alternative dispute
resolution relief and revised its reserve estimate accordingly. The reserve
estimate was further evaluated quarterly, and was adjusted as noted above, in
the fourth quarter of 2001. The adjustment to the reserve in 2001 was the result
of the Company being able to better estimate the cost of settling the remaining
claims, which on average tend to be larger, more complicated claims. The better
estimate comes from experience with actual settlements on similar claims.

Administration of the ADR component of the settlement continues to date.
Although some uncertainty remains as to the cost of claims in the final phase
(i.e., arbitration) of the ADR process, it is expected that the final cost of
the settlement will not differ materially from the amounts presently provided
for by the Company.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. SHAREHOLDER'S EQUITY

(a) Common Stock

The Company was established in 1979 as a stock insurance company with 50,000
shares outstanding, wholly owned by its parent, John Hancock Life Insurance
Company. The Company has one class of capital stock, common stock ($50 par
value, 50,000 shares authorized).

(b) Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive loss are as follows:

ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSSES)
---------------
(IN MILLIONS)

Balance at January 1, 1999 ..................................................... $ 12.3
Gross unrealized gains (losses) (net of deferred income
tax benefit of $18.0 million) ................................................. (34.2)
Reclassification adjustment for gains (losses), realized in net income
(net of tax expense of $1.7 million) .......................................... (3.1)
Adjustment to deferred policy acquisition costs and
present value of future profits (net of deferred income
tax expense of $6.2 million) .................................................. 11.6
------
Net unrealized gains (losses) .................................................. (25.7)
------
Balance at December 31, 1999 ................................................... $(13.4)
======

Balance at January 1, 2000 ..................................................... $(13.4)
Gross unrealized gains (losses) (net of deferred income
tax expense of $9.7 million) .................................................. 18.0
Reclassification adjustment for gains (losses), realized in
net income (net of tax expense of $1.6 million) ............................... (2.9)
Adjustment to deferred policy acquisition costs and
present value of future profits (net of deferred income
tax benefit of $2.1 million) .................................................. (3.9)
------
Net unrealized gains (losses) .................................................. 11.2
------
Balance at December 31, 2000 ................................................... $ (2.2)
======

Balance at January 1, 2001 ..................................................... $ (2.2)
Gross unrealized gains (losses) (net of deferred income
tax expense of $7.2 million) .................................................. 11.8
Reclassification adjustment for gains (losses), realized in
net income (net of tax benefit of $1.1 million) ............................... 2.1
Adjustment to deferred policy acquisition costs and
present value of future profits (net of deferred income
tax benefit of $3.2 million) .................................................. (6.0)
------
Net unrealized gains (losses) .................................................. 7.9
Change in accounting principle ................................................. 7.2
------
Balance at December 31, 2001 ................................................... $ 12.9
======

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. SHAREHOLDER'S EQUITY (CONTINUED)

Net unrealized investment gains (losses), included in the consolidated balance
sheet as a component of shareholder's equity, are summarized as follows:

2001 2000 1999
------ ------ ------
(IN MILLIONS)
Balance, end of year comprises:
Unrealized investment gains (losses) on:
Fixed maturities ............................ $ 20.6 ($ 7.0) ($ 28.7)
Equity investments .......................... 1.0 1.0 (1.4)
Derivatives and other ....................... 5.2 0.3 1.3
------ ------ -------
Total ......................................... 26.8 (5.7) (28.8)
Amounts of unrealized investment (gains) losses
attributable to:
Deferred policy acquisition cost and present
value of future profits .................... (7.1) 2.1 8.1
Deferred federal income taxes ............... (6.8) 1.4 7.3
------ ------ -------
Total ......................................... (13.9) 3.5 15.4
------ ------ -------
Net unrealized investment gains ............... $ 12.9 ($ 2.2) ($ 13.4)
====== ====== =======

The Company adopted the new codified statutory accounting principles
(Codification) effective January 1, 2001. Codification changes prescribe
statutory accounting practices and results in changes to the accounting
practices that the Company and its domestic life insurance subsidiary use to
prepare their statutory-basis financial statements.

The Company and its domestic insurance subsidiary prepare their
statutory-basis financial statements in accordance with accounting practices
prescribed or permitted by the state of domicile. For the Company, the
Commonwealth of Massachusetts only recognizes statutory accounting practices
prescribed or permitted by Massachusetts insurance regulations and laws. The
National Association of Insurance Commissioners' "Accounting Practices and
Procedures" manual (NAIC SAP) has been adopted as a component of prescribed or
permitted practices by Massachusetts. The Commissioner of Insurance has the
right to permit other specific practices that deviate from prescribed practices.

Prior to 2001, the Commissioner had provided the Company approval to recognize
as an admitted asset the pension plan prepaid expense in accordance with the
requirements of SFAS No. 87, "Employers' Accounting for Pensions." Beginning in
2001, the Commissioner has provided the Company with approval to phase-in over a
three-year period the impact of implementing the material provisions of
statutory SSAP No. 8, "Pensions." The Company's pension plan prepaid expense
recorded for statutory purposes amounted to $64.3 million, $55.6 million and
$42.3 million at December 31, 2001, 2000 and 1999 respectively. Statutory net
income is not impacted by this permitted practice.

Statutory net income and surplus include the accounts of the Company and its
wholly-owned subsidiary, Investors Partners Life Insurance Company.

2001 2000 1999
------ ------ ------
(IN MILLIONS)

Statutory net income .......................... $ 13.1 $ 26.6 $ 77.5
Statutory surplus ............................. 647.0 527.2 468.8

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. SHAREHOLDER'S EQUITY (CONTINUED)

Massachusetts has enacted laws governing the payment of dividends by insurers.
Under Massachusetts insurance law, no insurer may pay any shareholder dividends
from any source other than statutory unassigned funds without the prior approval
of Massachusetts Commissioner of Insurance. Massachusetts law also limits the
dividends an insurer may pay in any twelve month period, without the prior
permission of the Commonwealth of Massachusetts Insurance Commissioner, to the
greater of (i) 10% of its statutory policyholders' surplus as of the preceding
December 31 or (ii) the individual company's statutory net gain from operations
for the preceding calendar year, if such insurer is a life company.

NOTE 9. SEGMENT INFORMATION

The Company's reportable segments are strategic business units offering
different products and services. The reportable segments are managed separately,
as they focus on different products, markets or distribution channels.

ASSET GATHERING SEGMENT. Offers individual variable annuities. This segment
distributes its products through distribution channels including insurance
agents and brokers affiliated with the Company, securities brokerage firms,
financial planners, and banks.

The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. Allocations of net investment income
are based on the amount of assets allocated to each segment. Other costs and
operating expenses are allocated to each segment based on a review of the nature
of such costs, cost allocations utilizing time studies, and other relevant
allocation methodologies.

Management of the Company evaluates performance based on segment after-tax
operating income, which excludes the effect of net realized investment and other
gains (losses) and unusual or non-recurring events and transactions. Segment
after-tax operating income is determined by adjusting GAAP net income for net
realized investment and other gains (losses), including gains and losses on
disposals of businesses and certain other items which management believes are
not indicative of overall operating trends. While these items may be significant
components in understanding and assessing the Company's financial performance,
management believes that the presentation of after-tax operating income enhances
its understanding of the Company's results of operations by highlighting net
income attributable to the normal, recurring operations of the business.

Amounts reported as segment adjustments in the tables below primarily relate
to: (i) certain net realized investment and other gains (losses), net of related
amortization adjustment for deferred policy acquisition costs; (ii) benefits to
policyholders and expenses incurred relating to the settlement of a class action
lawsuit against the Company involving certain individual life insurance policies
sold from 1979 through 1996; (iii) restructuring costs related to our
distribution systems and retail operations; (iv) the surplus tax on mutual life
insurance companies that was allocated by John Hancock to the Company; (v) a
charge for certain one time costs associated with John Hancock's demutualization
process; and (vi) cumulative effect of an accounting change.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9. SEGMENT INFORMATION (CONTINUED)

The following table summarizes selected financial information by segment for
the year ended or as of December 31 and reconciles segment revenues and segment
after-tax operating income to amounts reported in the consolidated statements of
income:

ASSET
PROTECTION GATHERING CONSOLIDATED
---------- --------- ------------
(IN MILLIONS)

YEAR ENDED DECEMBER 31, 2001
REVENUES:
Segment revenues ..................................... $ 614.3 $ 62.2 $ 676.5
Net realized investment and other
gains (losses) ...................................... (9.0) -- (9.0)
-------- -------- ---------
Revenues ............................................. $ 605.3 $ 62.2 $ 667.5
======== ======== =========

Net investment income ................................ $ 229.2 $ (2.2) $ 227.0
NET INCOME:
Segment after-tax operating income ................... $ 130.0 $ 22.2 $ 152.2
Net realized investment and other
gains (losses) ...................................... (5.6) -- (5.6)
Surplus tax .......................................... 9.1 -- 9.1
Class action lawsuit ................................. (9.2) -- (9.2)
Cumulative effect of accounting
change, net of tax .................................. (1.6) -- (1.6)
-------- -------- ---------
Net income ........................................... $ 122.7 $ 22.2 $ 144.9
======== ======== =========
SUPPLEMENTAL INFORMATION:
Equity in net income of investees
accounted for by the equity method .................. $ 2.7 $ -- $ 2.7
Amortization of deferred policy
acquisition costs ................................... 46.6 20.5 67.1
Income tax expense ................................... 54.8 7.4 62.2
Segment assets ....................................... $9,995.5 $1,717.7 $11,713.2
NET REALIZED INVESTMENT AND OTHER GAINS
(LOSSES) DATA:
Net realized investment and other
gains (losses) ...................................... $ (10.5) -- $ (10.5)
Less amortization of deferred policy
acquisition costs related to net realized
investment and other gains (losses) ................. 1.5 -- 1.5
-------- -------- ---------
Net realized investment and other gains
(losses), net of related amortization of
deferred policy acquisition costs - per
consolidated financial statements .................. (9.0) -- (9.0)
Less income tax effect ............................... 3.4 -- 3.4
-------- -------- ---------
Net realized investment and other gains
(losses), net-after-tax adjustment made
to calculate segment operating income ............... $ (5.6) -- $ (5.6)
======== ======== =========

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9. SEGMENT INFORMATION (CONTINUED)

ASSET
PROTECTION GATHERING CONSOLIDATED
---------- --------- ------------
(IN MILLIONS)

YEAR ENDED DECEMBER 31, 2000
REVENUES:
Segment revenues ....................................................... $ 530.8 $ 48.5 $ 579.3
Net realized investment and other
gains (losses), net ................................................... (10.6) -- (10.6)
-------- -------- ---------
Revenues ......................................................... $ 520.2 $ 48.5 $ 568.7
======== ======== =========

Net investment income ............................................ $ 215.9 $ (2.5) $ 213.4
NET INCOME:
Segment after-tax operating income ..................................... 96.0 6.3 102.3
Net realized investment and other
gains (losses), net ................................................... (6.8) -- (6.8)
Surplus tax ............................................................ 5.4 0.2 5.6
Other demutualization related costs .................................... (0.5) (0.1) (0.6)
Restructuring charges .................................................. (1.1) -- (1.1)
-------- -------- ---------
Net income ............................................................. $ 93.0 $ 6.4 $ 99.4
======== ======== =========
SUPPLEMENTAL INFORMATION:
Equity in net income of investees accounted for
by the equity method .................................................. $ 1.3 $ -- $ 1.3
Amortization of deferred policy
acquisition costs ..................................................... 17.6 16.4 34.0
Income tax expense ..................................................... 40.7 3.1 43.8
Segment assets ......................................................... $9,326.9 $2,867.8 $12,194.7
NET REALIZED INVESTMENT AND OTHER GAINS (LOSSES) DATA:
Net realized investment and other losses ............................... $ (14.4) -- $ (14.4)
Less amortization of deferred policy acquisition
costs related to net realized
investment and
other gains (losses) ................................................. 3.8 -- 3.8
-------- -------- ---------
Net realized investment and other gains (losses),
net of related amortization of deferred policy
acquisition costs - per consolidated financial statements ............. (10.6) -- (10.6)
Less income tax effect ................................................. 3.8 -- 3.8
-------- -------- ---------
Net realized investment and other gains (losses), net-after-tax
adjustment made to calculate segment operating income ................. $ (6.8) -- $ (6.8)
======== ======== =========

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9. SEGMENT INFORMATION (CONTINUED)

ASSET
PROTECTION GATHERING CONSOLIDATED
---------- --------- ------------
(IN MILLIONS)

YEAR ENDED DECEMBER 31, 1999
REVENUES:
Segment revenues ....................................................... $ 488.0 $ 37.2 $ 525.2
Net realized investment and other
gains (losses), net ................................................... (4.8) -- (4.8)
-------- -------- ---------
Revenues ............................................................... $ 483.2 $ 37.2 $ 520.4
======== ======== =========

Net investment income .................................................. $ 178.1 $ (3.5) $ 174.6
NET INCOME:
Segment after-tax operating income ..................................... 108.0 6.8 114.8
Net realized investment and other
gains (losses), net ................................................... (3.1) -- (3.1)
Class action lawsuit ................................................... (42.9) -- (42.9)
Other demutualization related costs .................................... (0.3) (0.1) (0.4)
-------- -------- ---------
Net income ............................................................. $ 61.7 $ 6.7 $ 68.4
======== ======== =========
SUPPLEMENTAL INFORMATION:
Equity in net income of investees
accounted for by the equity method .................................... $ (0.1) $ -- $ (0.1)
Amortization of deferred policy
acquisition costs ..................................................... 4.6 8.5 13.1
Income tax expense ..................................................... 31.8 3.4 35.2
Segment assets ......................................................... $9,104.6 $2,869.6 $11,974.2
NET REALIZED INVESTMENT AND OTHER GAINS (LOSSES) DATA:
Net realized investment and other
gains (losses) ........................................................ $ (5.3) -- $ (5.3)
Less amortization of deferred policy
acquisition costs related to net
realized investment gains (losses) .................................... 0.5 -- 0.5
-------- -------- ---------
Net realized investment and other
gains (losses), net of related amortization
of deferred policy acquisition costs - per
consolidated financial statements ..................................... (4.8) -- (4.8)
Less income tax effect ................................................. 1.7 -- 1.7
-------- -------- ---------
Net realized investment and other
gains (losses), net-after-tax
adjustment made to calculate
segment operating income .............................................. $ (3.1) -- $ (3.1)
======== ======== =========

The Company operates only in the United States. The Company has no reportable
major customers and revenues are attributed to countries based on the location
of customers.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following discussion outlines the methodologies and assumptions used to
determine the fair value of the Company's financial instruments. The aggregate
fair value amounts presented herein do not represent the underlying value of the
Company and, accordingly, care should be exercised in drawing conclusions about
the Company's business or financial condition based on the fair value
information presented herein.

The following methods and assumptions were used by the Company to determine
the fair values of financial instruments:

Fair values for publicly traded fixed maturities (including redeemable
preferred stocks) are obtained from an independent pricing service. Fair values
for private placement securities and fixed maturities not provided by the
independent pricing service are estimated by the Company by discounting expected
future cash flows using a current market rate applicable to the yield, credit
quality and maturity of the investments. The fair value for equity securities is
based on quoted market prices.

The fair value for mortgage loans on real estate 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. Fair values for impaired mortgage loans are measured based
either on the present value of expected future cash flows discounted at the
loan's effective interest rate or the fair value of the underlying collateral
for loans that are collateral dependent.

The carrying amount in the balance sheet for policy loans, short-term
investments and cash and cash equivalents approximates their respective fair
values.

The fair value for fixed-rate deferred annuities is the cash surrender value,
which represents the account value less applicable surrender charges. Fair
values for immediate annuities without life contingencies are estimated based on
discounted cash flow calculations using current market rates.

The Company's derivatives include futures contracts, interest rate swap, cap
and floor agreements, currency rate swap agreements and equity collar
agreements. Fair values for these contracts are based on current settlement
values. These values are based on quoted market prices for the financial futures
contracts and brokerage quotes that utilize pricing models or formulas using
current assumptions for all swaps and other agreements.

The fair value for commitments approximates the amount of the initial
commitment.

100

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

The following table presents the carrying amounts and fair values of the
Company's financial instruments:

DECEMBER 31 DECEMBER 31
2001 2000
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-------- ------- -------- -------
(IN MILLIONS) (IN MILLIONS)

ASSETS:
Fixed maturities:
Held-to-maturity ......................................... $ 83.7 $ 82.1 $ 715.4 $ 686.8
Available-for-sale ....................................... 2,412.5 2,412.5 1,011.8 1,011.8
Equity securities:
Available-for-sale ....................................... 13.1 13.1 8.1 8.1
Mortgage loans on real estate ............................. 580.9 604.3 554.8 574.2
Policy loans .............................................. 352.0 352.0 334.2 334.2
Short-term investments .................................... -- -- 21.7 21.7
Cash and cash equivalents ................................ 115.4 115.4 277.3 277.3
Derivatives:
Futures contracts, net .................................... -- -- 0.1 0.1
Interest rate swap agreements ............................. 8.8 8.8 -- --
Interest rate cap agreements .............................. 3.5 3.5 2.1 2.1
Interest rate floor agreements ............................ 4.5 4.5 4.5 4.5
Currency rate swap agreements ............................. 0.4 0.4 -- --
Equity collar agreements .................................. 0.8 0.8 0.4 0.4
LIABILITIES:
Fixed rate deferred and immediate annuities ................ 53.1 50.3 63.8 60.4
Derivatives:
Interest rate swap agreements ............................. 13.2 13.2 -- 1.2
Currency rate swap agreements ............................. 0.1 0.1 0.6 0.6
Commitments ................................................ -- 57.1 -- 62.9

101

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE I - SUMMARY OF INVESTMENTS --
OTHER THAN INVESTMENTS IN RELATED PARTIES
AS OF DECEMBER 31, 2001
(IN MILLIONS OF DOLLARS)

COLUMN A COLUMN B COLUMN C COLUMN D

AMOUNT AT WHICH
SHOWN IN THE
CONSOLIDATED
BALANCE
TYPE OF INVESTMENT COST/(2)/ VALUE SHEET
----------- --------- -------------------

Fixed maturity securities, available-for-sale:
Bonds:
United States government and government agencies
and authorities ....................................................... $ 219.6 $ 214.8 $ 214.8
States, municipalities and political subdivisions ...................... 6.0 6.0 6.0
Foreign governments .................................................... 7.2 7.6 7.6
Public utilities ....................................................... 189.3 192.9 192.9
Convertibles and bonds with warrants attached .......................... 25.9 25.1 25.1
All other corporate bonds .............................................. 1,897.9 1,920.5 1,920.5
Certificates of deposits ............................................... -- -- --
Redeemable preferred stock ............................................. 46.0 45.6 45.6
-------- -------- --------
Total fixed maturity securities, available-for-sale .................... 2,391.9 2,412.5 2,412.5
======== ======== ========
Equity securities, available-for-sale:
Common stocks:
Public utilities ....................................................... -- -- --
Banks, trust and insurance companies ................................... -- -- --
Industrial, miscellaneous and all other ................................ 3.8 5.0 5.0
Non-redeemable preferred stock ......................................... 8.3 8.1 8.1
-------- -------- --------
Total equity securities, available-for-sale ............................ 12.1 13.1 13.1
======== ======== ========
Fixed maturity securities, held-to-maturity:

Bonds

United States government and government agencies
and authorities ....................................................... -- -- --
States, municipalities and political subdivisions ...................... -- -- --
Foreign governments .................................................... -- -- --
Public utilities ....................................................... -- -- --
Convertibles and bonds with warrants attached .......................... -- -- --
All other corporate bonds .............................................. 5.1 5.1 5.1
Certificates of deposits ............................................... 78.6 77.0 78.6
Redeemable preferred stock ............................................. -- -- --
-------- -------- --------
Total fixed maturity securities, held-to-maturity ...................... 83.7 82.1 83.7
======== ======== ========

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

102

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE I - SUMMARY OF INVESTMENTS --
OTHER THAN INVESTMENTS IN RELATED PARTIES (CONTINUED)
AS OF DECEMBER 31, 2001
(IN MILLIONS OF DOLLARS)

COLUMN A COLUMN B COLUMN C COLUMN D

AMOUNT AT WHICH
SHOWN IN THE
CONSOLIDATED
BALANCE
TYPE OF INVESTMENT COST/(2)/ VALUE SHEET
----------- --------- -------------------

Equity securities, trading:
Common stocks:
Public utilities -- -- --
Banks, trust and insurance companies -- -- --
Industrial, miscellaneous and all
other -- -- --
Non-redeemable preferred stock -- -- --
-------- -------- --------
Total equity securities, trading -- -- --
-------- -------- --------
Mortgage loans on real estate, net /(1)/ $ 586.4 xxxx $ 580.9
Real estate, net:
Investment properties /(1)/ 21.4 xxxx 20.6
Acquired in satisfaction of debt /(1)/ -- xxxx --
Policy loans 352.0 xxxx 352.0
Other long-term investments /(2)/ 39.6 xxxx 39.6
Short-term investments -- xxxx --
-------- -------- --------
Total investments $3,487.1 $2,507.7 $3,502.4
======== ======== ========

(1) Difference from Column B is primarily due to valuation allowances due to
impairments on mortgage loans on real estate and due to accumulated depreciation
and valuation allowances due to impairments on real estate. See note 3 to the
consolidated financial statements.

(2) Difference from Column B is primarily due to operating gains (losses) of
investments in limited partnerships.

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

103

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION
AS OF DECEMBER 31, 2001, 2000 AND 1999 AND FOR THE YEAR THEN ENDED
(IN MILLIONS OF DOLLARS)

DEFERRED FUTURE POLICY OTHER POLICY
POLICY BENEFITS, LOSSES, CLAIMS AND
ACQUISITION CLAIMS AND LOSS UNEARNED BENEFITS PREMIUM
SEGMENT COSTS EXPENSES PREMIUMS PAYABLE REVENUE
- ---------------------- ----------- ------------------ --------- ------------ ---------

2001:

Protection $ 918.4 $3,275.5 $221.0 $25.0 $60.1
Asset Gathering 142.4 63.2 -- -- --
-------- -------- ------ ----- -----
Total $1,060.8 $3,338.7 $221.0 $25.0 $60.1
======== ======== ====== ===== =====
2000:

Protection $ 819.3 $2,698.5 $212.0 $11.1 $28.6
Asset Gathering 174.8 70.0 -- -- --
-------- -------- ------ ----- -----
Total $ 994.1 $2,768.5 $212.0 $11.1 $28.6
======== ======== ====== ===== =====
1999:

Protection $ 707.8 $2,515.7 $175.2 $15.7 $ 8.9
Asset Gathering 147.3 50.6 -- -- --
-------- -------- ------ ----- -----
Total $ 855.1 $2,566.3 $175.2 $15.7 $ 8.9
======== ======== ====== ===== =====

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

104

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION (CONTINUED)
AS OF DECEMBER 31, 2001, 2000 AND 1999 AND FOR THE YEAR THEN ENDED
(IN MILLIONS OF DOLLARS)

AMORTIZATION OF
DEFERRED POLICY
BENEFITS, CLAIMS, ACQUISITION COSTS,
NET LOSSES, AND EXCLUDING AMOUNTS
INVESTMENT SETTLEMENT RELATED TO REALIZED OTHER OPERATING
SEGMENT INCOME EXPENSES INVESTMENT GAINS EXPENSES
- -------------------- ---------- ----------------- ------------------- -----------------

2001:

Protection $229.2 $285.5 $46.6 $ 72.8
Asset Gathering (2.2) 8.6 20.5 3.4
------ ------ ----- ------
Total $227.0 $294.1 $67.1 $ 76.2
====== ====== ===== ======
2000:

Protection $215.9 $242.2 $17.6 $100.5
Asset Gathering (2.5) 6.4 16.4 16.3
------ ------ ----- ------
Total $213.4 $248.6 $34.0 $116.8
====== ====== ===== ======
1999:

Protection $178.1 $192.3 $ 4.6 $100.6
Asset Gathering (3.5) 68.2 8.5 16.9
------ ------ ----- ------
Total $174.6 $260.5 $13.1 $117.5
====== ====== ===== ======

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

105

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY AND SUBSIDIARY

SCHEDULE IV - REINSURANCE

AS OF DECEMBER 31, 2001
(IN MILLIONS OF DOLLARS)

ASSUMED PERCENTAGE
CEDED TO FROM OF AMOUNT
GROSS OTHER OTHER NET ASSUMED TO
AMOUNT COMPANIES COMPANIES AMOUNT NET
---------- --------- --------- --------- ------------

2001

Life insurance in
force $119,332.2 $56,571.3 $35.1 $62,796.0 0.1%
---------- --------- ----- --------- ---
Premiums:
Life insurance $ 82.0 $ 21.9 $ -- $ 60.1 --
Accident and health
insurance -- -- -- -- --
P&C -- -- -- -- --
---------- --------- ----- --------- ---
Total $ 82.0 $ 21.9 $ -- $ 60.1 0.0%
========== ========= ===== ========= ===
2000

Life insurance in
force $ 98,737.2 $39,495.8 $37.1 $59,278.5 0.1%
---------- --------- ----- --------- ---
Premiums:
Life insurance $ 34.1 $ 5.5 $ -- $ 28.6 --
Accident and health
insurance -- -- -- -- --
P&C -- -- -- -- --
---------- --------- ----- --------- ---
Total $ 34.1 $ 5.5 $ -- $ 28.6 0.0%
========== ========= ===== ========= ===
1999

Life insurance in
force $ 75,674.7 $19,217.5 $38.5 $56,495.7 0.0%
---------- --------- ----- --------- ---
Premiums:
Life insurance $ 12.1 $ 3.2 $ -- $ 8.9 --
Accident and health
insurance -- -- -- -- --
P&C -- -- -- -- --
---------- --------- ----- --------- ---
Total $ 12.1 $ 3.2 $ -- $ 8.9 0.0%
========== ========= ===== ========= ===

NOTE: The life insurance caption represents principally premiums from
traditional life insurance and life-contingent immediate annuities and excludes
deposits on investment products and the universal life insurance products.

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

106

APPENDIX A - DETAILS ABOUT OUR GUARANTEE PERIODS

INVESTMENTS THAT SUPPORT OUR GUARANTEE PERIODS

We back our obligations under the guarantee periods with JHVLICO's general
assets. Subject to applicable law, we have sole discretion over the investment
of our general assets (including those held in our "non-unitized" separate
account that primarily supports the guarantee periods). We invest these amounts
in compliance with applicable state insurance laws and regulations concerning
the nature and quality of our general investments.

We invest the non-unitized separate account assets, according to our detailed
investment policies and guidelines, in fixed income obligations, including:

. corporate bonds,

. mortgages,

. mortgage-backed and asset-backed securities, and

. government and agency issues.

We invest primarily in domestic investment-grade securities. In addition, we
use derivative contracts only for hedging purposes, to reduce ordinary business
risks associated with changes in interest rates, and not for speculating on
future changes in the financial markets. Notwithstanding the foregoing, we are
not obligated to invest according to any particular strategy.

GUARANTEED INTEREST RATES

We declare the guaranteed rates from time to time as market conditions and
other factors dictate. We advise you of the guaranteed rate for a selected
guarantee period at the time we:

. receive your premium payment,

. effectuate your transfer, or

. renew your guarantee period

We have no specific formula for establishing the guaranteed rates for the
guarantee periods. The rates may be influenced by interest rates generally
available on the types of investments acquired with amounts allocated to the
guarantee period. In determining guarantee rates, we may also consider, among
other factors, the duration of the guarantee period, regulatory and tax
requirements, sales and administrative expenses we bear, risks we assume, our
profitability objectives, and general economic trends.

107

COMPUTATION OF MARKET VALUE ADJUSTMENT

We determine the amount of the market value adjustment by multiplying the
amount being taken from the guarantee period by a factor expressed by the
following formula:

( 1 + g ) /n/
(-------------) -- - 1
(1 + c + 0.005) /12/

where,

. G is the guaranteed rate in effect for the current guarantee period.

. C is the current guaranteed rate in effect for new guarantee periods with
duration equal to the number of years remaining in the current guarantee
period (rounded to the nearest whole number of years). If we are not
currently offering such a guarantee period, we will declare a guarantee
rate, solely for this purpose, consistent with interest rates currently
available.

. N is the number of complete months from the date of withdrawal to the end
of the current guarantee period. (If less than one complete month
remains, N equals one unless the withdrawal is made on the last day of
the guarantee period, in which case no adjustment applies.)

SAMPLE CALCULATION 1: POSITIVE ADJUSTMENT

Amount withdrawn or transferred $10,000
- -------------------------------------------------------------------------------------
Guarantee period 7 years
- -------------------------------------------------------------------------------------
Time of withdrawal or transfer beginning of 3rd year of guaranteed period
- -------------------------------------------------------------------------------------
Guaranteed rate (g) 8%
- -------------------------------------------------------------------------------------
Guaranteed rate for new 5 year 7%
guarantee (c)
- -------------------------------------------------------------------------------------
Remaining guarantee period (n) 60 months
- -------------------------------------------------------------------------------------

Market value adjustment:

[( 1 + 0.08 ) /60/ ]
10,000 x [(----------------) -- - 1] = 234.73
[(1 + 0.07 + 0.005) /12/ ]

Amount withdrawn or transferred (adjusted for market value adjustment): $10,000
+ $234.73 = $10,234.73

108

SAMPLE CALCULATION 2: NEGATIVE ADJUSTMENT

Amount withdrawn or transferred $10,000
- -------------------------------------------------------------------------------------
Guarantee period 7 years
- -------------------------------------------------------------------------------------
Time of withdrawal or transfer beginning of 3rd year of guaranteed period
- -------------------------------------------------------------------------------------
Guaranteed rate (g) 8%
- -------------------------------------------------------------------------------------
Guaranteed rate for new 5 year 9%
guarantee (c)
- -------------------------------------------------------------------------------------
Remaining guarantee period(n) 60 months
- -------------------------------------------------------------------------------------

Market value adjustment:

[( 1 + 0.08 ) /60/ ]
10,000 x [(----------------) -- - 1] = -666.42
[(1 + 0.09 + 0.005) /12/ ]

Amount withdrawn or transferred (adjusted for market value adjustment): $10,000
- - 666.42 = $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 guaranteed period
- -------------------------------------------------------------------------------------
Guaranteed rate (g) 8%
- -------------------------------------------------------------------------------------
Guaranteed rate for new 5 year 7.75%
guarantee (c)
- -------------------------------------------------------------------------------------
Remaining guarantee period(n) 60 months
- -------------------------------------------------------------------------------------

Market value adjustment:

[( 1 + 0.08 ) /60/ ]
10,000 x [(------------------) -- - 1] = -114.94
[(1 + 0.0775 + 0.005) /12/ ]

Amount withdrawn or transferred (adjusted for market value adjustment): $10,000
- - 114.94 = $9,885.06

------------------------------------------------------------------------------

*All interest rates shown have been arbitrarily chosen for purposes of these
examples. In most cases they will bear little or no relation to the rates we are
actually guaranteeing at any time.

109

APPENDIX B - EXAMPLES OF EARNINGS ENHANCEMENT DEATH BENEFIT CALCULATION

The following are examples of the optional earnings enhancement death benefit.
We have assumed that there are earnings under the contracts in each case.

Actual investment performance may be greater or lower than the amounts shown.

EXAMPLE 1 - EARNINGS ENHANCEMENT DEATH BENEFIT WITH STANDARD DEATH BENEFIT, NO
ADJUSTMENTS FOR WITHDRAWALS OR ADDITIONAL PREMIUM PAYMENTS

Assume:

. You elect the earnings enhancement death benefit rider (but not the enhanced
death benefit rider) when you purchase your contract,

. At the time of purchase, you and the annuitant are each under age 70 and
you pay an initial premium of $100,000,

. You allocate the premium to a variable investment option, and make no
transfers of contract value to other investment options,

. We determine the death benefit before the Maturity Date, in the fourth year
of your contract on a day when the total value of your contract is $180,000.

Calculation of Standard Death Benefit

We compare the total value of your contract ($180,000, with no market value
adjustment) to the total amount of premiums you paid ($100,000, with no
adjustment for withdrawals). The standard death benefit is the higher of the
two, or $180,000.

Calculation of Earnings Enhancement Amount

Because you and the annuitant were both under age 70 when the rider was
issued, the earnings enhancement amount is 40% of the difference between the
standard death benefit and your "Net Premiums," up to a maximum benefit amount
equal to 80% of your "Adjusted Net Premiums."

Calculation of Net Premiums and Adjusted Net Premiums - To determine "Net
Premiums," we reduce the premiums you paid ($100,000) by the amount of any
withdrawals in excess of earnings ($0). In this example, the Net Premiums is
$100,000. To determine "Adjusted Net Premiums," we reduce the Net Premiums
($100,000) by any premiums you made, other than the initial premium, during the
12 months before we calculated the death benefit ($0). In this example, the
"Adjusted Net Premiums" is $100,000.

Calculation of Maximum Benefit Amount - The maximum benefit amount under the
earnings enhancement death benefit rider in this example is 80% of the Adjusted
Net Premiums ($100,000), or $80,000.

The earnings enhancement amount is 40% of the difference between the standard
death benefit ($180,000) and your Net Premiums ($100,000), up to the maximum
benefit amount. In this example, 40% of the difference is $32,000, which is less
than the maximum benefit amount ($80,000). The earnings enhancement amount is
therefor $32,000.

The total Death Benefit in this example is the standard death benefit
($180,000) plus the earnings enhancement amount ($32,000), or $212,000.

EXAMPLE 2 - EARNINGS ENHANCEMENT DEATH BENEFIT WITH ENHANCED DEATH BENEFIT,
ADJUSTED FOR WITHDRAWAL AND ADDITIONAL PREMIUM

Assume:

. You elect the earnings enhancement death benefit rider and the enhanced death
benefit rider when you purchase your contract,

110

. At the time of purchase, you are over age 70 and you pay an initial
premium of $100,000,

. You allocate the premium to a variable investment option, and make no
transfers of contract value to other investment options,

. On the seventh anniversary of your contract, your total value in the contract
is $175,000, which is the highest value on any anniversary date

. On the day after the seventh anniversary of your contract, you make a
withdrawal of $80,000,

. On the eighth anniversary of your contract, the total value of your contract
is $110,000, and you make an additional premium payment of $10,000 at the end
of the eighth year of your contract

. We determine the death benefit before the Maturity Date in the middle of the
ninth year of your contract, on a day when the total value of your contract
is $120,000.

Calculation of Enhanced Death Benefit

In this example, the enhanced death benefit is the highest of an accumulated
premium "roll-up" amount, a "highest anniversary value" amount and the value of
your contract on the date the death benefit is determined.

Calculation of Premium Roll-up - We calculate the amount of each premium you
have paid, accumulated at a 5% effective annual rate, adjusted for any
withdrawals. In this example, the accumulated value of your initial premium,
after adjustment for the $80,000 withdrawal, is $65,319.75, and the accumulated
value of your second premium is $10,246.95. The total amount of the premium
"roll-up" is $75,566.70.

Calculation of Highest Anniversary Value - We determine the highest
anniversary value of your contract on any anniversary date during the rider's
measuring period ($175,000), plus any premiums since that date ($10,000), minus
any withdrawals since that date ($80,000). In this example, the "highest
anniversary value" is $105,000.

The total value of your contract on the date the death benefit is determined
($120,000, with no market value adjustment) is higher than the premium roll-up
amount ($75,566.70) and higher than the "highest anniversary value" amount
($105,000). The enhanced death benefit is therefor $120,000.

Calculation of Earnings Enhancement Amount

Because you were over age 70 when the rider was issued, the earnings
enhancement amount is 25% of the difference between the enhanced death benefit
and your "Net Premiums," up to a maximum benefit amount equal to 50% of your
"Adjusted Net Premiums."

Calculation of Net Premiums and Adjusted Net Premiums - To determine "Net
Premiums," we reduce the premiums you paid by the amount of any withdrawals in
excess of earnings (including withdrawal charges). In this example, you withdrew
$80,000 at a time when your earnings were $75,000. The amount withdrawn in
excess of earnings is therefore $5,000. Net Premiums is the amount of premiums
paid ($110,000) less amounts withdrawn in excess of earnings ($5,000), or
$105,000. To determine "Adjusted Net Premiums," we reduce the Net Premiums
($105,000) by any premiums you made during the 12 months before we calculated
the death benefit ($10,000). In this example, the "Adjusted Net Premiums" is
$95,000.

Calculation of Maximum Benefit Amount - The maximum benefit amount under the
earnings enhancement death benefit rider in this example is 50% of your Adjusted
Net Premiums ($95,000), or $47,500.

The earnings enhancement amount is 25% of the difference between the enhanced
death benefit ($120,000) and your Net Premiums ($105,000), up to the maximum
benefit amount. In this example, 25% of the difference is $3,750, which is less
than the maximum benefit amount ($47,500). The earnings enhancement amount is
therefor $3,750.

The total Death Benefit in this example is the enhanced death benefit
($120,000) plus the earnings enhancement amount ($3,750), or $123,750.

111

PROSPECTUS DATED MAY 1, 2002
- --------------------------------------------------------------------------------
REVOLUTION EXTRA VARIABLE ANNUITY
- --------------------------------------------------------------------------------

a deferred combination fixed and variable annuity contract issued by
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY ("JHVLICO")
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT JF

The contract enables you to earn fixed rates of interest that we guarantee
for stated periods of time ("guarantee periods") and investment-based
returns in the following variable investment options:

- --------------------------------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTION MANAGED BY
- -------------------------- ----------

Equity Index ................. SSgA Funds Management, Inc.
Large Cap Value .............. T. Rowe Price Associates, Inc.
Large Cap Value CORE/SM/ ..... Goldman Sachs Asset Management
Large Cap Growth ............. Independence Investment LLC
Large Cap Aggressive Growth .. Alliance Capital Management L.P.
Growth & Income .............. Independence Investment LLC and Putnam Investment Management LLC
Fundamental Value ............ Wellington Management Company, LLP
Multi Cap Growth ............. Janus Capital Management LLC
Fundamental Growth ........... Putnam Investment Management LLC
Small/Mid Cap CORE/SM/ ....... Goldman Sachs Asset Management
Small/Mid Cap Growth ......... Wellington Management Company, LLP
Small Cap Equity ............. Capital Guardian Trust Company
Small Cap Value .............. T. Rowe Price Associates, Inc.
Small Cap Growth ............. John Hancock Advisers, LLC
V.A. Relative Value .......... John Hancock Advisers, LLC
AIM VI Premier Equity ........ A I M Advisors, Inc.
AIM VI Capital Development ... A I M Advisors, Inc.
Fidelity VIP Growth .......... Fidelity Management & Research Company
Fidelity VIP Contrafund(R) ... Fidelity Management & Research Company
MFS Investors Growth Stock ... MFS Investment Management(R)
MFS Research ................. MFS Investment Management(R)
MFS New Discovery ............ MFS Investment Management(R)
International Equity Index ... Independence Investment LLC
International Opportunities .. T. Rowe Price International, Inc.
Fidelity VIP Overseas ........ Fidelity Management & Research Company
Emerging Markets Equity ...... Morgan Stanley Investment Management Inc.
Janus Aspen Worldwide Growth.. Janus Capital Management LLC
Real Estate Equity ........... Independence Investment LLC and Morgan Stanley Investment Management Inc.
Health Sciences .............. Putnam Investment Management LLC
V.A. Financial Industries .... John Hancock Advisers, LLC
V.A. Technology .............. John Hancock Advisers, LLC
Managed ...................... Independence Investment LLC and Capital Guardian Trust Company
Global Balanced .............. Capital Guardian Trust Company
Short-Term Bond .............. Independence Investment LLC
Bond Index ................... Mellon Bond Associates, LLP
Active Bond .................. John Hancock Advisers, LLC
V.A. Strategic Income ........ John Hancock Advisers, LLC
High Yield Bond .............. Wellington Management Company, LLP
Global Bond .................. Capital Guardian Trust Company
Money Market ................. Wellington Management Company, LLP
- --------------------------------------------------------------------------------------------------------

The variable investment options shown on page 1 are those available as of
the date of this prospectus. We may add, modify or delete variable investment
options in the future.

Each Series Fund is a so-called "series" type mutual fund registered with
the Securities and Exchange Commission ("SEC"). The investment results of each
variable investment option you select will depend on those of the corresponding
fund of one of the Series Funds. Each of the funds is separately managed and has
its own investment objective and strategies. Attached at the end of this
prospectus is a prospectus for each Series Fund. The Series Fund prospectuses
contain detailed information about each available fund. Be sure to read those
prospectuses before selecting any of the variable investment options shown on
page 1.

For amounts you don't wish to invest in a variable investment option, you
can choose among several guarantee periods, each of which has its own guaranteed
interest rate and expiration date. If you remove money from a guarantee period
prior to its expiration, however, we may increase or decrease your contract's
value to compensate for changes in interest rates that may have occurred
subsequent to the beginning of that guarantee period. This is known as a "market
value adjustment."

The Revolution Extra Variable Annuity provides an Extra Credit feature that is
described on page 17. Because of this feature, the withdrawal charge applicable
to certain withdrawals of contract value may be higher than those imposed under
contracts without an "extra credit" or "bonus" feature. The amount of the Extra
Credit that we add to your contract may be more than offset by the withdrawal
charge that is described on page 21 if you prematurely "surrender" or otherwise
withdraw money in excess of the Free Withdrawal Amounts (see page 22) while this
charge is in effect.

JOHN HANCOCK ANNUITY SERVICING OFFICE
-------------------------------------

Mail Delivery Phone:
------------- ------
1-800-824-0335
529 Main Street Fax:
Charlestown, MA 02129 ----
1-617-886-3070

Contracts 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,
other than JHVLICO. They involve investment risks including the possible loss of
principal.

********************************************************************************

Please note that the SEC has not approved or disapproved these securities,
or determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.

GUIDE TO THIS PROSPECTUS

This prospectus contains information that you should know before you buy a
contract or exercise any of your rights under the contract. We have arranged the
prospectus in the following way:

. The first section contains an "INDEX OF KEY WORDS."

. Behind the index is the "FEE TABLE." This section highlights the
various fees and expenses you will pay directly or indirectly, if
you purchase a contract.

. The next section is called "BASIC INFORMATION." It contains basic
information about the contract presented in a question and answer
format. You should read the Basic Information before reading any
other section of the prospectus.

. Behind the Basic Information is "ADDITIONAL INFORMATION." This
section gives more details about the contract. It generally does not
repeat information contained in the Basic Information.

The Series Funds' prospectuses are attached at the end of this prospectus. You
should save these prospectuses for future reference.

- --------------------------------------------------------------------------------
IMPORTANT NOTICES

- --------------------------------------------------------------------------------

INDEX OF KEY WORDS

We define or explain each of the following key words used in this prospectus on
the pages shown below:

KEY WORD PAGE

Accumulation units............................................................33
Annuitant.....................................................................14
Annuity payments..............................................................17
Annuity period................................................................17
Contract year.................................................................15
Date of issue.................................................................15
Date of maturity..............................................................33
Extra Credit..................................................................17
Free withdrawal amount........................................................22
Funds..........................................................................2
Guarantee period..............................................................16
Investment options............................................................18
Market value adjustment.......................................................16
Premium payments..............................................................14
Surrender.....................................................................21
Surrender value...............................................................23
Total value of your contract..................................................16
Variable investment options................................................cover
Withdrawal charge.............................................................21
Withdrawal....................................................................21

FEE TABLE

The following fee table shows the various fees and expenses that you will
pay, either directly or indirectly, if you purchase a contract. The table does
not include charges for premium taxes (which may vary by state) or fees for any
optional benefit riders that you select.

CONTRACTOWNER TRANSACTION EXPENSES AND ANNUAL CONTRACT FEE

. Maximum Withdrawal Charge (as % of amount withdrawn) 7%

. Annual Contract Fee (applies only to contracts of less
than $50,000) $30

SEPARATE ACCOUNT ANNUAL EXPENSES (AS A % OF THE AVERAGE TOTAL VALUE OF THE
CONTRACT)

. Asset-based Charge (for administration and mortality and
expense risk) 1.25%
This charge doesn't apply to amounts held in the guarantee
periods.

ANNUAL FUND EXPENSES (BASED ON % OF AVERAGE NET ASSETS)

The following figures for the funds are based on historical fund expenses,
as a percentage (rounded to two decimal places) of each fund's average daily net
assets for 2001, except as indicated in the Notes appearing at the end of this
table. Expenses of the funds are not fixed or specified under the terms of the
policy, and those expenses may vary from year to year.

Equity Index ........................................ 0.13% N/A 0.07% 0.20% 0.20
Large Cap Value ..................................... 0.75% N/A 0.08% 0.83% 0.83
Large Cap Value CORE /SM/ ........................... 0.75% N/A 0.10% 0.85% 0.88
Large Cap Growth .................................... 0.38% N/A 0.03% 0.41% 0.41
Large Cap Aggressive Growth ......................... 0.87% N/A 0.10% 0.97% 1.06
Growth & Income ..................................... 0.67% N/A 0.05% 0.72% 0.72
Fundamental Value * ................................. 0.89% N/A 0.10% 0.99% 1.20
Multi Cap Growth* ................................... 0.93% N/A 0.10% 1.03% 1.03
Fundamental Growth .................................. 0.90% N/A 0.10% 1.00% 1.19
Small/Mid Cap CORE /SM/ ............................. 0.80% N/A 0.10% 0.90% 1.15
Small/Mid Cap Growth ................................ 0.97% N/A 0.10% 1.07% 1.07
Small Cap Equity .................................... 0.90% N/A 0.10% 1.00% 1.02
Small Cap Value ..................................... 0.95% N/A 0.10% 1.05% 1.08
Small Cap Growth .................................... 1.05% N/A 0.10% 1.15% 1.17
International Equity Index .......................... 0.17% N/A 0.10% 0.27% 0.40
International Opportunities ......................... 1.14% N/A 0.10% 1.24% 1.39
Emerging Markets Equity ............................. 1.52% N/A 0.10% 1.62% 4.24
Real Estate Equity .................................. 1.00% N/A 0.07% 1.07% 1.07
Health Sciences ..................................... 1.00% N/A 0.10% 1.10% 1.19

Managed .................................................. 0.67% N/A 0.06% 0.73% 0.73
Global Balanced .......................................... 1.05% N/A 0.10% 1.15% 1.36
Short-Term Bond .......................................... 0.60% N/A 0.08% 0.68% 0.68
Bond Index ............................................... 0.15% N/A 0.09% 0.24% 0.24
Active Bond .............................................. 0.62% N/A 0.05% 0.67% 0.67
High Yield Bond .......................................... 0.80% N/A 0.10% 0.90% 1.00
Global Bond .............................................. 0.85% N/A 0.10% 0.95% 0.95
Money Market ............................................. 0.25% N/A 0.07% 0.32% 0.32

JOHN HANCOCK DECLARATION TRUST (NOTE 2):
V.A. Relative Value ...................................... 0.60% N/A 0.14% 0.74% 0.74
V.A. Financial Industries ................................ 0.80% N/A 0.09% 0.89% 0.89
V.A. Technology .......................................... 0.80% N/A 0.25% 1.05% 1.08
V.A. Strategic Income .................................... 0.60% N/A 0.10% 0.70% 0.70

AIM VARIABLE INSURANCE FUNDS - SERIES I SHARES:
AIM V.I. Premier Equity Fund** ........................... 0.60% N/A 0.25% 0.85% 0.85

AIM VARIABLE INSURANCE FUNDS - SERIES II SHARES:
AIM V.I. Capital Development Fund ........................ 0.75% 0.25% 0.41% 1.41% 1.41

VARIABLE INSURANCE PRODUCTS FUND - SERVICE CLASS
(NOTE 3):
Fidelity VIP Growth ...................................... 0.58% 0.10% 0.10% 0.78% 0.78
Fidelity VIP Overseas .................................... 0.73% 0.10% 0.20% 1.03% 1.03

VARIABLE INSURANCE PRODUCTS FUND II - SERVICE CLASS
(NOTE 3)
Fidelity VIP Contrafund/(R)/ ............................. 0.58% 0.10% 0.10% 0.78% 0.78

MFS VARIABLE INSURANCE TRUST - INITIAL CLASS SHARES
(NOTE 4):
MFS Investors Growth Stock ............................... 0.75% N/A 0.17% 0.92% 0.92
MFS Research ............................................. 0.75% N/A 0.15% 0.90% 0.90
MFS New Discovery ........................................ 0.90% N/A 0.16% 1.06% 1.09

JANUS ASPEN SERIES - SERVICE SHARES CLASS (NOTE 5):
Janus Aspen Worldwide Growth ............................. 0.65% 0.25% 0.04% 0.94% 0.94

NOTES TO ANNUAL FUND EXPENSES

nities, Emerging Markets, Short-Term Bond and High Yield Bond funds are
calculated as if the current management fee schedules, which apply to these
funds effective October 1, 2001, were in effect for all of 2001. Percentages
shown for the Health Sciences Fund are annualized. "CORE/SM/" is a service
mark of Goldman, Sachs & Co.

* Fundamental Value was formerly "Large/Mid Cap Value" and Multi Cap Growth
was formerly "Mid Cap Growth."

** AIM V.I. Premier Equity Fund was formerly "AIM V.I. Value Fund."

(3) Actual annual class operating expenses were lower for each of the Fidelity
VIP funds shown because a portion of the brokerage commissions that the fund
paid was used to reduce the fund's expense. In addition, through
rearrangements with the fund's custodian, credits realized as a result of
uninvested cash balances are used to reduce a portion of the fund's
custodian expenses. These offsets may be discontinued at any time.

(4) MFS Variable Insurance Trust funds have an expense offset arrangement which
reduces each fund's custodian fee based upon the amount of cash maintained
by the fund with its custodian and dividend disbursing agent. Each fund may
enter into other similar arrangements and directed brokerage arrangements,
which would also have the effect of reducing the fund's expenses. "Other
Operating Expenses" do not take into account these expense reductions, and
are therefore higher than the actual expenses of the funds. Had these fee
reductions been taken into account, "Total Fund Operating Expenses with
Reimbursement" would equal 0.90% for MFS Investors Growth Stock, 0.89% for
MFS Research and 1.05% for MFS New Discovery. MFS Investment Management(R)
(also doing business as Massachusetts Financial Services Company) has
contractually agreed, subject to reimbursement, to bear expenses for the MFS
New Discovery Fund, such that the fund's "Other Expenses" (after taking into
account the expense offset arrangement described above) does not exceed
0.15% annually. This contractual fee arrangement will continue until at
least May 1, 2003, unless changed with the consent of the board of trustees
which oversees the fund.

(5) Percentages shown for the Janus Aspen Worldwide Growth Fund are based upon
expenses for the year ended December 31, 2001. Expenses are shown without
the effect of any expense offset arrangement.

EXAMPLES

The four examples on the following pages illustrate the current expenses
you would pay, directly or indirectly, on a $1,000 investment allocated to one
of the variable investment options, assuming a 5% annual return on assets.

Examples I and II assume you have purchased a contract with the optional
waiver of withdrawal charge rider, the optional enhanced death benefit rider,
the optional earnings enhancement death benefit rider, the optional accumulated
value enhancement rider and the optional guaranteed retirement income benefit
rider. We refer to this contract as the "All Rider Contract."

Examples III and IV assume you have purchased a contract with no optional
benefit riders. We refer to this contract as the "No Rider Contract."

Example I If you "surrender" (turn in) your All Rider Contract at the end of
- ---------
the applicable time period, you would pay:

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Equity Index $ 92 $152 $204 $321
- --------------------------------------------------------------------------------
Large Cap Value $ 98 $171 $237 $381
- --------------------------------------------------------------------------------
Large Cap Value CORE/SM/ $ 99 $172 $238 $383
- --------------------------------------------------------------------------------
Large Cap Growth $ 94 $158 $215 $341
- --------------------------------------------------------------------------------
Large Cap Aggressive Growth $100 $175 $244 $394
- --------------------------------------------------------------------------------
Growth & Income $ 97 $168 $231 $371
- --------------------------------------------------------------------------------
Fundamental Value $100 $176 $245 $396
- --------------------------------------------------------------------------------
Multi Cap Growth $101 $177 $247 $400
- --------------------------------------------------------------------------------
Fundamental Growth $100 $176 $245 $397
- --------------------------------------------------------------------------------
Small/Mid Cap CORE/SM/ $ 99 $173 $241 $388
- --------------------------------------------------------------------------------
Small/Mid Cap Growth $101 $178 $249 $403
- --------------------------------------------------------------------------------
Small Cap Equity $100 $176 $245 $397
- --------------------------------------------------------------------------------
Small Cap Value $101 $178 $248 $402
- --------------------------------------------------------------------------------
Small Cap Growth $ 99 $174 $241 $389
- --------------------------------------------------------------------------------
V.A. Relative Value $ 98 $168 $232 $373
- --------------------------------------------------------------------------------
AIM V.I. Premier Equity $ 99 $172 $238 $383
- --------------------------------------------------------------------------------
AIM V.I. Capital Development $104 $188 $265 $434
- --------------------------------------------------------------------------------
Fidelity VIP Growth $ 98 $170 $234 $377
- --------------------------------------------------------------------------------
Fidelity VIP Contrafund/(R)/ $ 98 $170 $234 $377
- --------------------------------------------------------------------------------
MFS Investors Growth Stock $ 99 $174 $242 $390
- --------------------------------------------------------------------------------
MFS Research $ 99 $173 $241 $388
- --------------------------------------------------------------------------------
MFS New Discovery $101 $178 $248 $402
- --------------------------------------------------------------------------------
International Equity Index $ 93 $154 $207 $328
- --------------------------------------------------------------------------------
International Opportunities $103 $183 $257 $419
- --------------------------------------------------------------------------------
Fidelity VIP Overseas $101 $177 $247 $400
- --------------------------------------------------------------------------------
Emerging Markets Equity $107 $195 $275 $452
- --------------------------------------------------------------------------------
Janus Aspen Worldwide Growth $100 $174 $243 $392
- --------------------------------------------------------------------------------
Real Estate Equity $101 $178 $249 $403
- --------------------------------------------------------------------------------
Health Sciences $101 $179 $250 $406
- --------------------------------------------------------------------------------
V.A. Financial Industries $ 99 $173 $240 $387
- --------------------------------------------------------------------------------
V.A. Technology $101 $178 $248 $402
- --------------------------------------------------------------------------------
Managed $ 97 $168 $232 $372
- --------------------------------------------------------------------------------
Global Balanced $102 $181 $253 $411
- --------------------------------------------------------------------------------
Short-Term Bond $ 97 $167 $229 $367
- --------------------------------------------------------------------------------
Bond Index $ 92 $153 $206 $325
- --------------------------------------------------------------------------------
Active Bond $ 97 $166 $229 $366
- --------------------------------------------------------------------------------
V.A. Strategic Income $ 97 $167 $230 $369
- --------------------------------------------------------------------------------
High Yield Bond $ 99 $173 $241 $388
- --------------------------------------------------------------------------------
Global Bond $100 $175 $243 $392
- --------------------------------------------------------------------------------
Money Market $ 93 $156 $210 $333
- --------------------------------------------------------------------------------

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Equity Index $ 29 $ 89 $152 $321
- --------------------------------------------------------------------------------
Large Cap Value $ 35 $108 $183 $381
- --------------------------------------------------------------------------------
Large Cap Value CORE/SM/ $ 36 $109 $184 $383
- --------------------------------------------------------------------------------
Large Cap Growth $ 31 $ 95 $162 $341
- --------------------------------------------------------------------------------
Large Cap Aggressive Growth $ 37 $112 $190 $394
- --------------------------------------------------------------------------------
Growth & Income $ 34 $105 $178 $371
- --------------------------------------------------------------------------------
Fundamental Value $ 37 $113 $191 $396
- --------------------------------------------------------------------------------
Multi Cap Growth $ 38 $114 $193 $400
- --------------------------------------------------------------------------------
Fundamental Growth $ 37 $113 $191 $397
- --------------------------------------------------------------------------------
Small/Mid Cap CORE/SM/ $ 36 $110 $187 $388
- --------------------------------------------------------------------------------
Small/Mid Cap Growth $ 38 $115 $195 $403
- --------------------------------------------------------------------------------
Small Cap Equity $ 37 $113 $191 $397
- --------------------------------------------------------------------------------
Small Cap Value $ 38 $115 $194 $402
- --------------------------------------------------------------------------------
Small Cap Growth $ 36 $111 $187 $389
- --------------------------------------------------------------------------------
V.A. Relative Value $ 35 $105 $179 $373
- --------------------------------------------------------------------------------
AIM V.I. Premier Equity $ 36 $109 $184 $383
- --------------------------------------------------------------------------------
AIM V.I. Capital Development $ 41 $125 $211 $434
- --------------------------------------------------------------------------------
Fidelity VIP Growth $ 35 $107 $181 $377
- --------------------------------------------------------------------------------
Fidelity VIP Contrafund/(R)/ $ 35 $107 $181 $377
- --------------------------------------------------------------------------------
MFS Investors Growth Stock $ 36 $111 $188 $390
- --------------------------------------------------------------------------------
MFS Research $ 36 $110 $187 $388
- --------------------------------------------------------------------------------
MFS New Discovery $ 38 $115 $194 $402
- --------------------------------------------------------------------------------
International Equity Index $ 30 $ 91 $155 $328
- --------------------------------------------------------------------------------
International Opportunities $ 40 $120 $203 $419
- --------------------------------------------------------------------------------
Fidelity VIP Overseas $ 38 $114 $193 $400
- --------------------------------------------------------------------------------
Emerging Markets Equity $ 44 $132 $221 $452
- --------------------------------------------------------------------------------
Janus Aspen Worldwide Growth $ 37 $111 $189 $392
- --------------------------------------------------------------------------------
Real Estate Equity $ 38 $115 $195 $403
- --------------------------------------------------------------------------------
Health Sciences $ 38 $116 $196 $406
- --------------------------------------------------------------------------------
V.A. Financial Industries $ 36 $110 $186 $387
- --------------------------------------------------------------------------------
V.A. Technology $ 38 $115 $194 $402
- --------------------------------------------------------------------------------
Managed $ 34 $105 $178 $372
- --------------------------------------------------------------------------------
Global Balanced $ 39 $118 $199 $411
- --------------------------------------------------------------------------------
Short-Term Bond $ 34 $104 $176 $367
- --------------------------------------------------------------------------------
Bond Index $ 29 $ 90 $154 $325
- --------------------------------------------------------------------------------
Active Bond $ 34 $103 $175 $366
- --------------------------------------------------------------------------------
V.A. Strategic Income $ 34 $104 $177 $369
- --------------------------------------------------------------------------------
High Yield Bond $ 36 $110 $187 $388
- --------------------------------------------------------------------------------
Global Bond $ 37 $112 $189 $392
- --------------------------------------------------------------------------------
Money Market $ 30 $ 93 $158 $333
- --------------------------------------------------------------------------------

Example III If you "surrender" (turn in) your No Rider Contract at the end of
the applicable time period, you would pay:

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Equity Index $ 79 $112 $135 $188
- --------------------------------------------------------------------------------
Large Cap Value $ 86 $133 $170 $257
- --------------------------------------------------------------------------------
Large Cap Value CORE/SM/ $ 86 $133 $171 $259
- --------------------------------------------------------------------------------
Large Cap Growth $ 81 $119 $147 $211
- --------------------------------------------------------------------------------
Large Cap Aggressive Growth $ 87 $137 $178 $272
- --------------------------------------------------------------------------------
Growth & Income $ 84 $129 $164 $245
- --------------------------------------------------------------------------------
Fundamental Value $ 87 $138 $179 $274
- --------------------------------------------------------------------------------
Multi Cap Growth $ 88 $139 $181 $278
- --------------------------------------------------------------------------------
Fundamental Growth $ 87 $138 $179 $275
- --------------------------------------------------------------------------------
Small/Mid Cap CORE/SM/ $ 86 $135 $174 $264
- --------------------------------------------------------------------------------
Small/Mid Cap Growth $ 88 $140 $183 $282
- --------------------------------------------------------------------------------
Small Cap Equity $ 87 $138 $179 $275
- --------------------------------------------------------------------------------
Small Cap Value $ 88 $140 $182 $280
- --------------------------------------------------------------------------------
Small Cap Growth $ 86 $135 $174 $265
- --------------------------------------------------------------------------------
V.A. Relative Value $ 85 $130 $165 $247
- --------------------------------------------------------------------------------
AIM V.I. Premier Equity $ 86 $133 $171 $259
- --------------------------------------------------------------------------------
AIM V.I. Capital Development $ 92 $151 $202 $317
- --------------------------------------------------------------------------------
Fidelity VIP Growth $ 85 $131 $167 $252
- --------------------------------------------------------------------------------
Fidelity VIP Contrafund/(R)/ $ 85 $131 $167 $252
- --------------------------------------------------------------------------------
MFS Investors Growth Stock $ 87 $135 $175 $266
- --------------------------------------------------------------------------------
MFS Research $ 86 $135 $174 $264
- --------------------------------------------------------------------------------
MFS New Discovery $ 88 $140 $183 $281
- --------------------------------------------------------------------------------
International Equity Index $ 80 $114 $139 $196
- --------------------------------------------------------------------------------
International Opportunities $ 90 $145 $192 $300
- --------------------------------------------------------------------------------
Fidelity VIP Overseas $ 88 $139 $181 $278
- --------------------------------------------------------------------------------
Emerging Markets Equity $ 94 $157 $213 $338
- --------------------------------------------------------------------------------
Janus Aspen Worldwide Growth $ 87 $136 $176 $269
- --------------------------------------------------------------------------------
Real Estate Equity $ 88 $140 $183 $282
- --------------------------------------------------------------------------------
Health Sciences $ 88 $141 $185 $285
- --------------------------------------------------------------------------------
V.A. Financial Industries $ 86 $135 $173 $263
- --------------------------------------------------------------------------------
V.A. Technology $ 88 $140 $182 $280
- --------------------------------------------------------------------------------
Managed $ 85 $130 $164 $246
- --------------------------------------------------------------------------------
Global Balanced $ 89 $143 $188 $290
- --------------------------------------------------------------------------------
Short-Term Bond $ 84 $128 $162 $241
- --------------------------------------------------------------------------------
Bond Index $ 79 $113 $137 $192
- --------------------------------------------------------------------------------
Active Bond $ 84 $128 $161 $240
- --------------------------------------------------------------------------------
V.A. Strategic Income $ 84 $129 $163 $243
- --------------------------------------------------------------------------------
High Yield Bond $ 86 $135 $174 $264
- --------------------------------------------------------------------------------
Global Bond $ 87 $136 $177 $270
- --------------------------------------------------------------------------------
Money Market $ 80 $116 $141 $201
- --------------------------------------------------------------------------------

1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
Equity Index $16 $50 $ 86 $188
- ------------------------------------------------------------------------------
Large Cap Value $23 $70 $119 $257
- ------------------------------------------------------------------------------
Large Cap Value CORE/SM/ $23 $70 $121 $259
- ------------------------------------------------------------------------------
Large Cap Growth $18 $56 $ 97 $211
- ------------------------------------------------------------------------------
Large Cap Aggressive Growth $24 $74 $127 $272
- ------------------------------------------------------------------------------
Growth & Income $21 $66 $114 $245
- ------------------------------------------------------------------------------
Fundamental Value $24 $75 $128 $274
- ------------------------------------------------------------------------------
Multi Cap Growth $25 $76 $130 $278
- ------------------------------------------------------------------------------
Fundamental Growth $24 $75 $128 $275
- ------------------------------------------------------------------------------
Small/Mid Cap CORE/SM/ $23 $72 $123 $264
- ------------------------------------------------------------------------------
Small/Mid Cap Growth $25 $77 $132 $282
- ------------------------------------------------------------------------------
Small Cap Equity $24 $75 $128 $275
- ------------------------------------------------------------------------------
Small Cap Value $25 $77 $131 $280
- ------------------------------------------------------------------------------
Small Cap Growth $23 $72 $124 $265
- ------------------------------------------------------------------------------
V.A. Relative Value $22 $67 $115 $247
- ------------------------------------------------------------------------------
AIM V.I. Premier Equity $23 $70 $121 $259
- ------------------------------------------------------------------------------
AIM V.I. Capital Development $29 $88 $150 $317
- ------------------------------------------------------------------------------
Fidelity VIP Growth $22 $68 $117 $252
- ------------------------------------------------------------------------------
Fidelity VIP Contrafund/(R)/ $22 $68 $117 $252
- ------------------------------------------------------------------------------
MFS Investors Growth Stock $24 $72 $124 $266
- ------------------------------------------------------------------------------
MFS Research $23 $72 $123 $264
- ------------------------------------------------------------------------------
MFS New Discovery $25 $77 $131 $281
- ------------------------------------------------------------------------------
International Equity Index $17 $52 $ 90 $196
- ------------------------------------------------------------------------------
International Opportunities $27 $82 $141 $300
- ------------------------------------------------------------------------------
Fidelity VIP Overseas $25 $76 $130 $278
- ------------------------------------------------------------------------------
Emerging Markets Equity $31 $94 $160 $338
- ------------------------------------------------------------------------------
Janus Aspen Worldwide Growth $24 $73 $125 $269
- ------------------------------------------------------------------------------
Real Estate Equity $25 $77 $132 $282
- ------------------------------------------------------------------------------
Health Sciences $25 $78 $134 $285
- ------------------------------------------------------------------------------
V.A. Financial Industries $23 $72 $123 $263
- ------------------------------------------------------------------------------
V.A. Technology $25 $77 $131 $280
- ------------------------------------------------------------------------------
Managed $22 $67 $114 $246
- ------------------------------------------------------------------------------
Global Balanced $26 $80 $136 $290
- ------------------------------------------------------------------------------
Short-Term Bond $21 $65 $112 $241
- ------------------------------------------------------------------------------
Bond Index $16 $51 $ 88 $192
- ------------------------------------------------------------------------------
Active Bond $21 $65 $111 $240
- ------------------------------------------------------------------------------
V.A. Strategic Income $21 $66 $113 $243
- ------------------------------------------------------------------------------
High Yield Bond $23 $72 $123 $264
- ------------------------------------------------------------------------------
Global Bond $24 $73 $126 $270
- ------------------------------------------------------------------------------
Money Market $17 $54 $ 92 $201
- ------------------------------------------------------------------------------

BASIC INFORMATION

This "Basic Information" section provides answers to commonly asked
questions about the contract. Here are the page numbers where the questions and
answers appear:

QUESTION STARTING ON PAGE
-------- ----------------

What is the contract? .................................................. 14

Who owns the contract? ................................................. 14

Is the owner also the annuitant? ....................................... 14

How can I invest money in a contract? .................................. 14

How will the value of my investment in the contract change over time? .. 16

What annuity benefits does the contract provide? ....................... 17

To what extent can John Hancock vary the terms and conditions of its
contracts? ............................................................. 17

What are the tax consequences of owning a contract? .................... 18

How can I change my contract's investment allocations? ................. 18

What fees and charges will be deducted from my contract? ............... 21

How can I withdraw money from my contract? ............................. 23

What happens if the owner or the annuitant dies before my contract's
date of maturity? ...................................................... 25

What other benefits can I purchase under a contract? ................... 28

Can I return my contract? .............................................. 29

WHAT IS THE CONTRACT?

The contract is a deferred payment variable annuity contract. An "annuity
contract" provides a person (known as the "annuitant" or "payee") with a series
of periodic payments. Because this contract is also a "deferred payment"
contract, the "annuity payments" will begin on a future date, called the
contract's "date of maturity." Under a "variable annuity" contract, the amount
you have invested can increase or decrease in value daily based upon the value
of the variable investment options chosen. If your annuity is provided under a
master group contract, the term "contract" as used in this prospectus refers to
the certificate you will be issued and not to the master group contract.

WHO OWNS THE CONTRACT?

However, you are free to name another person or entity (such as a trust) as
owner. In writing this prospectus, we've assumed that you, the reader, are the
person or persons entitled to exercise the rights and obligations under
discussion. If a contract has joint owners, both must join in any written notice
or request.

IS THE OWNER ALSO THE ANNUITANT?

HOW CAN I INVEST MONEY IN A CONTRACT?

Premium payments

We call the investments you make in your contract premiums or premium
payments. In general, you need at least a $10,000 initial premium payment to
purchase a contract. If you purchase your contract under any of the
tax-qualified plans shown on page 38 or if you purchase your contract through
the automatic investment plan, different minimums may apply. If you choose to
contribute more money into your contract, each subsequent premium payment must
be at least $200 ($100 for the annuity direct deposit program). If your
contract's total value ever falls to zero, we may terminate it. Therefore, you
may need to pay more premiums to keep the contract in force.

Applying for a contract

Once we receive your initial premium payment and all necessary information,
we will issue your contract and invest your initial premium payment within two
business days. If the information is not in good order, we will contact you to
get the necessary information. If for some reason, we are unable to complete
this process within 5 business days, we will either send back your money or get
your permission to keep it until we get all of the necessary information.

We measure the years and anniversaries of your contract from its date of
issue. We use the term contract year to refer to each period of time between
anniversaries of your contract's date of issue.

Limits on premium payments

You can make premium payments of up to $1,000,000 in any one contract year.
The total of all new premium payments and transfers that you allocate to any one
variable investment option in any one contract year may not exceed $1,000,000.
While the annuitant is alive and the contract is in force, you can make premium
payments at any time before the date of maturity. However,

YOU MAY NOT MAKE ANY PREMIUM
IF YOUR CONTRACT IS USED TO FUND PAYMENTS AFTER THE ANNUITANT
REACHES AGE
- -------------------------------------------------------------------------------------------------------
a "tax qualified plan"* 70 1/2**
- -------------------------------------------------------------------------------------------------------
a non-tax qualified plan 85
- -------------------------------------------------------------------------------------------------------

* as that term is used in "Tax Information," beginning on page 36.
** except for a Roth IRA, which has no age limit.

We will not issue a contract if any proposed owner or annuitant is older
than age 84. We may, however, waive this underwriting limit.

Ways to make premium payments

Premium payments made by check or money order should be:

. drawn on a U.S. bank,

. drawn in U.S. dollars, and

. made payable to "John Hancock."

We will not accept credit card checks. Nor will we accept starter or third
party checks that fail to meet our administrative requirements.

Premium payments after the initial premium payment should be sent to the
John Hancock Annuity Servicing Office at the address shown on page 2 of this
prospectus. We will also accept premium payments by wire. We will accept your
initial premium payment by exchange from another insurance company. You can find
information about wire payments under "Premium payments by wire," below.

You can find information about other methods of premium payment by
contacting your broker-dealer or by contacting the John Hancock Annuity
Servicing Office.

Once we have issued your contract and it becomes effective, we credit you
with any additional premiums you pay as of the day we receive them at the John
Hancock Annuity Servicing Office.

Premium payments by wire

If your wire order is complete, we will invest the premium payment in your
selected investment options as of the day we received the wire order. If the
wire order is incomplete, we may hold your initial premium payment for up to 5
business days while attempting to obtain the missing information. If we can't
obtain the information within 5 business days, we will immediately return your
premium payment, unless you tell us to hold the premium payment for 5 more days
pending completion of the application. Nevertheless, until we receive and accept
a properly completed and signed application, we will not:

. issue a contract;

. accept premium payments; or

. allow other transactions.

After we issue your contract, subsequent premium payments may be
transmitted by wire through your bank. Information about our bank, our account
number, and the ABA routing number may be obtained from the John Hancock Annuity
Servicing Office. Banks may charge a fee for wire services.

HOW WILL THE VALUE OF MY INVESTMENT IN THE CONTRACT CHANGE OVER TIME?

Like a regular mutual fund, each fund deducts investment management fees
and other operating expenses. These expenses are shown in the fee table
beginning on page 5. However, unlike a mutual fund, we will also deduct charges
relating to the annuity guarantees and other features provided by the contract.
These charges reduce your investment performance and the amount we have credited
to your contract in any variable investment option. We describe these charges
under "What fees and charges will be deducted from my contract?" beginning on
page 21.

However, if you prematurely transfer, "surrender" or otherwise withdraw
money from a guarantee period we will increase or reduce the remaining value in
your contract by an amount that approximates the impact that any changes in
interest rates would have had on the market value of a debt instrument with
terms comparable to that guarantee period. This market value adjustment (or
"MVA") imposes investment risks on you. We describe how the market value
adjustments work in "Calculation of market value adjustment ("MVA")" beginning
on page 32.

At any time before the date of maturity, the total value of your contract
equals

. the total amount you invested,

. plus the amount(s) credited to your contact under the "Extra Credit
feature" described below,

. minus all charges we deduct,

. minus all withdrawals you have made,

. plus or minus any positive or negative MVAs that we have made at the time of
any premature withdrawals or transfers you have made from a guarantee period,

. plus or minus each variable investment option's positive or negative
investment return that we credit daily to any of your contract's value while
it is in that option, and

. plus the interest we credit to any of your contract's value while it is in a
guarantee period.

Extra Credit feature

Each time you make a premium payment, we will credit an extra amount to the
total value of your contract in addition to the amount of the premium payment.
If your premium payment is greater than $10,000 and less than $2.5 million, the
extra amount will be equal to 3.5% of the premium payment. If your premium
payment is $2.5 million or more, the extra amount will be equal to 5.0% of the
premium payment. These extra amounts are referred to as extra credits. Each
extra credit will be credited to your contract at the same time the premium
payment is credited and will be allocated among the variable investment options
and the guarantee periods in the same way that the premium payment is allocated
(see "Allocation of premium payments" on page 18). However, each extra credit
will be treated for all purposes as "earnings" under your contract, not as a
premium payment.

We anticipate that a portion of the withdrawal charge, and any profits
derived from other contract fees and charges, will be used to help recover our
cost of providing the Extra Credit feature. (For a description of these fees and
charges, see the response to the question "What fees and charges will be
deducted from my contract?") Under certain circumstances (such as a withdrawal
of money that is in excess of the Free Withdrawal amounts, while a withdrawal
charge is in effect) the cost associated with the Extra Credit feature may
exceed the Extra Credit amount and any related earnings. You should consider
this possibility before purchasing the contract.

WHAT ANNUITY BENEFITS DOES THE CONTRACT PROVIDE?

If your contract is still in effect on its date of maturity, it enters what
is called the annuity period. During the annuity period, we make a series of
fixed or variable payments to you as provided under one of our several annuity
options. The form in which we will make the annuity payments, and the proportion
of such payments that will be on a fixed basis and on a variable basis, depend
on the elections that you have in effect on the date of maturity. Therefore you
should exercise care in selecting your date of maturity and your choices that
are in effect on that date.

You should carefully review the discussion under "The annuity period,"
beginning on page 33, for information about all of these choices you can make.

TO WHAT EXTENT CAN JHVLICO VARY THE TERMS AND CONDITIONS OF ITS CONTRACTS?

Listed below are some of the variation we can make in the terms of our
contracts. Any variation will be made only in accordance with uniform rules that
we apply fairly to all our customers.

State law insurance requirements

Variations in charges or rates

We may vary the charges, guarantee periods, and other terms of our
contracts where special circumstances result in sales or administrative
expenses, mortality risks or other risks that are different from those normally
associated with the contracts. These include the types of variations discussed
under "Certain changes" in the Additional Information section of this
prospectus.

WHAT ARE THE TAX CONSEQUENCES OF OWNING A CONTRACT?

In most cases, no income tax will have to be paid on amounts you earn under
a contract until these earnings are paid out. All or part of the following
distributions from a contract may constitute a taxable payout of earnings:

. partial withdrawal (including systematic withdrawals),

. full withdrawal ("surrender"),

. payment of any death benefit proceeds, and

. periodic payments under one of our annuity payment options.

How much you will be taxed on a distribution is based upon complex tax
rules and depends on matters such as

. the type of the distribution,

. when the distribution is made,

. the nature of any tax qualified retirement plan for which the contract is
being used, if any, and

. the circumstances under which the payments are made.

If your contract is issued in connection with a tax-qualified retirement
plan, all or part of your premium payments may be tax-deductible.

Special 10% tax penalties apply in many cases to the taxable portion of any
distributions from a contract before you reach age 59 1/2. Also, most
tax-qualified plans require that distributions from a contract commence and/or
be completed by a certain period of time. This effectively limits the period of
time during which you can continue to derive tax deferral benefits from any
tax-deductible premiums you paid or on any earnings under the contract.

HOW CAN I CHANGE MY CONTRACT'S INVESTMENT ALLOCATIONS?

Allocation of premium payments

When you apply for your contract, you specify the variable investment
options or guarantee periods (together, your investment options) in which your
premium payments will be allocated. You may change this investment allocation
for future premium payments at any time. Any change in allocation will be
effective as of receipt of your request at the John Hancock Annuity Servicing
Office.

Transferring your assets

Up to 12 times during each year of your contract, you may transfer, free of
any charge,

. all or part of the assets held in one VARIABLE INVESTMENT OPTION to any other
available variable investment option or guarantee period, or

. transfer more than $1,000,000 in a contract year into any one variable
investment option or guarantee period, without our prior approval,

. make any transfer that would cause you to exceed the above-mentioned
maximum of 18 investment options,

. make any transfers, during the annuity period, to or from a guarantee
period, or

. make any transfer during the annuity period that would result in more than
four investment options being used at once.

We reserve the right to prohibit a transfer less than 30 days prior to the
contract's date of maturity.

The contract you are purchasing was not designed for professional market
timing organizations or other persons or entities that use programmed or
frequent transfers. The use of such transfers may be disruptive to a fund. We
reserve the right to reject any premium payment or transfer request from any
person, if in our judgment, a fund would be unable to invest effectively in
accordance with its investment objectives and policies, or would otherwise be
potentially adversely affected.

Procedure for transferring your assets

. your name,

. daytime telephone number,

. contract number,

. the names of the investment options to and from which assets are being
transferred, and

. the amount of each transfer.

The request becomes effective on the day we receive your request, in proper
form, at the John Hancock Annuity Servicing Office.

Telephone transfers

Once you have completed a written authorization, you may request a transfer
by telephone or by fax. If the fax request option becomes unavailable, another
means of telecommunication will be substituted.

Dollar-cost averaging program

You may elect, at no cost, to automatically transfer assets from any
variable investment option to one or more other variable investment options on a
monthly, quarterly, semiannual, or annual basis.

The following conditions apply to the dollar-cost averaging program:

. You may elect the program only if the total value of your contract equals
$15,000 or more.

. The amount of each transfer must equal at least $250.

. You may change your variable investment allocations instructions at any time
in writing or, if you have authorized telephone transfers, by telephone.

. You may discontinue the program at any time.

. The program automatically terminates when the variable investment option from
which we are taking the transfers has been exhausted.

. Automatic transfers to or from guarantee periods are not permitted.

. We reserve the right to suspend or terminate the program at any time.

Strategic rebalancing

Once elected, strategic rebalancing will continue until we receive notice
of cancellation of the option or notice of the death of the insured person.

The guarantee periods do not participate in and are not affected by
strategic rebalancing. We reserve the right to modify, terminate or suspend the
strategic rebalancing program at any time.

WHAT FEES AND CHARGES WILL BE DEDUCTED FROM MY CONTRACT?

Asset-based charge

We deduct a daily asset-based charge that compensates us primarily for our
administrative expense and for the mortality and expense risks that we assume
under the contracts. On an annual basis, this charge equals 1.25% of the value
of the assets you have allocated to the variable investment options. (This
charge does not apply to assets you have in our guarantee periods.)

In return for the mortality risk charge, we assume the risk that annuitants
as a class will live longer than expected, requiring us to pay a greater number
of annuity payments. In return for the expense risk charge, we assume the risk
that our expenses relating to the contracts may be higher than we expected when
we set the level of the contracts' other fees and charges, or that our revenues
from such other sources will be less than expected.

Annual contract fee

Prior to the date of maturity of your contract, we will deduct $30 each
year from your contract if it has a total value on the contract anniversary of
less than $50,000. We deduct this annual contract fee at the beginning of each
contract year after the first contract year. We also deduct it if you surrender
your contract, unless your total value is $50,000 or more at the time of
surrender. We take the deduction proportionally from each variable investment
option and each guarantee period you are then using. We reserve the right to
increase the annual contract fee to up to $50.

Premium taxes

We make deductions for any applicable premium or similar taxes based on the
amount of a premium payment. Currently, certain local jurisdictions assess a tax
of up to 5% of each premium payment.

Withdrawal charge

If you withdraw some of your premiums from your contract prior to the date
of maturity ("partial withdrawal") or if you surrender (turn in) your contract,
in its entirety, for cash prior to the date of maturity ("total withdrawal" or
"surrender"), we may assess a withdrawal charge. Some people refer to this
charge as a "contingent deferred sales load." We use this charge to help defray
expenses relating to the Extra Credit feature and to sales of the contracts,
including commissions paid and other distribution costs.

Free withdrawal amounts: If you have any profit in your contract, you can
always withdraw that profit without any withdrawal charge. By "profit," we mean
the amount by which your contract's total value exceeds the premiums you have
paid and have not (as discussed below) already withdrawn. If your contract
doesn't have any profit (or you have withdrawn it all) you can still make
charge-free withdrawals, unless and until all of your withdrawals during the
same contract year exceed 10% of all of the premiums you have paid to date.

Here's how we determine the charge: If the amount you withdraw or surrender
totals more than the free withdrawal amount during the contract year, we will
assess a withdrawal charge on any amount of the excess that we attribute to
premium payments you made within seven years of the date of the withdrawal or
surrender.

The withdrawal charge percentage depends upon the number of years that have
elapsed from the date you paid the premium to the date of its withdrawal, as
follows:

YEARS FROM DATE OF PREMIUM PAYMENT TO
DATE OF SURRENDER OR WITHDRAWAL WITHDRAWAL CHARGE*
- ------------------------------------------------------------------------------------------------

7 or more .......................................................... 0%
- ------------------------------------------------------------------------------------------------
6 but less than 7 .................................................. 4%
- ------------------------------------------------------------------------------------------------
5 but less than 6 .................................................. 5%
- ------------------------------------------------------------------------------------------------
4 but less than 5 .................................................. 6%
- ------------------------------------------------------------------------------------------------
3 but less than 4 .................................................. 7%
- ------------------------------------------------------------------------------------------------
2 but less than 3 .................................................. 7%
- ------------------------------------------------------------------------------------------------
1 but less than 2 .................................................. 7%
- ------------------------------------------------------------------------------------------------
less than 1 ........................................................ 7%
- ------------------------------------------------------------------------------------------------

* AS A PERCENTAGE OF THE AMOUNT OF SUCH PREMIUM THAT WE CONSIDER TO HAVE BEEN
WITHDRAWN (INCLUDING THE WITHDRAWAL CHARGE), AS EXPLAINED IN THE TEXT
IMMEDIATELY BELOW.

Solely for purposes of determining the amount of the withdrawal charge, we
assume that the amount of each withdrawal that exceeds the free withdrawal
amount (together with any associated withdrawal charge) is a withdrawal first
-----
from the earliest premium payment, and then from the next earliest premium
----
payment, and so forth until all payments have been exhausted. Once a premium
payment has been considered to have been "withdrawn" under these procedures,
that premium payment will not enter into any future withdrawal charge
calculations.

Here's how we deduct the withdrawal charge: We deduct the withdrawal charge
proportionally from each variable investment option and each guarantee period
- --------------
being reduced by the surrender or withdrawal. For example, if 60% of the
withdrawal amount comes from a Growth option and 40% from the Money Market
option, then we will deduct 60% of the withdrawal charge from the Growth option
and 40% from the Money Market option. If any such option has insufficient
remaining value to cover the charge, we will deduct any shortfall from all of
your other investment options, pro-rata based on the value in each. If your
contract as a whole has insufficient surrender value to pay the entire charge,
we will pay you no more than the surrender value.

You will find examples of how we compute the withdrawal charge in
Appendix B to this prospectus.

When withdrawal charges don't apply: We don't assess a withdrawal charge in
the following situations:

. on amounts applied to an annuity option at the contract's date of
maturity or to pay a death benefit;

. on certain withdrawals if you have elected the rider that waives the
withdrawal charge; and

. on amounts withdrawn to satisfy the minimum distribution requirements for tax
qualified plans. (Amounts above the minimum distribution requirements are
subject to any applicable withdrawal charge, however.)

How an MVA affects the withdrawal charge: If you make a withdrawal from a
guarantee period at a time when the related MVA results in an upward adjustment
in your remaining value, we will calculate the withdrawal charge as if you had
withdrawn that much more. Similarly, if the MVA results in a downward
adjustment, we will compute any withdrawal charge as if you had withdrawn that
much less.

Other charges

We offer, subject to state availability, five optional benefit riders. We
charge a separate monthly charge for each rider selected. At the beginning of
each month, we currently charge an amount equal to 1/12/th/ of the following
annual percentages:

- ---------------------------------------------------------------------------------------

Waiver of withdrawal 0.10% of that portion of your contract's total value
charge attributable to premiums you contributed and extra
credits credited within 7 years prior to the date of
deduction
- ---------------------------------------------------------------------------------------
Enhanced death benefit 0.25% of your contract's total value*
- ---------------------------------------------------------------------------------------
Earnings enhancement 0.25% of your contract's total value
death benefit
- ---------------------------------------------------------------------------------------
Accumulated value 0.35% of your initial premium payment (we reserve the
enhancement** right to increase this percentage on a uniform basis for all
riders issued in the same state)
- ---------------------------------------------------------------------------------------
Guaranteed retirement 0.30% of your contract's total value
income benefit
- ---------------------------------------------------------------------------------------

* Rate is applicable to enhanced death benefit riders issued after May 1,
2002. In certain states, and for riders issued prior to May 1, 2002, a lower
rate may apply.

** If you choose the accumulated value enhancement, you must also choose the
waiver of withdrawal charge.

We deduct the charge proportionally from each of your investment options,
based on your value in each.

HOW CAN I WITHDRAW MONEY FROM MY CONTRACT?

Surrenders and partial withdrawals

Prior to your contract's date of maturity, if the annuitant is living, you
may:

. surrender your contract for a cash payment of its "surrender value," or

. make a partial withdrawal of the surrender value.

The surrender value of a contract is the total value of a contract, after
any market value adjustment, minus the annual contract fee, any applicable
-----
premium tax, any withdrawal charges, and any applicable rider charges. We will
determine the amount surrendered or withdrawn as of the date we receive your
request in proper form at the John Hancock Annuity Servicing Office.

Certain surrenders and withdrawals may result in taxable income to you or
other tax consequences as described under "Tax information," beginning on page
36. Among other things, if you make a full surrender or partial withdrawal from
your contract before you reach age 59 1/2, an additional federal penalty of 10%
generally applies to any taxable portion of the withdrawal.

We will deduct any partial withdrawal proportionally from each of your
--------------
investment options based on the value in each, unless you direct otherwise.

Without our prior approval, you may not make a partial withdrawal

. for an amount less than $100, or

. if the remaining total value of your contract would be less than $1,000.

We reserve the right to terminate your contract if the value of your contract
becomes zero.

You generally may not make any surrenders or partial withdrawals once we
begin making payments under an annuity option.

Waiver of withdrawal charge rider

If your state permits, you may purchase an optional waiver of withdrawal
charge rider at the time of application. The "covered persons" under the rider
are the owner and the owner's spouse, unless the owner is a trust. If the owner
is a trust, the "covered persons" are the annuitant and the annuitant's spouse.
Under this rider, we will waive the withdrawal charge on any withdrawals if a
"covered person" has been diagnosed with one of the critical illnesses listed in
the rider, or if all the following conditions apply:

. a covered person become confined to a nursing home beginning at least 30 days
after we issue your contract;

. such covered person remains in the nursing home for at least 90 consecutive
days receiving nursing care; and

. the covered person's confinement is prescribed by a doctor and medically
necessary because of a covered physical or mental impairment.

You may not purchase this rider if either of the covered persons (1) is older
than 74 years at application or (2) was confined to a nursing home within the
past two years.

There is a charge for this rider, as set forth under "Other charges"
beginning on page 23, above. This rider (and the related charges) will terminate
on the contract's date of maturity, upon your surrendering the contract, or upon
your written request that we terminate it.

For a more complete description of the terms and conditions of this
benefit, you should refer directly to the rider. We will provide you with a copy
on request. In certain marketing materials, this rider may be referred to as
"CARESolutions."

If you purchase this rider:

. you and your immediate family will also have access to a national program
designed to help the elderly maintain their independent living by providing
advice about an array of eldercare services available to seniors, AND

. you will have access to a list of long-term care providers in your area who
provide special discounts to persons who belong to the national program.

You should carefully review the tax considerations for optional benefit riders
on page 37 before selecting this optional benefit rider.

Systematic withdrawal plan

otherwise comparable non-systematic withdrawal. See "How will the value of my
investment in the contract change over time?" beginning on page 16, and "What
fees and charges will be deducted from my contract?" beginning on page 21. The
same tax consequences also generally will apply.

The following conditions apply to systematic withdrawal plans:

. You may elect the plan only if the total value of your contract equals
$25,000 or more.

. The amount of each systematic withdrawal must equal at least $100.

. If the amount of each withdrawal drops below $100 or the total value of your
contract becomes less that $5,000, we will suspend the plan and notify you.

. You may cancel the plan at any time.

. We reserve the right to modify the terms or conditions of the plan at any
time without prior notice.

WHAT HAPPENS IF THE ANNUITANT DIES BEFORE MY CONTRACT'S DATE OF MATURITY?

We will pay a death benefit to the contract's beneficiary, depending on the
form of ownership and whether there is one annuitant or joint annuitants:

. If your contract is owned by a single natural person and has a single
annuitant, the death benefit is payable on the earlier of the owner's death
and the annuitant's death.

If your contract has joint owners, each owner will automatically be deemed
to be the beneficiary of the other. This means that any death benefit payable
upon the death of one owner will be paid to the other owner. In that case, any
other beneficiary you have named would receive the death benefit only if neither
joint owner remains alive at the time the death benefit becomes payable.

We calculate the death benefit value as of the day we receive, in proper
order at the John Hancock Annuity Servicing Office:

. proof of death before the contract's date of maturity, and

. any required instructions as to method of settlement.

We will generally pay the death benefit in a single sum to the beneficiary
you chose, unless

Standard death benefit

The standard death benefit is the greater of:
-------

. the total value of your contract, adjusted by any then-applicable market
value adjustment, or

. the total amount of premium payments made, minus any partial withdrawals.

Enhanced death benefit rider

Under this rider, we will pay an enhanced death benefit (instead of the
standard death benefit) that is the greatest of:

. the amount of each premium you have paid, but not including any extra
credits, accumulated at 5% effective annual interest during the rider's
measuring period (less any partial withdrawals you have taken and not
including any interest on such amounts after they are withdrawn);

. the total value of your contract (adjusted by any market value adjustment) as
of the date we receive due proof of the annuitant's death.

. the owner, if there is only one owner under your contract and the death
benefit is payable because the owner dies before the Maturity Date,

. the oldest owner, if there are joint owners under your contract and the death
benefit is payable because either owner dies before the Maturity Date,

. the annuitant, if there is only one annuitant under your contract and the
death benefit is payable because the annuitant dies before the Maturity Date,

If an owner is also an annuitant, we will generally consider that person to be
an "owner" instead of an "annuitant" for purposes of determining the rider's
measuring life.

You may elect to enhance the standard death benefit by purchasing an
enhanced death benefit rider:

. only if this rider is available in your state; and

. only when you apply for the contract; and

As long as the rider is in effect, you will pay a monthly charge for this
benefit. For a description of this charge, refer to page 23 under "Other
charges." For a more complete description of the terms and conditions of this
benefit, you should refer directly to the rider. We will provide you with a copy
on request.

ownership, except where a spousal beneficiary continues the rider after an
owner's death. (We explain contract continuation by a spouse in the section
entitled "Distributions following death of owner" on page 36.)

You should carefully review the tax considerations for optional benefit riders
on page 37 before selecting this optional benefit rider.

Earnings enhancement death benefit rider

Under this rider, the death benefit may be increased by an earnings
enhancement amount. The earnings enhancement amount is determined as follows:

. if there are joint annuitants under your contract, we will not count the age
of the older annuitant for either of these purposes unless the older
annuitant is also an owner.

This rider is unavailable if your contract is purchased in connection with
a tax-qualified retirement plan. In addition, you may elect to purchase an
earnings enhancement death benefit rider:

. only if this rider is available in your state; and

. only when you apply for the contract (we may waive this restriction, however,
for contracts purchased prior to October 15, 2001 or prior to the date this
rider was available in your state); and

. only if each owner and each annuitant is under age 75 at the time you apply
for the rider.

The earnings enhancement amount decreases if you withdraw earnings that
accumulate under your contract. This rider may not be appropriate for you if you
expect to withdraw earnings.

WHAT OTHER BENEFITS CAN I PURCHASE UNDER A CONTRACT?

In addition to the enhanced death benefit and waiver of withdrawal charge
riders discussed above, we currently make available two other optional benefits
if your state permits and if you are under age 75 when you apply for a contract.
These optional benefits are provided under riders that contain many terms and
conditions not set forth below. Therefore, you should refer directly to each
rider for more complete information. We will provide you with a copy on request.
We may make other riders available in the future.

Accumulated value enhancement

Under this rider, we will make a contribution to the total value of the
contract on a monthly basis if the covered person (who must be an owner and the
annuitant):

. is unable to perform at least 2 activities of daily living without human
assistance or has a cognitive impairment, AND

. is receiving certain qualified services described in the rider.

The amount of the contribution (called the "Monthly Benefit") is shown in
the specifications page of the contract. However, the rider contains an
inflation protection feature that will increase the Monthly Benefit by 5% each
year after the 7th contract year. The specifications page of the contract also
contains a limit on how much the total value of the contract can be increased by
this rider (the "benefit limit"). The rider must be in effect for 7 years before
any increase will occur.

You may elect this rider only when you apply for the contract. Under our
current administrative rules, the Monthly Benefit (without regard to the
inflation protection feature) is equivalent to 1% of your initial premium, up to
a maximum premium of $300,000. We may reduce this $300,000 limit further,
however, if you own additional annuity contracts issued by JHVLICO or its
affiliates that provide a similar benefit. The $300,000 limit applies only to
the calculation of the Monthly Benefit under the accumulated value enhancement
rider. (See "Limits on Premium Payments" on page 14 for a general description of
other premium limits under the contract).

There is a monthly charge for this rider. The charge is described under
"Other charges" beginning on page 23.

The rider will terminate if the contract terminates, if the covered person
dies, if the benefit limit is reached, if the owner is the covered person and
the ownership of the contract changes, or if, before annuity payments start, the
total value of the contract falls below an amount equal to 25% of your initial
premium payment. You may cancel the rider by written notice at any time. The
rider charge will terminate when the rider terminates.

You should carefully review the tax considerations for optional benefit riders
on page 37 before selecting this optional benefit rider. In certain marketing
materials, this rider may be referred to as "CARESolutions Plus."

Guaranteed retirement income benefit

Under this rider, we will guarantee the amount of annuity payments you
receive, if the following conditions are satisfied:

. The date of maturity must be within the 30 day period following a contract
anniversary.

. If the annuitant was less than age 45 on the date of issue, the contract
must have been in effect for at least 15 contract years on the date of
maturity and the date of maturity must be on or before the annuitant's 90th
birthday.

You cannot elect this rider at any time after your contract is issued. If
you elect this rider you need not choose to receive the guaranteed income
benefit that it provides. Rather, unless and until such time as you exercise
your option to receive a guaranteed income benefit under this rider, you will
continue to have the option of exercising any other right or option that you
would have under the contract (including withdrawal and annuity payment options)
if the rider had not been added to it.

If you do decide to add this rider to your contract, and if you do
ultimately decide to take advantage of the guaranteed income it provides, we
will automatically provide that guaranteed income in the form of fixed payments
under our "Option A: life annuity with payments for guaranteed period" described
under "Annuity options" on page 30. The guaranteed period will automatically be
a number of years that the rider specifies, based on the annuitant's age at the
annuity date and whether your contract is purchased in connection with a
tax-qualified plan. (These specified periods range from 5 to 10 years.) You will
have no discretion to vary this form of payment, if you choose the guaranteed
income benefit under this rider.

If you exercise your rights under this rider, we guarantee that the amount
we apply to this annuity payment option will be the same amount as if your
premium payments had earned a return prescribed by the rider, rather than the
return they earned in the subaccounts you actually chose. Under this rider, we
would apply that guaranteed amount to the fixed annuity payment option specified
in the rider in the same manner and on the same terms as if you had, in the
absence of this rider, elected to apply total contract value in the same amount
to that same annuity payment option.

There is a monthly charge for this rider, which is described beginning on
page 23 under "Other charges." The rider (and the related charges) automatically
terminate if your contract is surrendered or the annuitant dies. After you've
held your contract for 10 years, you can terminate the rider by written request.

CAN I RETURN MY CONTRACT?

In most cases, you have the right to cancel your contract within 10 days
(or longer in some states) after you receive it. To cancel your contract, simply
deliver or mail it to:

. JHVLICO at the address shown on page 2, or

. the JHVLICO representative who delivered the contract to you.

In most states, you will receive a refund equal to the total value of your
contract on the date of cancellation minus the extra credit deduction (as
defined below), adjusted by any then-applicable market value adjustments and
increased by any charges for premium taxes deducted by us to that date. The
"extra credit deduction" is equal to the lesser of (1) the portion of the total
value of your contract that is attributable to any extra credits and (2) the
amount of all extra credits. Thus, you receive any gain and we bear any loss on
extra credits if you return your contract within the time period specified
above. In some states, or if your contract was issued as an "IRA," you will
receive a refund of any premiums you've paid. The date of cancellation will be
the date we receive the contract.

ADDITIONAL INFORMATION

This section of the prospectus provides additional information that is not
contained in the Basis Information section on pages 13 through 29.

CONTENTS OF THIS SECTION STARTING ON PAGE

Description of JHVLICO.................................................. 31

Who should purchase a contract?......................................... 31

How we support the variable investment options.......................... 31

How we support the guarantee periods.................................... 32

How the guarantee periods work.......................................... 32

The accumulation period................................................. 33

The annuity period...................................................... 33

Variable investment option valuation procedures......................... 35

Distributions following death of owner.................................. 36

Miscellaneous provisions................................................ 36

Tax information......................................................... 36

Further information about JHVLICO....................................... 42

Management's discussion and analysis.................................... 44

Performance information................................................. 64

Reports................................................................. 65

Voting privileges....................................................... 65

Certain changes......................................................... 65

Distribution of contracts............................................... 66

Experts................................................................. 66

Registration statement.................................................. 66

Condensed Financial Information......................................... 67

JHVLICO financial statements............................................ 72

Appendix A - Details About Our Guarantee Periods........................ 109

Appendix B - Example of Withdrawal Charge Calculation................... 112

Appendix C - Examples of Earnings Enhancement Death Benefit Calculation. 114

DESCRIPTION OF JHVLICO

We are JHVLICO, a stock life insurance company organized, in 1979, under
the laws of the Commonwealth of Massachusetts. We have authority to transact
business in all states, except New York. We are a wholly-owned subsidiary of
John Hancock Life Insurance Company ("John Hancock"), a Massachusetts stock life
insurance company. On February 1, 2000, John Hancock Mutual Life Insurance
Company (which was chartered in Massachusetts in 1862) converted to a stock
company by "demutualizing" and changed its name to John Hancock Life Insurance
Company. As part of the demutualization process, John Hancock became a
subsidiary of John Hancock Financial Services, Inc., a newly formed
publicly-traded corporation. John Hancock's home office is at John Hancock
Place, Boston, Massachusetts 02117. At year end 2001, John Hancock's assets were
approximately $ 81 billion and it had invested approximately $575 million in
JHVLICO in connection with JHVLICO's organization and operation.

WHO SHOULD PURCHASE A CONTRACT? We designed these contracts for individuals
doing their own retirement planning, including purchases under plans and trusts
that do not qualify for special tax treatment under the Internal Revenue Code of
1986 (the "Code"). We also designed the contracts for purchase under:

. traditional individual retirement annuity plans ("Traditional IRAs")
satisfying the requirements of Section 408 of the Code;

. non-deductible IRA plans ("Roth IRAs") satisfying the requirements of
Section 408A of the Code;

. SIMPLE IRA plans adopted under Section 408(p) of the Code;

. Simplified Employee Pension plans ("SEPs") adopted under Section 408(k) of
the Code; and

. annuity purchase plans adopted under Section 403(b) of the Code by public
school systems and certain other tax-exempt organizations.

We do not currently offer the contracts to every type of tax-qualified
plan, and we may not offer the contracts for all types of tax-qualified plans in
the future. In certain circumstances, we may also make the contracts available
for purchase under deferred compensation plans maintained by a state or
political subdivision or tax exempt organization under Section 457 of the Code
or by pension or profit-sharing plans qualified under section 401(a) of the
Code. We provide general federal income tax information for contracts purchased
in connection with tax qualified retirement plans beginning on page __

We may include certain requirements from the above sources in endorsements
or riders to the affected contracts. In other cases, we do not. In no event,
however, do we undertake to assure a contract's compliance with all plan, tax
law, and ERISA requirements applicable to a tax-qualified or non tax-qualified
retirement plan. Therefore, if you use or plan to use a contract in connection
with such a plan, you must consult with competent legal and tax advisers to
ensure that you know of (and comply with) all such requirements that apply in
your circumstances.

To accommodate "employer-related" pension and profit-sharing plans, we
provide "unisex" purchase rates. That means the annuity purchase rates are the
same for males and females. Any questions you have as to whether you are
participating in an "employer-related" pension or profit-sharing plan should be
directed to your employer. Any question you or your employer have about unisex
rates may be directed to the John Hancock Annuity Servicing Office.

HOW WE SUPPORT THE VARIABLE INVESTMENT OPTIONS

We hold the fund shares that support our variable investment options in
John Hancock Variable Annuity Account JF (the "Account"), a separate account
established by JHVLICO under Massachusetts law. The Account is registered as a
unit investment trust under the Investment Company Act of 1940 ("1940 Act").

The Account's assets, including the Series Funds' shares, belong to
JHVLICO. Each contract provides that amounts we hold in the Account pursuant to
the contracts cannot be reached by any other persons who may have claims against
us.

All of JHVLICO's general assets also support JHVLICO's obligations under
the contracts, as well as all of its other obligations and liabilities. These
general assets consist of all JHVLICO's assets that are not held in the Account
(or in another separate account) under variable annuity or variable life
insurance contracts that give their owners a preferred claim on those assets.

HOW WE SUPPORT THE GUARANTEE PERIODS

HOW THE GUARANTEE PERIODS WORK

. withdraw all or a portion of any such amount from the contract,

. allocate all or a portion of such amount to a new guarantee period or
periods of the same or different duration as the expiring guarantee
period, or

. allocate all or a portion of such amount to one or more of the variable
investment options.

We currently make available guarantee periods with durations up to ten
years. If you select a guarantee period that extends beyond your contract's date
of maturity, your maturity date will automatically be changed to the annuitant's
95th birthday (or a later date, if we approve). We reserve the right to add or
delete guarantee periods for new allocations to or from those that are available
at any time.

Guaranteed interest rates

Each guarantee period has its own guaranteed rate. 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 time you allocate or transfer money to a
guarantee period, a new guarantee period, with a new interest rate, begins to
run with respect to that amount. The amount allocated or transferred earns a
guaranteed rate that will continue unchanged until the end of that period.

- -------------------------------------------------------------------------------
We make the final determination of guaranteed rates and guarantee perioeds
to be declared. We cannot predict or assure the level of any future guaranteed
rates or the availability of any future guarantee periods.
- -------------------------------------------------------------------------------

You may obtain information concerning the guaranteed rates applicable to
the various guarantee periods, and the durations of the guarantee periods
offered at any time, by calling the John Hancock Annuity Servicing Office at the
telephone number shown on page 2.

Calculation of market value adjustment ("MVA")

. death benefits pursuant to your contract,

. amounts you apply to an annuity option, and

. amounts paid in a single sum in lieu of an annuity.

The market value adjustment increases or decreases your remaining value in
the guarantee period. If the value in that guarantee period is insufficient to
pay any negative MVA, we will deduct any excess from the value in your other
investment options pro-rata based on the value in each. If there is insufficient
value in your other investment options, we will in no event pay out more than
the surrender value of the contract.

Here is how the MVA works:

- --------------------------------------------------------------------------------
We compare

. the guaranteed rate of the guarantee period from which the assets
are being taken WITH

. the guaranteed rate we are currently offering for guarantee
periods of the same duration as remains on the guarantee period
from which the assets are being taken.

If the first rate exceeds the second by more than 1/2%, the market value
adjustment produces an increase in your contract's value.

If the first rate does not exceed the second by at least 1/2%, the market value
adjustment produces a decrease in your contract's value.
- --------------------------------------------------------------------------------

For this purpose, we consider that the amount withdrawn from the guarantee
period includes the amount of any negative MVA and is reduced by the amount of
any positive MVA.

The mathematical formula and sample calculations for the market value
adjustment appear in Appendix A.

THE ACCUMULATION PERIOD

Your value in our variable investment options

Each premium payment, extra credit or transfer that you allocate to a
variable investment option purchases accumulation units of that variable
investment option. Similarly, each withdrawal or transfer that you take from a
variable investment option (as well as certain charges that may be allocated to
that option) result in a cancellation of such accumulation units.

Valuation of accumulation units

To determine the number of accumulation units that a specific transaction
will purchase or cancel, we use the following formula:

---------------------------------------------------
dollar amount of transaction
DIVIDED BY
value of one accumulation unit for the applicable
variable investment option at the time of such
transaction
---------------------------------------------------

Therefore, at any time prior to the date of maturity, the total value of
your contract in a variable investment option can be computed according to the
following formula:

Your value in the guarantee periods

On any date, the total value of your contract in a guarantee period equals:

. the amount of premium payments, extra credits or transferred amounts
allocated to the guarantee period, MINUS

. the amount of any withdrawals or transfers paid out of the guarantee
period, MINUS

. the amount of any negative market value adjustments resulting from such
withdrawals or transfers, plus
----

. the amount of any positive market value adjustments resulting from such
withdrawals and transfers, MINUS

. the amount of any charges and fees deducted from that guarantee period,
PLUS

. interest compounded daily on any amounts in the guarantee period from time
to time at the effective annual rate of interest we have declared for that
guarantee period.

THE ANNUITY PERIOD

Annuity payments are made to the annuitant, if still living. If more than
one annuitant is living at the date of maturity, the payments are made to the
younger of them.

Date of maturity

Your contract specifies the date of maturity, when payments from one of our
annuity options are scheduled to begin. You initially choose a date of maturity
when you

complete your application for a contract. Unless we otherwise permit, the date
of maturity must be

. at least 6 months after the date the first premium payment is applied to
your contract, and

. no later than the maximum age specified in your contract (normally age
95).

Subject always to these requirements, you may subsequently change the date
of maturity. The John Hancock Annuity Servicing Office must receive your new
selection at least 31 days prior to the new date of maturity, however. Also, if
you are selecting or changing your date of maturity for a contract issued under
a tax qualified plan, special limits apply. (See "Contracts purchased for a
tax-qualified plan," beginning on page 33.)

Choosing fixed or variable annuity payments

During the annuity period, the total value of your contract must be
allocated to no more than four investment options. During the annuity period, we
do not offer the guarantee periods. Instead, we offer annuity payments on a
fixed basis as one investment option, and annuity payments on a variable basis
for EACH variable investment option.

We will generally apply (1) amounts allocated to the guarantee periods as
of the date of maturity to provide annuity payments on a fixed basis and (2)
amounts allocated to variable investment options to provide annuity payments on
a variable basis. If you are using more than four investment options on the date
of maturity, we will divide your contract's value among the four investment
options with the largest values (considering all guarantee periods as a single
option), pro-rata based on the amount of the total value of your contract that
you have in each.

Once annuity payments commence, you may not make transfers from fixed to
variable or from variable to fixed.

Selecting an annuity option

Each contract provides, at the time of its issuance, for annuity payments
to commence on the date of maturity pursuant to Option A: "life annuity with 10
years guaranteed" (discussed under "Annuity options" on page 35).

If the initial monthly payment under an annuity option would be less than
$50, we may make a single sum payment equal to the total surrender value of your
contract on the date the initial payment would be payable. Such single payment
would replace all other benefits.

Subject to that $50 minimum limitation, your beneficiary may elect an
annuity option if:

. you have not made an election prior to the annuitant's death;

. the beneficiary is entitled to payment of a death benefit of at least
$5,000 in a single sum; and

. the beneficiary notifies us of the election prior to the date the proceeds
become payable.

Variable monthly annuity payments

The amount of each subsequent variable annuity payment under that variable
investment option depends upon the investment performance of that variable
investment option. Here's how it works:

. we calculate the actual net investment return of the variable investment
option (after deducting all charges) during the period between the dates
for determining the current and immediately previous monthly payments.

. if that actual net investment return exceeds the "assumed investment rate"
(explained below), the current monthly payment will be larger than the
previous one.

. if the actual net investment return is less than the assumed investment
rate, the current monthly payment will be smaller than the previous one.

Assumed investment rate

The assumed investment rate for any variable portion of your annuity
payments will be 3 1/2% per year, except as follows.

You may elect an assumed investment rate of 5% or 6%, provided such a rate
is available in your state. If you elect a higher assumed investment rate, your
initial variable annuity payment will also be higher. Eventually, however, the
monthly variable annuity payments may be smaller than if you had elected a lower
assumed investment rate.

Fixed monthly annuity payments

The dollar amount of each fixed monthly annuity payment is specified during
the entire period of annuity payments, according to the provisions of the
annuity option selected. To determine such dollar amount we first, in accordance
with the procedures described above, calculate the amount to be applied to the
fixed annuity option as of the date of maturity. We then divide the difference
by $1,000 and multiply the result by the greater of:
-------

. the applicable fixed annuity purchase rate shown in the appropriate table
in the contract; or

. the rate we currently offer at the time of annuitization. (This current
rate may be based on the sex of the annuitant, unless prohibited by law.)

Annuity options

Here are some of the annuity options that are available, subject to the
terms and conditions described above. We reserve the right to make available
optional methods of payment in addition to those annuity options listed here and
in your contract.

OPTION B: LIFE ANNUITY WITHOUT FURTHER PAYMENT ON DEATH OF PAYEE - We will
make monthly payments to the payee as long as he or she lives. We guarantee no
minimum number of payments.

OPTION D: JOINT AND 1/2 SURVIVOR; OR JOINT AND 2/3 SURVIVOR - We will
provide payments monthly, quarterly, semiannually, and annually for the payee's
life and the life of the payee's spouse/joint payee. Upon the death of one
payee, we will continue payments (reduced to 1/2 or 2/3 the full payment amount)
to the surviving payee. All payments stop at the death of the surviving payee.

If the payee is more than 85 years old on the date of maturity, the
following two options are not available without our consent:

. Option A: "life annuity with 5 years guaranteed" and

. Option B: "life annuity without further payment on the death of payee."

VARIABLE INVESTMENT OPTION VALUATION PROCEDURES

We compute the net investment return and accumulation unit values for each
variable investment option as of the end of each business day. A business day is
any date on which the New

York Stock Exchange is open for regular trading. Each business day ends at the
close of regular trading for the day on that exchange. Usually this is 4:00
p.m., Eastern time. On any date other than a business day, the accumulation unit
value or annuity unit value will be the same as the value at the close of the
next following business day.

DISTRIBUTIONS FOLLOWING DEATH OF OWNER

- --------------------------------------------------------------------------------
IF DEATH BENEFITS ARE PAYABLE UPON YOUR DEATH BEFORE ANNUITY
PAYMENTS HAVE BEGUN:

. if the beneficiary is not your surviving spouse OR if the beneficiary is
your surviving spouse but chooses not to continue the contract, the
"entire interest" (as discussed below) in the contract on the date of your
death must be:
(1) paid out in full within five years of your death or
(2) applied in full towards the purchase of a life annuity on the
beneficiary with payments commencing within one year of your death.

. the "entire interest" in the contract on the date of your death equals the
standard death benefit (or any enhanced death benefit) and, if an earnings
enhancement benefit rider is then in force, any earnings enhancement death
benefit amount, that may then be payable.

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
IF YOU DIE ON OR AFTER ANNUITY PAYMENTS HAVE BEGUN:

. any remaining amount that we owe must be paid out at least as rapidly as
under the method of making annuity payments that is then in use.
- --------------------------------------------------------------------------------

The Code imposes very similar distribution requirements on contracts used
to fund tax qualified plans. We provide the required provisions for tax
qualified plans in separate disclosures and endorsements.

Notice of the death of an owner or annuitant should be furnished promptly
to the John Hancock Annuity Servicing Office.

MISCELLANEOUS PROVISIONS

Assignment; change of owner or beneficiary

. the rights of any assignees of record and

. certain other conditions referenced in the contract.

An assignment, pledge, or other transfer may be a taxable event. See "Tax
information" below. Therefore, you should consult a competent tax adviser before
taking any such action.

TAX INFORMATION

Our income taxes

We are taxed as a life insurance company under the Internal Revenue Code
(the "Code"). The Account is taxed as part of our operations and is not taxed
separately.

Special Considerations for Optional Benefit Riders

If you have elected an optional death benefit rider, it is our understanding
that the charges relating to these riders are not subject to current taxation.
The Internal Revenue Service ("IRS") might take the position, however, that
each charge associated with the rider is deemed a partial withdrawal from the
contract subject to current income tax to the extent of any gains and, if
applicable, the 10% penalty tax for premature distributions from annuities. We
understand that you are not prevented from adding any of our optional death
benefit riders to your contract if it is issued as an IRA. However, the law is
unclear because IRAs generally may not invest in "life insurance contracts."
Therefore, it is possible that a Contract may be disqualified as an IRA if it
has an optional death benefit rider added to it. If so, you may be subject to
increased taxes.

At present, the IRS has not provided guidance as to the tax effect of adding
an optional Accumulated Value Enhancement rider or the optional Waiver of
Withdrawal Charge rider to an annuity contract. The IRS might take the position
that each charge associated with these riders is deemed a withdrawal from the
contract subject to current income tax to the extent of any gains and, if
applicable, the 10% penalty tax for premature withdrawals.

Contracts not purchased to fund a tax qualified plan

Undistributed gains

However, a contract owned other than by a natural person (e.g., corporations,
partnerships, limited liability companies and other such entities) does not
generally qualify as an annuity for tax purposes. Any increase in value
therefore would constitute ordinary taxable income to such an owner in the year
earned.

Annuity payments

Surrenders, withdrawals and death benefits

preceding section entitled "Distribution following death of owner."

Penalty for premature withdrawals

Puerto Rico annuity contracts not purchased to fund a tax qualified plan

Diversification requirements

Contracts purchased for a tax qualified plan

Tax-free rollovers

For tax years beginning in 2002, if permitted under your plans, you may make
a tax-free rollover from:

. a traditional IRA to another traditional IRA,

. a traditional IRA to another tax-qualified plan, including a Section
403(b) plan

. any tax-qualified plan (other than a Section 457 deferred compensation plan
maintained by a tax-exempt organization) to a traditional IRA,

. a Section 457 deferred compensation plan maintained by a tax-exempt
organization to another Section 457 deferred compensation plan maintained by
a tax-exempt organization and

. a traditional IRA to a Roth IRA, subject to special restrictions discussed
below.

Traditional IRAs

. 100% of compensation includable in your gross income, or

The amount of your deduction is based on the following factors:

. whether you or your spouse is an active participant in an employer
sponsored retirement plan,

. your federal income tax filing status, and

. your "Modified Adjusted Gross Income."

The tax law requires that annuity payments under a traditional IRA contract
begin no later than April 1 of the year following the year in which the owner
attains age 70 1/2.

Roth IRAs

Distributions. If you hold your Roth IRA for at least five years the payee
-------------
will not owe any federal income taxes or early withdrawal penalties on amounts
paid out from the contract:

. after you reach age 59 1/2,

. on your death or disability, or

. to qualified first-time home buyers (not to exceed a lifetime limitation of
$10,000) as specified in the Code.

Conversion to a Roth IRA. You can convert a traditional IRA to a Roth IRA,
------------------------
unless

. you have adjusted gross income over $100,000, or

. you are a married taxpayer filing a separate return.

The Roth IRA annual contribution limit does not apply to converted amounts.

SIMPLE IRA plans

In general, a small business employer may establish a SIMPLE IRA retirement
plan if the employer employed 100 or fewer employees earning at least $5,000
during the preceding year. As an eligible employee of the business, you may make
pre-tax contributions to the SIMPLE IRA plan. You may specify the percentage of
compensation that you want to contribute under a qualified salary reduction
arrangement, provided the amount does not exceed the SIMPLE IRA annual
contribution limit. The SIMPLE IRA annual limit is $7,000 for tax years
beginning in 2002, $8,000 for 2003, $9,000 for 2004, and $10,000 for 2005.
After that, the annual limit is indexed for inflation in $500 increments as
provided in the Code. Your employer must elect to make a matching contribution
of up to 3% of your compensation or a non-elective contribution equal to 2% of
your compensation.

Simplified Employee Pension plans (SEPs)

Section 403(b) plans

. on the employee's separation from service, death, or disability,

. with respect to distributions of assets held under a 403(b) contract as
of December 31, 1988, and

. transfers and exchanges to other products that qualify under Section 403(b).

Minimum distributions under a 403(b) contract must begin no later than April 1
of the year following the year in which the employee reaches age 70 1/2 or, if
later, retires

Pension and profit sharing plans qualified under Section 401(a)

Annuity payments (or other payments, such as upon withdrawal, death or
surrender) generally constitute taxable income to the payee; and the payee must
pay income tax on the amount by which a payment exceeds its allocable share of
the employee's "investment in the contract" (as defined in the Code), if any.
In general, an employee's "investment in the contract" equals the aggregate
amount of premium payments made by the employee.

"Top-heavy" plans

Section 457 deferred compensation plans

Under the provisions of Section 457 of the Code, you can exclude a portion of
your compensation from gross income if you participate in a deferred
compensation plan maintained by:

. a state,

. a political subdivision of a state,

. an agency or instrumentality or a state or political subdivision of a
state, or

. a tax-exempt organization.

The deferred compensation plan must satisfy several conditions, including the
following:

. the plan must not permit distributions prior to your separation from service
(except in the case of an unforeseen emergency), and

. all compensation deferred under the plan shall remain solely the employer's
property and may be subject to the claims of its creditors.

Elective Deferral Limits

A participant in a Section 403(b) plan, a Section 457 Plan or in certain other
types of tax-qualified pension and profit

sharing plans that are commonly referred to as "401(k)" plans and "SARSEPS" may
elect annually to defer current compensation so that it can be contributed to
the applicable plan or plans. The annual elective deferral limit is $11,000 for
tax years beginning in 2002, $12,000 for 2003, $13,000 for 2004, $14,000 for
2005 and $15,000 for 2006. After that, for the tax years beginning in 2007, 2008
and 2009, the annual elective deferral limit is indexed for inflation in $500
increments as provided in the Code.

Elective Catch-up Limits

A participant in a Section 403(b) plan, a Section 457 Plan or in certain other
types of tax-qualified pension and profit sharing plans that are commonly
referred to as "401(k)" plans and "SARSEPS" who is age 50 or older may increase
contributions by an amount up to $1,000 for tax years beginning in 2002, $2,000
for 2003, $3,000 for 2004, $4,000 for 2005 and $5,000 for 2006. After that, for
the tax years beginning in 2007, the elective catch-up contribution limit is
indexed for inflation in $500 increments as provided in the Code.

Withholding on rollover distributions

Puerto Rico annuity contracts purchased to fund a tax-qualified plan

The provisions of the tax laws of Puerto Rico vary significantly from those
under the Internal Revenue Code of the United States with respect to the various
"tax qualified" plans described above. Although we may offer variable annuity
contracts in Puerto Rico in connection with "tax qualified" plans, the text of
the prospectus under the subsection "Contracts purchased for a tax qualified
plan" is inapplicable in Puerto Rico and should be disregarded.

See your own tax adviser

The above description of Federal income tax consequences to owners of and
payees under contracts, 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 under the Code governing tax qualified plans are extremely
complex and often difficult to understand. Changes to the tax laws may be
enforced retroactively. 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. 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 you should consult a qualified tax adviser.

FURTHER INFORMATION ABOUT JHVLICO

We are JHVLICO, a stock life insurance company, organized in 1979 under the
laws of the Commonwealth of Massachusetts. JHVLICO commenced operations in 1980.
Currently, JHVLICO writes term, whole, variable and universal life insurance
policies and variable annuity contracts in all states except New York.
JHVLICO is wholly-owned by John Hancock Life Insurance Company (formerly known
as John Hancock Mutual Life Insurance Company, hereinafter referred to as
"JHLICO" or "John Hancock"), a life insurance company organized under the laws
of Massachusetts in 1862. Pursuant to a Plan of Reorganization approved by the
policyholders of John Hancock and the Commonwealth of Massachusetts Division of
Insurance, effective February 1, 2000, John Hancock converted from a mutual life
insurance company to a stock life insurance company (i.e. demutualized) and
became a wholly owned subsidiary of John Hancock Financial Services, Inc. which
is a holding company. In connection with the reorganization, John Hancock
changed its name to John Hancock Life Insurance Company. In addition, on
February 1, 2000, John Hancock Financial Services, Inc. completed its initial
public offering in which 102 million shares of common stock were issued at an
initial public offering price of $17 per share. At December 31, 2001, JHVLICO
had $119.3 billion of gross life insurance in force.

JHVLICO markets its policies through

. John Hancock's sales organization, which includes a career agency system
composed of company-supported independent general agencies and,

. various unaffiliated broker-dealers and certain financial institutions
with which John Hancock and JHVLICO have sales agreements.

Selected financial data

- --------------------------------------------------------------------------------
The following table sets forth certain selected historical financial data. The
selected income statement data for each of the years in the three year period
ended December 31, 2001 and balance sheet data as of December 31, 2001 and 2000
are presented in accordance with accounting principles generally accepted in the
United States (referred to as "GAAP") and have been derived from the audited
financial statements included elsewhere in this prospectus. The selected balance
sheet data as of December 31, 1999 is presented on a GAAP basis. These balances
have been determined by adjusting the previously audited statements that were
prepared on a basis prescribed or permitted by the Commonwealth of Massachusetts
Division of Insurance ("statutory" or "Stat" basis) to a GAAP basis, and are
unaudited. The financial statements from which this data has been derived are
not included in this prospectus. The income statement data for each of the years
in the two year period ended December 31, 1998 and 1997 and balance sheet data
as of December 31, 1998 and 1997 is presented on a statutory basis. The audited
statutory basis financial statements from which the selected data has been
derived are not included in this prospectus.

Certain prior year amounts have been reclassified to conform to the current year
presentation.

Past results are not necessarily indicative of future results.
- --------------------------------------------------------------------------------

INCOME STATEMENT DATA:
Premiums ........... $ 60.1 $ 28.6 $ 8.9 $1,272.3 $ 872.7
Universal life and
investment-type
product charges .. 365.4 337.1 341.5 -- --
Net investment
income ........... 227.0 213.4 174.6 122.8 89.7
Net realized
investment and
other gains
(losses) ......... (9.0) (10.6) (4.8) -- --
Other revenue ...... 24.0 0.2 0.2 618.1 449.1
--------- --------- --------- -------- --------
TOTAL REVENUES ..... 667.5 568.7 520.4 2,013.2 1,411.5

Total benefits and
expenses ......... 458.8 425.5 416.8 1,963.9 1,342.5
Federal income tax
expense
(credit) ......... 62.2 43.8 35.2 33.1 38.5
Net realized
capital gains
(losses) ......... -- -- -- (0.6) (3.0)
Cumulative effect of
accounting change,
net of tax ....... (1.6) -- -- -- --
--------- --------- --------- -------- --------
NET INCOME/NET
GAIN .............. $ 144.9 $ 99.4 $ 68.4 $ 15.6 $ 27.5
========= ========= ========= ======== ========

BALANCE SHEET DATA:
Total assets ....... $11,713.2 $12,194.7 $11,974.2 $8,599.0 $6,521.5
Total
liabilities/
obligations ....... 10,747.6 11,389.1 11,279.2 8,268.2 6,199.8
Total stockholder's
equity/
policyholders'
contingency
reserve ........... $ 965.6 $ 805.6 $ 695.0 $ 330.8 $ 321.7

MANAGEMENT'S DISCUSSION AND ANALYSIS

Forward-Looking Information

Overview

Our revenues are derived principally from:

. premiums on individual life insurance and annuities with life contingencies;

. product charges from variable and universal life insurance products and
annuities;

. net investment income and net realized investment and other gains (losses)
on general account assets.

Critical Accounting Policies

General

Amortization of Deferred Policy Acquisition Costs

Investment in Debt and Equity Securities

Income Taxes

Results of Operations

The table below presents our consolidated results of operations for the years
indicated.

- --------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31
------------------------------
2001 2000 1999
---- ---- ----
(IN MILLIONS)
REVENUES
Premiums .................... $ 60.1 $ 28.6 $ 8.9
Universal life and
investment-type product
charges .................... 365.4 337.1 341.5
Net investment income ....... 227.0 213.4 174.6
Net realized investment and
other gains (losses), net of
related amortization of
deferred policy acquisition
costs/(1)/ ................. (9.0) (10.6) (4.8)
Other revenues .............. 24.0 0.2 0.2
------ ------ ------
Total revenues .............. 667.5 568.7 520.4
------ ------ ------

BENEFITS AND EXPENSES
Benefits to policyholders ... 294.1 248.6 260.5
Other operating costs and
expenses ................... 76.2 116.8 117.5
Amortization of deferred
policy acquisition costs,
excluding amounts related
to net realized investment
and other gains
(losses)/(2)/ ............. 67.1 34.0 13.1
Dividends to policyholders .. 21.4 26.1 25.7
------ ------ ------
Total benefits and
expenses .................. 458.8 425.5 416.8
------ ------ ------
Income before income taxes and
cumulative effect of
accounting change ........... 208.7 143.2 103.6
Income taxes ................. 62.2 43.8 35.2
------ ------ ------
Income before cumulative effect
of accounting change ........ 146.5 99.4 68.4
Cumulative effect of accounting
change, net of tax .......... (1.6) -- --
------ ------ ------
Net income ................... $144.9 $ 99.4 $ 68.4
====== ====== ======

- ------------------------------------------------------------------

(1) Net of related amortization of deferred policy acquisition costs of $(1.5)
million, $(3.8) million, and $(0.5) million for the years ended 2001, 2000, and
1999, respectively.

(2) Excluding amounts related to net realized investment and other gains
(losses) of $(1.5) million, $(3.8) million, and $(0.5) million for the years
ended 2001, 2000 and 1999, respectively.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Benefits and expenses of $458.8 million increased $33.3 million, or 7.8%,
from $425.5 million from the comparable prior year period. The increase in
benefits and expenses was primarily driven by growth in benefits to
policyholders of $45.5 million due to growth in the in-force in the traditional
and non-traditional life insurance businesses. In addition, amortization of
deferred policy acquisition costs increased $33.1 million driven by the
non-traditional life insurance business due to an increase in universal life
product charges. These increases in benefits and expenses were partially offset
by a $40.6 million decrease in other operating costs and expenses driven by cost
reduction programs.

Income taxes were $62.2 million in 2001, compared to $43.8 million for 2000.
Our effective tax rate was 29.8% in 2001, as compared to 30.6% in 2000.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Income taxes were $43.8 million in 2000, compared to $35.2 million for 1999.
Our effective tax rate was 30.6% in 2000, as compared to 34.0% in 1999.

Results of Operations by Segment

- -------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31
-------------------------------
2001 2000 1999
---- ---- ----
(IN MILLIONS)
SEGMENT DATA:/(1)/
SEGMENT AFTER-TAX OPERATING INCOME:
Protection Segment .................... $130.0 $ 96.0 $108.0
Asset Gathering Segment ............... 22.2 6.3 6.8
------ ------ ------
Total segment after-tax operating
income .............................. 152.2 102.3 114.8

AFTER-TAX ADJUSTMENTS:
Net realized investment and other gains
(losses), net ........................ (5.6) (6.8) (3.1)
Surplus tax ........................... 9.1 5.6 --
Class action lawsuit .................. (9.2) -- (42.9)
Other demutualization related costs ... -- (0.6) (0.4)
Restructuring charges ................. -- (1.1) --
------ ------ ------
Total after-tax adjustments .......... (5.7) (2.9) (46.4)
------ ------ ------

GAAP REPORTED:
Income before cumulative effect of
change in accounting principle ........ 146.5 99.4 68.4
Cumulative effect of change in
accounting principle, net of tax ..... (1.6) -- --
------ ------ ------
Net income ............................ $144.9 $ 99.4 $ 68.4
====== ====== ======

- -------------------------------------------------------------------------------

(1) See "Adjustments to GAAP Reported Net Income" set forth below.

Adjustments to GAAP Reported Net Income

- -------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31
-------------------------------
2001 2000 1999
------ ------ ------
(in millions)

Net realized investment and
other gains (losses) ....... $(10.5) $(14.4) $(5.3)
Less amortization of deferred
policy acquisition costs
related to net realized
investment and other gains
(losses) ................... 1.5 3.8 0.5
------ ------ -----
Net realized investment and
other gains, net of related
amortization of deferred
policy acquisition costs per
audited consolidated
financial statements ....... (9.0) (10.6) (4.8)
Less income tax effect ...... 3.4 3.8 1.7
------ ------ -----
Net realized investment and
other gains (losses), net -
after-tax adjustment to
calculate segment after-tax
operating income ........... $ (5.6) $ (6.8) $(3.1)
====== ====== =====

- -------------------------------------------------------------------------------

Protection Segment

The following table presents certain summary financial data relating to the
Protection Segment for the periods indicated.

- --------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31
-------------------------------
2001 2000 1999
---- ---- ----
(in millions)
OPERATING RESULTS:
Revenues
Premiums .................................. $ 60.1 $ 28.6 $ 8.9
Universal life and investment-type product
charges .................................. 324.7 286.0 300.8
Net investment income ..................... 229.2 215.9 178.1
Other revenue ............................. 0.3 0.3 0.2
------ ------ ------
Total revenues ........................... 614.3 530.8 488.0
Benefits and expenses
Benefits to policyholders ................. 271.3 242.2 192.3
Other operating costs and expenses ........ 72.8 98.1 100.6
Amortization of deferred policy
acquisition costs, excluding amounts
related to net realized investment and
other gains (losses) .................... 46.6 17.6 4.6
Dividends to policyholders ................ 21.4 26.1 25.7
------ ------ ------
Total benefits and expenses .............. 412.1 384.0 323.2
Segment pre-tax operating income ........... 202.2 146.8 164.8
Income taxes ............................... 72.2 50.8 56.8
------ ------ ------
Segment after-tax operating income /(1)/ ... 130.0 96.0 108.0
After-tax adjustments: /(1)/
Net realized investment and other gains
(losses), net ............................ (5.6) (6.8) (3.1)
Surplus tax ............................... 9.1 5.4 --
Class action lawsuit, net ................. (9.2) -- (42.9)
Other demutualization related costs ....... -- (0.5) (0.3)
Restructuring charges ..................... -- (1.1) --
------ ------ ------
Total after-tax adjustments .............. (5.7) (3.0) (46.3)
------ ------ ------

GAAP REPORTED:
Income before cumulative effect of change in
accounting principle ...................... 124.3 93.0 61.7
Cumulative effect of change in accounting
principle, net of tax ..................... (1.6) -- --
------ ------ ------
Net income ................................. $122.7 $ 93.0 $ 61.7
====== ====== ======

- --------------------------------------------------------------------------------

(1) See "Adjustments to GAAP Reported Net Income" included in this MD&A section
of the prospectus.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Total revenues were $530.8 million in 2000, an increase of $42.8 million,
or 8.8%, from $488.0 million in 1999. Traditional life insurance segment's
premiums increased $19.7 million, or 221.3% due to increase in term life sales.
Universal life and investment-type product charges consist primarily of cost of
insurance fees and separate account fees and were $286.0 million in 2000, a
decrease of $14.8 million, or 4.9%, from $300.8 million in 1999. The decrease
was primarily due to lower fees resulting from a decline in separate account
performance in 2000. Net investment income increased $37.8 million, or 21.2%,
primarily due to increases in average net invested assets for the
non-traditional life insurance segment.

Total benefits and expenses were $384.0 million in 2000, an increase of
$60.8 million, or 18.8%, from $323.2 million in 1999. Benefits to policyholders
increased $49.9 million, or 25.9%, primarily due to increase in reserves related
to growth in term life business for the traditional life insurance segment.
Amortization of deferred policy acquisition costs of $17.6 million in 2000
increased $13.0 million, or 282.6%, from $4.6 million in 1999. Amortization
expense increased primarily due to revised projections of estimated gross
profits on non-traditional life insurance products based upon changes in
estimated future interest margins. The segment's effective tax rate increased to
34.6% in 2000 from 34.5% in 1999.

Asset Gathering Segment

The following table presents certain summary financial data relating to the
Asset Gathering Segment for the periods indicated.

- ---------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
------------------------------
2001 2000 1999
---- ---- ----
(in millions)

OPERATING RESULTS:
Revenues

Universal life and investment-type product charges . $40.7 $51.1 $40.7
Net investment income .............................. (2.2) (2.5) (3.5)
Other revenue ...................................... 23.7 (0.1) --
----- ----- -----
Total revenues .................................... 62.2 48.5 37.2
Benefits and expenses
Benefits to policyholders .......................... 8.7 6.4 2.2
Other operating costs and expenses ................. 3.4 16.1 16.3
Amortization of deferred policy acquisition costs,
excluding amounts related to net realized
investment and other gains (losses) ............. 20.5 16.4 8.5
----- ----- -----
Total benefits and expenses ....................... 32.6 38.9 27.0
Segment pre-tax operating income .................... 29.6 9.6 10.2
Income taxes ........................................ 7.4 3.3 3.4
----- ----- -----
Segment after-tax operating income/(1)/ ............. 22.2 6.3 6.8
After-tax adjustments:/(1)/
Surplus tax ........................................ -- 0.2 --
Other demutualization related costs ................ -- (0.1) (0.1)
----- ----- -----
Total after-tax adjustments ....................... -- 0.1 (0.1)
----- ----- -----
Net income .......................................... $22.2 $ 6.4 $ 6.7
===== ===== =====

- --------------------------------------------------------------------------------------------

(1) See "Adjustments to GAAP Reported Net Income" included in this MD&A section
of the prospects.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Segment after-tax operating income was $22.2 million in 2001, an increase
of $15.9 million, or 252.4%, from $6.3 million in 2000. The increase in the
Asset Gathering Segment is primarily driven by growth in other revenue of $23.8
million and a decrease in other operating costs and expenses of $12.7 million
from the comparable prior year period. These changes were partially offset by a
decrease in investment-type product fees of $10.4 million and an increase in
amortization of deferred policy acquisition costs of $4.1 million.

Total benefits and expenses decreased $6.3 million, or 16.2%, to $32.6
million in 2001 from the comparable prior year period. The decrease in benefit
and expenses is primarily due to a $12.7 million decrease in other operating
costs and expenses resulting from our on-going cost reduction program. Partially
offsetting the decrease in other operating costs and expenses was a $4.1 million
increase in amortization of deferred policy acquisition costs and a $2.3 million
increase in benefits to policyholders. Amortization of deferred policy
acquisition costs increased primarily due to poor separate account performance
and increased surrenders in the variable annuity business in 2001. Benefits to
policyholders increased primarily due to higher surrender benefits on higher
lapses. The segment's effective tax rate was 25.0% and 34.4% in 2001 and 2000,
respectively. The change in the segment's effective tax rate is primarily due to
increased dividend received deductions in variable annuity separate accounts.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

General Account Investments

Overall Composition of the General Account

- -----------------------------------------------------------------------------------------------
AS OF DECEMBER 31, AS OF DECEMBER 31,
2001 2000
-------------------- --------------------
CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL
------------- ------ ------------- --------
(IN MILLIONS) (IN MILLIONS)

Fixed maturity securities/(1)/ ............... $2,496.2 69.0% $1,727.2 57.9%
Mortgage loans/(2)/ .......................... 580.9 16.0 554.8 18.6
Real estate .................................. 20.6 0.6 23.9 0.8
Policy loans/(3)/ ............................ 352.0 9.7 334.2 11.2
Equity securities ............................ 13.1 0.4 8.1 0.3
Other invested assets ........................ 39.6 1.1 34.8 1.2
Short-term investments ....................... 0.0 0.0 21.7 0.7
Cash and cash equivalents/(4)/ ............... 115.4 3.2 277.3 9.3
-------- ----- -------- -----
Total invested assets ....................... $3,617.8 100.0% $2,982.0 100.0%
======== ===== ======== =====
- -----------------------------------------------------------------------------------------------

(2) The fair value of the mortgage loan portfolio was $604.3 million and $467.3
million as of December 31, 2001 and December 31, 2000, respectively.

(3) Policy loans are secured by the cash value of the underlying life insurance
policies and do not mature in a conventional sense, but expire in conjunction
with the related policy liabilities.

(4) Cash and cash equivalents are included in total invested assets for the
purposes of calculating yields on the income producing assets for JHVLICO.

The following table shows the composition by issuer of the fixed maturity
securities portfolio.

FIXED MATURITY SECURITIES -- BY ISSUER

- --------------------------------------------------------------------------------------
AS OF DECEMBER 31, AS OF DECEMBER 31,
2001 2000
-------------------- ---------------------
CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL
----- ----- ----- -----
(IN MILLIONS) (IN MILLIONS)

Corporate securities ..................... $1,955.8 78.3% $1,428.6 82.7%
MBS/ABS .................................. 317.1 12.7 268.2 15.5
U.S. Treasury securities and
obligations of
U.S. government agencies ................ 214.8 8.6 16.7 1.0
Debt securities issued by foreign
governments ............................. 7.6 0.3 10.9 0.6
Obligations of states and political
subdivisions ............................ 0.9 0.1 2.8 0.2
--- --- --- ---
Total .................................... $2,496.2 100.0% $1,727.2 100.0%
======== ===== ======== =====
- ---------------------------------------------------------------------------------------

The Securities Valuation Office (SVO) of the National Association of
Insurance Commissioners evaluates all public and private bonds purchased as
investments by insurance companies. The SVO assigns one of six investment
categories to each security it reviews. Category 1 is the highest quality
rating, and Category 6 is the lowest. Categories 1 and 2 are the equivalent of
investment grade debt as defined by rating agencies such as Standard & Poors
(S&P) and Moody's (i.e., BBB-/Baa3 or higher), while Categories 3-6 are the
equivalent of below-investment grade securities. SVO ratings are reviewed and
may be revised at least once a year.

The following table sets forth the SVO ratings for JHVLICO's bond portfolio
along with an equivalent S&P rating agency designation. The majority of bonds
are investment grade, with 87.7% invested in Category 1 and 2 securities as of
December 31, 2001. Below investment grade bonds were 12.3% of fixed maturity
securities and 8.4% of total invested assets as of December 31, 2001. This
allocation reflects JHVLICO's strategy of avoiding the unpredictability of
interest rate risk in favor of relying on the bond analysts' ability to better
predict credit or default risk. The bond analysts operate in an industry-based,
team-oriented structure that permits the evaluation of a wide range of below
investment grade offerings in a variety of industries resulting in a
well-diversified high yield portfolio. A majority, 62.9% of our below investment
grade bonds are rated BB, or category 3, the highest quality below investment
grade. Category 6 bonds, those in or near default, represent securities that
were originally acquired as long-term investments, but subsequently became
distressed.

FIXED MATURITY SECURITIES -- BY CREDIT QUALITY

- --------------------------------------------------------------------------------------------
AS OF AS OF
DEC. 31, DEC. 31,
2001 2000
--------------------- ----------------------
S&P
SVO EQUIVALENT CARRYING % OF CARRYING % OF
RATING/(1)/ DESIGNATION/(2)/ VALUE/(3)/ TOTAL VALUE/(3)/ TOTAL
----------- ------------------- ------------- ------ ------------- --------
(IN MILLIONS) (IN MILLIONS)

1 AAA/AA/A ......... $ 910.4 37.2% $ 634.2 37.6%
2 BBB .............. 1,237.9 50.5 774.5 46.0
3 BB ............... 190.2 7.8 187.2 11.1
4 B ................ 59.7 2.4 61.4 3.7
5 CCC and lower .... 27.7 1.1 9.2 0.5
6 In or near default 24.7 1.0 18.3 1.1
-------- ----- -------- -----
Total ............ $2,450.6 100.0% $1,684.8 100.0%
======== ===== ======== =====
- ---------------------------------------------------------------------------------------------------

(1)For securities that are awaiting an SVO rating, JHVLICO has assigned a rating
based on an analysis that it believes is equivalent to that used by the SVO.

(2)Comparisons between SVO and S&P ratings are published by the National
Association of Insurance Commissioners.

(3)Does not include redeemable preferred stock with a carrying value of $45.6
million and $42.4 million as of December 31, 2001 and December 31, 2000,
respectively.

MORTGAGE LOANS. As of December 31, 2001 and 2000, we held mortgage loans with
carrying values of $0.6 billion, which included $0.2 billion of agricultural
loans.

- -----------------------------------------------------------------------------------------------------------
AS OF AS OF
DEC. 31 DEC. 31,
2001, 2000
----------------------- -----------------------
CARRYING % OF CARRYING % OF
VALUES TOTAL VALUES TOTAL
------------- ------ ------------- --------
(IN MILLIONS) (IN MILLIONS)
- -----------------------------------------------------------------------------------------------------------

Apartments ............................................ $114.4 19.7% $128.3 23.1%
Office Buildings ...................................... 145.3 25.0 98.0 17.8
Retail ................................................ 35.3 6.1 45.4 8.2
Agricultural .......................................... 166.3 28.6 163.9 29.5
Industrial ............................................ 71.6 12.3 76.8 13.8
Hotels ................................................ 24.6 4.2 15.0 2.7
Mixed Use ............................................. 4.9 0.9 13.4 2.4
Other ................................................. 18.5 3.2 14.0 2.5
------ ----- ------ -----
Total ................................................ $580.9 100.0% $554.8 100.0%
====== ===== ====== =====
- -------------------------------------------------------------------------------------------------------

The following table shows the distribution of JHVLICO's mortgage loan
portfolio by geographical region.

MORTGAGE LOANS -- BY ACLI REGION

AS OF DEC. 31, 2001 AS OF DEC. 31,2000
----------------------------------------------- ------------------------
NUMBER CARRYING % OF CARRYING % OF
OF LOANS VALUES TOTAL VALUES TOTAL
-------------- -------------------- --------- -------------- --------
(IN MILLIONS) (IN MILLIONS)
- ---------------------------------------------------------------------------------------------------------------

East North Central .............. 18 $ 63.1 10.9% $ 67.6 12.2%
East South Central .............. 17 24.3 4.2 27.5 5.0
Middle Atlantic ................. 12 50.3 8.6 26.8 4.8
Mountain ........................ 13 35.3 6.1 35.4 6.4
New England ..................... 13 54.7 9.4 44.2 8.0
Pacific ......................... 48 110.5 19.0 119.3 21.5
South Atlantic .................. 41 151.7 26.1 155.2 28.0
West North Central .............. 6 20.5 3.5 16.8 3.0
West South Central .............. 21 67.3 11.6 58.8 10.5
Canada .......................... 1 3.2 0.6 3.2 0.6
--- ------ ----- ------ -----
Total .......................... 190 $580.9 100.0% $554.8 100.0%
=== ====== ===== ====== =====
- ---------------------------------------------------------------------------------------------------------------

The allowance for losses on mortgage loans on real estate and real estate
to be disposed of is maintained at a level that we believe to be adequate to
absorb estimated probable credit losses. JHVLICO's periodic evaluation of the
adequacy of the allowance for losses is based on past experience, known and
inherent risks, adverse situations that may affect the borrower's ability to
repay (including the timing of future payments), the estimated value of the
underlying security, the general composition of the portfolio, current economic
conditions and other factors. This evaluation is inherently subjective and is
susceptible to significant changes and no assurance can be given that the
allowances taken will in fact be adequate to cover all losses or that additional
valuation allowances or asset write-downs will not be required in the future.
The portion of the investment valuation allowance for JHVLICO's mortgage loan
portfolio was $5.5 million, or 0.9% of carrying value before reserves and $5.0
million, or 0.9% of carrying value before reserves as of December 31, 2001 and
2000, respectively. The portion of the investment valuation allowance for
JHVLICO's real estate to be disposed of was $0.8 million, or 3.9% of carrying
value before reserves and $0.7 million, or 2.9% of carrying value before
reserves as of December 31, 2001 and 2000, respectively.

Investment Results

the 10-year U.S. Treasury rate of 34 basis points from December 31, 1999 to
December 31, 2000.

FOR THE YEAR ENDED
DECEMBER 31,
---------------------------------------------------------------------------------
2001 2000 1999
---- ---- ----

YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT
----- ---------------- ----- ---------------- ----- ------------------
(IN MILLIONS) (IN MILLIONS) (IN MILLIONS)
- ------------------------------------------------------------------------------------------------------

GENERAL ACCOUNT
ASSETS-EXCLUDING
POLICY LOANS
Gross income 7.26% $ 214.6 8.23% $ 207.5 7.56% $ 172.8
Ending
assets-excluding
policy loans 3,265.8 2,647.8 2,397.2
POLICY LOANS
Gross income 6.15 21.1 5.50 17.1 5.08 13.7
Ending assets 352.0 334.2 287.4
Total gross income 7.14 235.7 7.93 224.6 7.29 186.5
Less: investment
expenses ........ (8.7) (11.2) (11.9)
--------- -------- --------
Net investment
income .......... 6.88% $ 227.0 7.53% $ 213.4 6.83% $ 174.6
========= ======== ========

- ------------------------------------------------------------------------------------------------------

Liquidity and Capital Resources

Liquidity describes the ability of a company to generate sufficient cash
flows to meet the cash requirements of business operations. Historically,
JHVLICO's principal cash flow sources have been premiums, deposits and charges
on policies, investment income, maturing investments and proceeds from sales of
investment assets. In addition to the need for cash flow to meet operating
expenses, our liquidity requirements relate principally to the liabilities
associated with our various life insurance and annuity products and to the
funding of investments in new products, processes and technologies. Product
liabilities include the payment of benefits under life insurance, policies and
annuity contracts and the payment of policy surrenders, withdrawals and policy
loans. JHVLICO periodically adjusts its investment policy to respond to changes
in short-term and long-term cash requirements and provide adequate funds to pay
benefits without forced sales of investments.

Net cash provided (used) by operating activities was $314.2 million,
$(349.3) million, and $(459.4) million for the years ended December 31, 2001,
2000 and 1999, respectively. The increase in 2001 as compared to 2000 of $663.5
million resulted primarily from a decrease in benefits paid of $644.7 million
and decrease in operating costs and expenses paid of $74.9 million from the
prior year period. In addition, premiums received increased $25.7 million, fees
received increased $28.3 million, and net investment income received increased
by $16.7 million. The primary increase in cash provided by operations in 2000 as
compared to 1999 is primarily due to the net decrease in other assets and other
liabilities offset somewhat by a larger decrease in policy liabilities as
compared with prior year.

Net cash used in investing activities was $782.6 million, $269.5 million
and $101.9 million for the years ended December 31, 2001, 2000, and 1999,
respectively. The increase in net cash used in 2001 as compared to 2000 of
$513.1 million, resulted primarily from an increase in purchases of fixed
maturities of $565.5 million. Offsetting the cash used by increases in fixed
maturities purchases were increases in cash provided by the maturity, prepayment
and scheduled redemptions of short-term and other invested assets of $36.4
million and a decrease in purchases of mortgage loans of $15.5 million. The
increase in net cash used in 2000 as compared to 1999 resulted primarily from an
increase in fixed maturities purchases, offset somewhat by an increase in the
maturities, prepayments or scheduled redemptions of fixed maturities

Net cash provided by financing activities was $306.5 million, $636.5
million and $778.6 million, for the years ended December 31, 2001, 2000 and
1999, respectively. The decrease in cash provided by financing activities in
2001 as compared to 2000 of $330.0 million resulted from increase in maturities
and withdrawals from universal life and investment-type contracts in excess of
increases in deposits. The decrease in 2000 as compared to 1999 is the result of
no financing activities in 2000,

- --------------------------------------------------------------------------------
AS OF AS OF
DEC. 31,2001 DEC. 31,2000
------------ ------------

AMOUNT % AMOUNT %
------ - ------ -
(IN MILLIONS) (IN MILLIONS)

Subject to discretionary
withdrawal at contract
value less surrender
charge .................. $45.4 75.0% $54.7 75.1%
Not subject to
discretionary withdrawal
provisions .............. 7.6 12.6 7.1 9.8
Subject to discretionary
withdrawal adjustment:
At contract value ....... 7.5 12.4 11.0 15.1
----- ----- ----- -----
Total annuity reserves and
deposit funds liability . $60.5 100.0% $72.8 100.0%
===== ===== ===== =====
- -------------------------------------------------------------------------------

Individual life insurance policies are less susceptible to withdrawal than
are individual annuity contract because policyholders in later policy years may
incur surrender charges and undergo a new underwriting process in order to
obtain a new insurance policy. As indicated in the table above, there is a
substantial percentage of annuity reserves and deposit fund liabilities that are
subject to discretionary withdrawal at the contract value less a surrender
charge. Of the remaining percentage, a little over half are not subject to
withdrawal. In addition, none of these obligations can be accelerated based on
any change in JHVLICO's credit rating.

Individual life insurance policies (other than term life insurance)
increase in cash value over their lives. Policyholders have the right to borrow
from us an amount generally up to the cash value of their policy at any time. As
of December 31, 2001, we had approximately $7.1 billion in cash values in which
policyholders have rights to policy loans. The majority of cash values eligible
for policy loans are at variable interest rates which are reset annually on the
policy anniversary. Moreover, a portion of our fixed interest rate policy loans
have features that provide for reduced crediting rates on the portion of cash
values loaned. Policy loans were $352.0 million and $334.2 million at December
31, 2001 and 2000, respectively.

JHVLICO reviewed its financial information about contractual obligations
and commercial commitments by due date and expiration date as of December 31,
2001. Contractual obligations of JHVLICO are those obligations fixed by
agreement as to dollar amount and date of payment. Other commercial commitments
are those commitments entered into by JHVLICO with known expiration dates.
JHVLICO identified investment purchase commitments of $55.8 million due in less
than one year as its primary contractual obligation. No other contractual
obligation or commercial commitment was identified by JHVLICO.

The risk-based capital standards for life insurance companies, as
prescribed by the National Association of Insurance Commissioners, establish a
risk-based capital ratio comparing adjusted surplus to required surplus for each
of our United States domiciled insurance subsidiaries. If the risk-based capital
ratio falls outside of acceptable ranges, regulatory action may be taken ranging
from increased information requirements to mandatory control by the domiciliary
insurance department. The risk-based capital ratios of our insurance subsidiary
as of December 31, 2001, were above the ranges that would require regulatory
action.

We maintain reinsurance programs designed to protect against large or
unusual losses. Based on our review of our reinsurers' financial statements and
reputations in the reinsurance marketplace, we believe that our reinsurers are
financially sound, and, therefore, that we have no significant exposure to
uncollectable reinsurance in excess of uncollectable amounts already recognized
in our audited consolidated financial statements. JHVLICO has also entered into
reinsurance agreements which transfers risks and profits to John Hancock Life
Insurance Company, the parent. The reinsurance agreements provide reinsurance
expense allowances to reimburse JHVLICO for the related expenses. The agreements
cover variable annuity, variable life insurance and term life insurance
contracts issued by JHVLICO.

Quantitative and Qualitative Disclosures About Market Risk

Capital Markets Risk Management

JHVLICO maintains a disciplined, comprehensive approach to managing capital
market risks inherent in its business operations. To mitigate these risks, and
effectively

Credit Risk

Interest Rate Risk

Derivative Instruments

- -----------------------------------------------------------------------------------
AS OF DECEMBER 31, 2001
---------------------------------------------------------
FAIR VALUE
------------------------------------
WEIGHTED- -100 +100
AVERAGE BASIS BASIS
NOTIONAL TERM POINT AS OF POINT
AMOUNT (YEARS) CHANGE/(2)/ 12/31/01 CHANGE/(2)/
-------- --------- ----------- -------- ------------
(IN MILLIONS, EXCEPT FOR WEIGHTED-AVERAGE TERM)

Interest rate swaps ..... $1,341.8 3.9 $(24.0) $(4.2) $14.0
Futures contracts/(1)/ .. 33.8 8.1 (1.4) (0.2) 1.0
Interest rate floors .... 239.4 5.8 1.8 3.5 6.4
Interest rate caps ...... 361.4 8.4 1.9 1.2 0.2
-------- ------ ----- -----
Totals .................. $1,976.4 5.0 $(21.7) $ 0.3 $21.6
======== ====== ===== =====
- -----------------------------------------------------------------------------------

(1) Represents the notional value on open contracts as of December 31, 2001.

As of December 31, 2001, JHVLICO had no outstanding fixed income obligations.

Separate Accounts

Competition

The life insurance business is highly competitive. There are numerous stock
and other types of insurers in the life/health insurance business in the United
States.

Employees and Facilities

Transactions with John Hancock

See Note 2 to our audited consolidated GAAP financial statements included
elsewhere in this prospectus for additional information on related party
transactions.

Legal Proceedings

Sales Practice Class Action Settlement

In conjunction with this settlement, we had a total reserve that stood at $7.0
million and $66.3 million at December 31, 2001 and 2000, respectively. We
incurred settlement related costs of $14.1 million and $66.0 million in 2001 and
1999, respectively. No such costs were incurred in 2000. In 1999, JHVLICO
updated its estimate of the cost of claims subject to alternative dispute
resolution (ADR) relief and revised its reserve estimate accordingly. The
reserve estimate was further evaluated quarterly, and was adjusted as noted
above in 2001. The adjustment to the reserve in 2001 was the result of JHVLICO
being able to better estimate the cost of settling the remaining claims, which
on average tend to be the larger more complicated claims. The better estimate is
from experience with actual settlement of similar claims.

Regulation

Our business is subject to extensive regulation at both the state and Federal
level, including regulation under state insurance and Federal and state
securities laws.

State Insurance Regulation

Regulation Governing Potential Acquisitions of Control

Surplus and Capital Requirements

Risk-Based Capital

Statutory Investment Valuation Reserves

IRIS Ratios

Regulation of Investments

Valuation of Life Insurance Policies Model Regulation

Federal Insurance Initiatives and Legislation

Tax Legislation

The enactment of EGTRRA has adversely affected sales of certain of our
insurance and investment advisory products, but this effect is mitigated
somewhat by the sunset provision. If the sunset provision of EGTRRA is
eliminated in the future, the adverse affect on the sales of these products
could increase. In addition, sales of split dollar life insurance products have
been adversely affected by proposed changes being considered by the Internal
Revenue Service.

Securities Laws

Directors and Executive Officers

The directors and executive officers of JHVLICO and their principal
occupations during the past five years are as follows:

- ----------------------------------------------------------------------------------------------
Directors and Executive Officers Principal Occupations
- -------------------------------- ---------------------

David F. D'Alessandro ........................ Chairman of the Board of JHVLICO; Chairman,
President and Chief Executive Officer, John
Hancock Life Insurance Company.
Michele G. Van Leer. ......................... Vice Chairman of the Board and President of
JHVLICO; Senior Vice President, John Hancock
Life Insurance Company.
Ronald J. Bocage ............................. Director, Vice President and Counsel of
JHVLICO; Vice President and Counsel, John
Hancock Life Insurance Company.
Todd G. Engelsen ............................. Director and Vice President of JHVLICO; Vice
President, John Hancock Life Insurance Company
Bruce M. Jones ............................... Director and Vice President of JHVLICO; Senior
Vice President, John Hancock Life Insurance
Company.
Daniel L. Ouellette .......................... Director and Vice President of JHVLICO; Senior
Vice President, John Hancock Life Insurance
Company.
Barbara L. Luddy ............................. Director, Vice President and Actuary of JHVLICO;
Senior Vice President, John Hancock Life
Insurance Company.
Robert R. Reitano ............................ Director, Vice President and Chief Investment
officer of JHVLICO; Senior Vice President and
Chief Investment Strategist, John Hancock Life
Insurance Company.
Paul Strong .................................. Director and Vice President of JHVLICO; Vice
President, John Hancock Life Insurance Company.
Roger G. Nastou .............................. Vice President, Investments, of JHVLICO; Vice
President, John Hancock Life Insurance Company
Julie H. Indge ............................... Treasurer of JHVLICO; Assistant Treasurer, John
Hancock Life Insurance Company
Earl W. Baucom ............................... Controller of JHVLICO; Senior Vice President and
Controller, John Hancock Life Insurance Company.
Peter Scavongelli ............................ Secretary of JHVLICO; State Compliance Officer,
John Hancock Life Insurance Company
- -----------------------------------------------------------------------------------------------

The business address of all directors and executive officers of JHVLICO is
John Hancock Place, Boston, Massachusetts 02117.

Executive Compensation

Directors of JHVLICO receive no compensation in addition to their compensation
as employees of JHLICO.

- --------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
------------------- ----------------------
Name Title Salary Bonus Other LTIP All Other
---- ----- ------ ----- ----- ---- ---------
- -------------------------------------------------------------------------------------------------

D. F. D'Alessandro Chairman $37,632 $61,555 $3,041 $49,428 $0
- -------------------------------------------------------------------------------------------------

PERFORMANCE INFORMATION

. the value of a hypothetical investment in a variable investment option at
the beginning of the relevant period, and

. the value at the end of such period.

At the Account level, total return reflects adjustments for:

. the mortality and expense risk charges,

. the annual contract fee, and

. any withdrawal charge payable if the owner surrenders his contract at the
end of the relevant period.

We may also advertise total return in a non-standard format in conjunction
with the standard format described above. The non-standard format is generally
the same as the standard format except that it will not reflect any withdrawal
charge and it may be for additional durations.

Current yield and effective yield reflect all the recurring charges at the
Account level, but will not reflect any premium tax, any withdrawal charge, or
any charge for optional benefit riders.

REPORTS

At least annually, we will send you (1) a report showing the number and value
of the accumulation units in your contract and (2) the financial statements of
the Series Funds.

VOTING PRIVILEGES

At meetings of the Series Funds' shareholders, we will generally vote all the
shares of each fund that we hold in the Account in accordance with instructions
we receive from the owners of contracts that participate in the corresponding
variable investment option.

CERTAIN CHANGES

Changes to the Account

We reserve the right, subject to applicable law, including any required
shareholder approval,

. to add or delete variable investment options,

. to change the underlying investment vehicles,

. to operate the Account in any form permitted by law, and

. to terminate the Account's registration under the 1940 Act, if such
registration should no longer be legally required.

Unless otherwise required under applicable laws and regulations, notice to or
approval of owners will not be necessary for us to make such changes.

Variations in charges or rates for eligible classes

The entitlement to such variation in charges or rates will be determined by us
based upon such factors as the following:

. the size of the initial premium payment,

. the size of the group or class,

. the total amount of premium payments expected to be received from the group
or class and the manner in which the premium payments are remitted,

. the purpose for which the contracts are being purchased and whether that
purpose makes it likely that the costs and expenses will be reduced, or

. the level of commissions paid to selling broker-dealers or certain financial
institutions with respect to contracts within the same group or class.

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.

DISTRIBUTION OF CONTRACTS

Signator Investors, Inc. ("Signator") acts as principal distributor of the
contracts sold through this prospectus. Signator is registered as a
broker-dealer under the Securities Exchange Act of 1934, and a member of the
National Association of Securities Dealers, Inc. Signator's address is 200
Clarendon Street, John Hancock Place, Boston, Massachusetts 02117. Signator is a
subsidiary of John Hancock.

You can purchase a contract through registered representatives of
broker-dealers and certain financial institutions who have entered into selling
agreements with JHVLICO and Signator. We pay broker-dealers compensation for
promoting, marketing and selling our variable insurance and variable annuity
products. In turn, the broker-dealers pay a portion of the compensation to their
registered representatives, under their own arrangements. Signator will also pay
its own registered representatives for sales of the contracts to their
customers. We do not expect the compensation we pay to such broker-dealers
(including Signator) and financial institutions to exceed 8.0% of premium
payments (on a present value basis) for sales of the contracts described in this
prospectus. For limited periods of time, we may pay additional compensation to
broker-dealers as part of special sales promotions. We offer these contracts on
a continuous basis, but neither JHVLICO nor Signator is obligated to sell any
particular amount of contracts. We also reimburse Signator for direct and
indirect expenses actually incurred in connection with the marketing of these
contracts.

EXPERTS

REGISTRATION STATEMENT

This prospectus omits certain information contained in the registration
statement that we filed with the SEC. You can get more details from the SEC upon
payment of prescribed fees or through the SEC's internet web site (www.sec.gov).

Among other things, the registration statement contains a "Statement of
Additional Information" that we will send you without charge upon request. The
Table of Contents of the Statement of Additional Information lists the following
subjects that it covers:

page of SAI

DISTRIBUTION ........................... 2

CALCULATION OF PERFORMANCE
DATA ................................. 2

CALCULATION OF ANNUITY PAYMENTS ........ 8

ADDITIONAL INFORMATION ABOUT
DETERMINING UNIT VALUES .............. 10

PURCHASES AND
REDEMPTIONS OF FUND SHARES ........... 11

THE ACCOUNT ............................ 11

DELAY OF CERTAIN PAYMENTS .............. 11

LIABILITY FOR TELEPHONE TRANSFERS ...... 12

VOTING PRIVILEGES ...................... 13

FINANCIAL STATEMENTS ................... 14

CONDENSED FINANCIAL INFORMATION

JOHN HANCOCK VARIABLE ANNUITY ACCOUNT JF

Period from
Year Ended Year Ended August 10, 1999
December 31, December 31, to December 31,
2001 2000 1999
------------ ------------ ----------------

EQUITY INDEX
Accumulation share value:
Beginning of period ............................................. $20.22 $22.54 $10.00
End of period ................................................... $17.58 $20.22 $22.54
Number of Accumulation Shares outstanding at end of period ....... 804,600 507,320 76,098
GROWTH & INCOME
Accumulation share value:
Beginning of period (Note 2) .................................... $8.82 $10.00 --
End of period ................................................... $7.36 $8.82 --
Number of Accumulation Shares outstanding at end of period ....... 1,817,947 12,749 --
LARGE CAP VALUE
Accumulation share value:
Beginning of period (Note 3) .................................... $10.00 -- --
End of period ................................................... $11.38 -- --
Number of Accumulation Shares outstanding at end of period ....... 334,667 -- --
LARGE CAP VALUE CORE/SM/
Accumulation share value:
Beginning of period ............................................. $10.71 $10.31 $10.00
End of period ................................................... $10.07 $10.71 $10.31
Number of Accumulation Shares outstanding at end of period ....... 1,056,790 520,128 92,493
LARGE CAP GROWTH
Accumulation share value:
Beginning of period (Note 3) ................................... $10.00 -- --
End of period .................................................. $8.13 -- --
Number of Accumulation Shares outstanding at end of period ....... 77,662 -- --
LARGE CAP AGGRESSIVE GROWTH
Accumulation share value:
Beginning of period ............................................. $9.60 $11.97 $10.00
End of period ................................................... $8.09 $9.60 $11.97
Number of Accumulation Shares outstanding at end of period ....... 1,205,414 1,040,129 178,388
FUNDAMENTAL VALUE
Accumulation share value:
Beginning of period ............................................. $11.68 $10.43 $10.00
End of period ................................................... $10.73 $11.68 $10.43
Number of Accumulation Shares outstanding at end of period ....... 802,605 347,760 64,904
MULTI CAP GROWTH
Accumulation share value:
Beginning of period (Note 1) .................................... $7.11 $10.00 --
End of period ................................................... $4.43 $7.11 --
Number of Accumulation Shares outstanding at end of period ....... 1,636,323 629,910 --
FUNDAMENTAL GROWTH
Accumulation share value:
Beginning of period ............................................. $14.74 $15.39 $10.00
End of period ................................................... $9.86 $14.74 $15.39
Number of Accumulation Shares outstanding at end of period ....... 589,572 525,081 38,912
SMALL/MID CAP CORE/SM/
Accumulation share value:
Beginning of period ............................................. $13.16 $12.73 $11.00
End of period ................................................... $13.06 $13.16 $12.73
Number of Accumulation Shares outstanding at end of period ....... 220,092 114,891 9,532

Period from
Year Ended Year Ended August 10, 1999
December 31, December 31, to December 31,
2001 2000 1999
------------ ------------ ----------------

SMALL/MID CAP GROWTH
Accumulation share value:
Beginning of period ............................................. $20.47 $18.98 $18.07
End of period ................................................... $20.79 $20.47 $18.98
Number of Accumulation Shares outstanding at end of period ....... 242,085 136,439 14,779
SMALL CAP EQUITY
Accumulation share value:
Beginning of period (Note 2) .................................... $8.30 $10.00 --
End of period ................................................... $7.90 $8.30 --
Number of Accumulation Shares outstanding at end of period ....... 79,406 535 --
SMALL CAP VALUE
Accumulation share value:
Beginning of period ............................................. $13.87 $10.46 $10.00
End of period ................................................... $16.31 $13.87 $10.46
Number of Accumulation Shares outstanding at end of period ....... 546,648 241,338 --
SMALL CAP GROWTH
Accumulation share value:
Beginning of period ............................................. $16.44 $21.19 $14.27
End of period ................................................... $14.19 $16.44 $21.19
Number of Accumulation Shares outstanding at end of period ....... 715,728 608,753 59,529
V.A. RELATIVE VALUE
Accumulation share value:
Beginning of period (Note 1) .................................... $9.20 $10.00 --
End of period ................................................... $8.84 $9.20 --
Number of Accumulation Shares outstanding at end of period ....... 560,990 172,283 --
AIM V.I. PREMIER EQUITY
Accumulation share value:
Beginning of period ............................................. $9.92 $11.77 $10.00
End of period ................................................... $8.57 $9.92 $11.77
Number of Accumulation Shares outstanding at end of period ....... 3,090,645 2,548,369 302,772
FIDELITY VIP GROWTH - SERVICE CLASS
Accumulation share value:
Beginning of period ............................................. $10.57 $12.04 $10.00
End of period ................................................... $8.59 $10.57 $12.04
Number of Accumulation Shares outstanding at end of period ....... 2,501,361 1,875,307 205,097
FIDELITY VIP CONTRAFUND(R) - SERVICE CLASS
Accumulation share value:
Beginning of period ............................................. $10.69 $11.61 $10.00
End of period ................................................... $9.25 $10.69 $11.61
Number of Accumulation Shares outstanding at end of period ....... 1,645,859 1,447,471 237,990
MFS INVESTORS GROWTH STOCK - INITIAL CLASS
Accumulation share value:
Beginning of period ............................................. $11.45 $12.36 $10.00
End of period ................................................... $8.58 $11.45 $12.36
Number of Accumulation Shares outstanding at end of period ....... 1,280,675 971,077 158,192
MFS RESEARCH - INITIAL CLASS
Accumulation share value:
Beginning of period ............................................. $11.14 $11.86 $10.00
End of period ................................................... $8.67 $11.14 $11.86
Number of Accumulation Shares outstanding at end of period ....... 970,571 672,010 73,452
MFS NEW DISCOVERY - INITIAL CLASS
Accumulation share value:
Beginning of period ............................................. $14.77 $15.26 $10.00
End of period ................................................... $13.85 $14.77 $15.26
Number of Accumulation Shares outstanding at end of period ....... 533,377 431,090 36,557

Period from
Year Ended Year Ended August 10, 1999
December 31, December 31, to December 31,
2001 2000 1999
------------ ------------ ----------------

INTERNATIONAL OPPORTUNITIES
Accumulation share value:
Beginning of period (Note 3) .................................... $10.00 -- --
End of period ................................................... $8.33 -- --
Number of Accumulation Shares outstanding at end of period ....... 20,457 -- --
FIDELITY VIP OVERSEAS - SERVICE CLASS
Accumulation share value:
Beginning of period ............................................. $9.97 $12.48 $10.00
End of period ................................................... $7.75 $9.97 $12.48
Number of Accumulation Shares outstanding at end of period ....... 960,931 1,107,608 30,517
EMERGING MARKETS EQUITY
Accumulation share value:
Beginning of period (Note 3) .................................... $10.00 -- --
End of period ................................................... $9.85 -- --
Number of Accumulation Shares outstanding at end of period ...... 7,941 -- --
JANUS ASPEN WORLDWIDE GROWTH - SERVICE SHARES CLASS
Accumulation share value:
Beginning of period (Note 2) .................................... $9.03 $10.00 --
End of period ................................................... $6.90 $9.03 --
Number of Accumulation Shares outstanding at end of period ....... 322,018 128,709 --
REAL ESTATE EQUITY
Accumulation share value:
Beginning of period (Note 2) .................................... $10.95 $10.00 --
End of period ................................................... $11.43 $10.95 --
Number of Accumulation Shares outstanding at end of period ....... 138,332 1,766 --
HEALTH SCIENCES
Accumulation share value:
Beginning of period (Note 3) .................................... $10.00 -- --
End of period ................................................... $9.73 -- --
Number of Accumulation Shares outstanding at end of period ....... 100,786 -- --
V.A. FINANCIAL INDUSTRIES
Accumulation share value:
Beginning of period ............................................. $17.90 $14.25 $10.00
End of period ................................................... $14.58 $17.90 $14.25
Number of Accumulation Shares outstanding at end of period ....... 855,100 642,376 113,876
V.A. TECHNOLOGY
Accumulation share value:
Beginning of period (Note 1) .................................... $7.28 $10.00 --
End of period ................................................... $4.02 $7.28 --
Number of Accumulation Shares outstanding at end of period ....... 1,348,542 679,427 --
MANAGED
Accumulation share value:
Beginning of period (Note 2) .................................... $9.73 $10.00 --
End of period ................................................... $9.34 $9.73 --
Number of Accumulation Shares outstanding at end of period ....... 868,814 89 --
GLOBAL BALANCED
Accumulation share value:
Beginning of period ............................................. $11.65 $12.98 $12.24
End of period ................................................... $10.76 $11.65 $12.98
Number of Accumulation Shares outstanding at end of period ....... 128,318 63,735 5,361
SHORT TERM BOND
Accumulation share value:
Beginning of period ............................................. $13.30 $12.48 $12.34
End of period ................................................... $14.20 $13.30 $12.48
Number of Accumulation Shares outstanding at end of period ....... 440,240 126,421 15,433

Period from
Year Ended Year Ended August 10, 1999
December 31, December 31, to December 31,
2001 2000 1999
------------ ------------ ----------------

BOND INDEX
Accumulation share value:
Beginning of period ............................................. $10.63 $9.63 $9.65
End of period ................................................... $11.31 $10.63 $9.63
Number of Accumulation Shares outstanding at end of period ....... 833,929 327,502 47,232
ACTIVE BOND
Accumulation share value:
Beginning of period (Note 3) .................................... $10.00 -- --
End of period ................................................... $10.39 -- --
Number of Accumulation Shares outstanding at end of period ....... 1,154,989 -- --
V.A. STRATEGIC INCOME
Accumulation share value:
Beginning of period ............................................. $12.64 $12.62 $12.25
End of period ................................................... $13.05 $12.64 $12.62
Number of Accumulation Shares outstanding at end of period ....... 813,003 535,897 58,942
HIGH YIELD BOND
Accumulation share value:
Beginning of period ............................................. $9.04 $10.27 $10.00
End of period ................................................... $9.12 $9.04 $10.27
Number of Accumulation Shares outstanding at end of period ....... 644,021 333,028 48,898
GLOBAL BOND
Accumulation share value:
Beginning of period (Note 2) .................................... $10.60 $10.00 --
End of period ................................................... $10.31 $10.60 --
Number of Accumulation Shares outstanding at end of period ....... 71,857 -- --
MONEY MARKET
Accumulation share value:
Beginning of period (Note 3) .................................... $10.00 -- --
End of period ................................................... $10.12 -- --
Number of Accumulation Shares outstanding at end of period ....... 4,289,180 -- --

(1) Values shown for 2000 begin on May 1, 2000.

(2) Values shown for 2000 begin on November 1, 2000.

(3) Values shown for 2001 begin on May 1, 2001.

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
John Hancock Variable Life Insurance Company

As discussed in Note 1 to the consolidated financial statements, in 2001 the
Company changed its method of accounting for derivatives.

/s/ ERNST & YOUNG LLP

Boston, Massachusetts
March 21, 2002

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS

DECEMBER 31
2001 2000
--------- ---------
(IN MILLIONS)
ASSETS
Investments--Notes 3 and 4
Fixed maturities:
Held-to-maturity--at amortized cost
(fair value: 2001--$82.1; 2000--$686.8) .......... $ 83.7 $ 715.4
Available-for-sale--at fair value
(cost: 2001--$2,391.9; 2000--$1,018.8) ........... 2,412.5 1,011.8
Equity securities:
Available-for-sale--at fair value
(cost: 2001--$12.1; 2000--$7.1) .................. 13.1 8.1
Mortgage loans on real estate ...................... 580.9 554.8
Real estate ........................................ 20.6 23.9
Policy loans ....................................... 352.0 334.2
Short-term investments ............................. -- 21.7
Other invested assets .............................. 39.6 34.8
--------- ---------
Total Investments ................................ 3,502.4 2,704.7

Cash and cash equivalent ........................... 115.4 277.3
Accrued investment income .......................... 60.8 52.1
Premiums and accounts receivable. .................. 12.5 7.0
Deferred policy acquisition costs .................. 1,060.8 994.1
Reinsurance recoverable--Note 6 .................... 110.4 48.4
Other assets ....................................... 121.8 28.2
Separate accounts assets ........................... 6,729.1 8,082.9
--------- ---------
Total Assets ..................................... $11,713.2 $12,194.7
========= =========

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS (CONTINUED)

DECEMBER 31

2001 2000
--------- ---------
(IN MILLIONS)

LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities
Future policy benefits .................................. $ 3,335.4 $ 2,754.2
Policyholders' funds .................................... 3.0 14.2
Unearned revenue ........................................ 221.0 212.0
Unpaid claims and claim expense reserves ................ 25.0 11.1
Dividends payable to policyholders ...................... 0.3 0.1
Income taxes--Note 5 .................................... 191.1 64.2
Other liabilities ....................................... 242.7 250.4
Separate accounts liabilities ........................... 6,729.1 8,082.9
--------- ---------
Total Liabilities ..................................... 10,747.6 11,389.1
Shareholder's Equity--Note 8
Common stock, $50 par value; 50,000 shares
authorized; 50,000 shares issued and
outstanding ........................................... 2.5 2.5
Additional paid in capital .............................. 572.4 572.4
Retained earnings ....................................... 377.8 232.9
Accumulated other comprehensive loss .................... 12.9 (2.2)
--------- ---------
Total Shareholder's Equity ............................ 965.6 805.6
--------- ---------
Total Liabilities and Shareholder's Equity ............ $11,713.2 $12,194.7
========= =========

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31

2001 2000 1999
------ ------- ------
(IN MILLIONS)

Premiums ............................................. $ 60.1 $ 28.6 $ 8.9
Universal life and investment-type product charges.... 365.4 337.1 341.5
Net investment income--Note 3 ........................ 227.0 213.4 174.6
Net realized investment and other gains (losses),
net of related amortization of deferred policy
acquisition costs of $(1.5), $(3.8) and $(0.5),
respectively--Notes 1, 3, and 9 .................... (9.0) (10.6) (4.8)
Other revenue ........................................ 24.0 0.2 0.2
------ ------ ------
Total revenues ....................................... 667.5 568.7 520.4
BENEFITS AND EXPENSES
Benefits to policyholders ............................ 294.1 248.6 260.5
Other operating costs and expenses ................... 76.2 116.8 117.5
Amortization of deferred policy acquisition costs,
excluding amounts related to net realized
investment and other gains (losses) of $(1.5),
$(3.8) and $(0.5), respectively -- Notes 1, 3
and 9 .............................................. 67.1 34.0 13.1
Dividends to policyholders ........................... 21.4 26.1 25.7
------ ------ ------
Total benefits and expenses .......................... 458.8 425.5 416.8
------ ------ ------
Income before income taxes and cumulative effect
of accounting change ............................... 208.7 143.2 103.6
Income taxes--Note 5 ................................ 62.2 43.8 35.2
------ ------ ------
Income before cumulative effect of accounting
change ............................................. 146.5 99.4 68.4
Cumulative effect of accounting change, net of tax ... (1.6) -- --
------ ------ ------
Net income ........................................... $144.9 $ 99.4 $ 68.4
====== ====== ======

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY

AND COMPREHENSIVE INCOME

ACCUMULATED
ADDITIONAL OTHER TOTAL OUTSTANDING
COMMON PAID IN RETAINED COMPREHENSIVE SHAREHOLDER'S SHARES (IN
STOCK CAPITAL EARNINGS INCOME EQUITY THOUSANDS)
------ ---------- -------- ------------- ------------- -----------
(IN MILLIONS)

BALANCE AT JANUARY 1, 1999 ............... $2.5 $377.5 $ 65.1 $ 12.3 $457.4 50.0
Comprehensive income:
Net income ............................... 68.4 68.4
Other comprehensive income, net of tax:
Net unrealized losses .................. (25.7) (25.7)
------
Comprehensive income ..................... 42.7
Capital contribution ..................... 194.9 194.9
---- ------ ------ ------ ------ ----
BALANCE AT DECEMBER 31, 1999 ............. $2.5 $572.4 $133.5 $(13.4) $695.0 50.0
==== ====== ====== ======= ====== ====

Comprehensive income:
Net income ............................... 99.4 99.4
Other comprehensive income, net of tax:
Net unrealized gains ................... 11.2 11.2
------
Comprehensive income ..................... 110.6
---- ------ ------ ------ ------ ----
BALANCE AT DECEMBER 31, 2000 ............. $2.5 $572.4 $232.9 $ (2.2) $805.6 50.0
==== ====== ====== ====== ====== ====

Comprehensive income:
Net income ............................. 144.9 144.9
Other comprehensive income, net of tax:
Net unrealized gains ................... 7.9 7.9
------
Comprehensive income ..................... 152.8
Change in accounting principle ........... 7.2 7.2
---- ------ ------ ------- ------ ----
BALANCE AT DECEMBER 31, 2001 ............. $2.5 $572.4 $377.8 $ 12.9 $965.6 50.0
==== ====== ====== ======= ====== ====

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31

2001 2000 1999
--------- ------- -------
(IN MILLIONS)

Cash flows from operating activities:
Net income ........................................... $ 144.9 $ 99.4 $ 68.4
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Amortization of discount - fixed maturities .... (0.4) (1.9) 1.2
Realized investment losses, net ................ 9.0 10.6 4.8
Change in deferred policy acquisition costs .... (74.1) (141.5) (126.5)
Depreciation and amortization .................. 0.3 1.9 0.6
Increase in accrued investment income .......... (8.6) (10.2) (3.5)
Decrease (increase) in premiums and accounts
receivable ................................... (5.5) 0.3 (2.4)
(Increase) decrease in other assets and other
liabilities, net ............................. (159.2) 70.7 (58.2)
Increase (decrease) in policy liabilities and
accruals, net ................................ 289.1 (401.1) (377.6)
Increase in income taxes ....................... 118.7 22.5 33.8
--------- ------ -------
Net cash provided (used) by operating
activities ................................... 314.2 (349.3) (459.4)
Cash flows from investing activities:
Sales of:
Fixed maturities available-for-sale ................ 184.6 194.6 204.3
Equity securities available-for-sale ............... 6.0 1.0 0.6
Real estate ........................................ 3.3 0.2 17.9
Short-term investments and other invested assets ... -- 1.3 1.5
Maturities, prepayments and scheduled redemptions of:
Fixed maturities held-to-maturity .................. 4.5 79.9 75.8
Fixed maturities available-for-sale ................ 180.4 91.5 53.6
Short-term investments and other invested assets ... 46.5 10.1 --
Mortgage loans on real estate ...................... 66.4 85.6 35.8
Purchases of:
Fixed maturities held-to-maturity .................. (5.1) (127.2) (98.8)
Fixed maturities available-for-sale ................ (1,112.3) (424.7) (250.9)
Equity securities available-for-sale ............... (6.1) (0.6) (4.0)
Real estate ........................................ (0.6) (0.4) (2.2)
Short-term investments and other invested assets ... (39.6) (38.8) (14.6)
Mortgage loans on real estate issued ............... (85.0) (100.5) (90.3)
Other, net ......................................... (25.6) (41.5) (30.6)
--------- ------ -------
Net cash used in investing activities ............ (782.6) (269.5) (101.9)

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

YEAR ENDED DECEMBER 31

2001 2000 1999
-------- -------- --------
(IN MILLIONS)

Cash flows from financing activities:
Capital contribution from parent company .............. -- -- $ 194.9
Universal life and investment-type contract deposits .. $1,220.7 $1,067.2 1,026.3
Universal life and investment-type contract
maturities and withdrawals .......................... (914.2) (430.7) (380.7)
Repayment of long term debt ........................... -- -- (61.9)
-------- -------- --------
Net cash provided by financing activities ............. 306.5 636.5 778.6
-------- -------- --------
Net (decrease) increase in cash and cash equivalents .. (161.9) 17.7 217.3
Cash and cash equivalents at beginning of year .......... 277.3 259.6 42.3
-------- -------- --------
Cash and cash equivalents at end of year ................ $ 115.4 $ 277.3 $ 259.6
======== ======== ========

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

John Hancock Variable Life Insurance Company (the Company) is a
wholly-owned subsidiary of John Hancock Life Insurance Company (John Hancock or
the Parent). The Company, domiciled in the Commonwealth of Massachusetts, issues
variable and universal life insurance policies, individual whole and term life
policies and fixed and variable annuity contracts. Those policies primarily are
marketed through John Hancock's sales organization, which includes a career
agency system composed of Company-supported independent general agencies and a
direct brokerage system that markets directly to external independent brokers.
Policies are also sold through various unaffiliated securities broker-dealers
and certain other financial institutions. Currently, the Company writes business
in all states except New York.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, Investors Partner Life Insurance
Company (IPL). All significant intercompany transactions and balances have been
eliminated.

Certain prior year amounts have been reclassified to conform to the current
year presentation.

Reorganization and Initial Public Offering

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Investments

The Company classifies its debt and equity investment securities into one
of three categories: held-to-maturity, available-for-sale or trading. The
Company determines the appropriate classification of debt securities at the time
of purchase and re-evaluates such designation as of each balance sheet date.
Fixed maturity investments include bonds, mortgage-backed securities, and
redeemable preferred stock and are classified as held-to-maturity or
available-for-sale. Those bonds and mortgage-backed securities that the Company
has the positive intent and ability to hold to maturity are classified as
held-to-maturity and carried at amortized cost. Fixed maturity investments not
classified as held-to-maturity are classified as available-for-sale and are
carried at fair value. Unrealized gains and losses related to available-for-sale
securities are reflected in shareholder's equity, net of related amortization of
deferred policy acquisition costs and applicable taxes. The amortized cost of
debt securities is adjusted for amortization of premiums and accretion of
discounts to maturity. Such amortization is included in investment income. The
amortized cost of fixed maturity investments is adjusted for impairments in
value deemed to be other than temporary, and such adjustments are reported as a
component of net realized investment and other gains (losses).

Equity securities include common stock and non-redeemable preferred stock.
Equity securities that have readily determinable fair values are carried at fair
value. For equity securities which the Company has classified as
available-for-sale, unrealized gains and losses are reflected in shareholder's
equity, as described above for fixed maturity securities. Impairments in value
deemed to be other than temporary are reported as a component of net realized
investment and other gains (losses).

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Policy loans are carried at unpaid principal balances, which approximate
fair value.

Short-term investments are carried at amortized cost, which approximates
fair value.

Net realized investment and other gains (losses), other than those related
to separate accounts for which the Company does not bear the investment risk,
are determined on the basis of specific identification and are reported net of
related amortization of deferred policy acquisition costs.

Derivative Financial Instruments

In certain cases, the Company uses hedge accounting as allowed by Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities," by designating derivative instruments as
either fair value hedges or cash flow hedges. For derivative instruments that
are designated and qualify as fair value hedges, the change in fair value of the
derivative instrument as well as the offsetting change in fair value of the
hedged item are recorded in net realized investment and other gains (losses).
Basis adjustments are amortized into income through net realized investment and
other gains (losses). For derivative instruments that are designated and qualify
as cash flow hedges, the effective portion of the change in fair value of the
derivative instrument is recorded in other comprehensive income, and then
reclassified into income when the hedged item affects income. Hedge
effectiveness is assessed quarterly by a variety of techniques including
regression analysis and cumulative dollar offset. In certain cases, there is no
hedge ineffectiveness because the derivative instrument was constructed such
that all the terms of the derivative exactly match the hedged risk in the hedged
item. If a hedge becomes ineffective, the hedge accounting described above
ceases.

Cash and Cash Equivalents

Cash and cash equivalents include cash and all highly liquid debt
investments with a maturity of three months or less when purchased.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Deferred Policy Acquisition Costs

Net realized investment and other gains (losses) related to certain
products have a direct impact on the amortization of deferred policy acquisition
costs as such gains and losses affect the amount and timing of profit emergence.
Accordingly, to the extent that such amortization results from net realized
investment and other gains and (losses), management believes that presenting
realized investment gains and losses net of related amortization of deferred
policy acquisition costs provides information useful in evaluating the operating
performance of the Company. This presentation may not be comparable to
presentations made by other insurers.

Reinsurance

Assets and liabilities related to reinsurance ceded contracts are reported
on a gross basis. The accompanying statements of income reflect premiums,
benefits and settlement expenses net of reinsurance ceded. 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. The
Company remains liable to its policyholders to the extent that counterparties to
reinsurance ceded contracts do not meet their contractual obligations.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Separate Accounts

Future Policy Benefits and Policyholders' Funds

Future policy benefits for participating traditional life insurance
policies are based on the net level premium method. This net level premium
reserve is calculated using the guaranteed mortality and dividend fund interest
rates, which range from 4.5% to 5.0%. The liability for annual dividends
represents the accrual of annual dividends earned. Settlement dividends are
accrued in proportion to gross margins over the life of the contract.

Policyholders' funds for universal life and investment-type products are
equal to the policyholder account values before surrender charges. Policy
benefits that are charged to expense include benefit claims incurred in the
period in excess of related policy account balances and interest credited to
policyholders' account balances. Interest crediting rates range from 3.0% to
9.0% for universal life products.

Liabilities for unpaid claims and claim expenses include estimates of
payments to be made on reported individual life claims and estimates of incurred
but not reported claims based on historical claims development patterns.

Estimates of future policy benefit reserves, claim reserves and expenses
are reviewed continually and adjusted as necessary; such adjustments are
reflected in current earnings. Although considerable variability is inherent in
such estimates, management believes that future policy benefit reserves and
unpaid claims and claims expense reserves are adequate.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Participating Insurance

Participating business represents approximately 7.6% and 16.3% of the
Company's life insurance in-force at December 31, 2001 and 2000, respectively.

The amount of policyholders' dividends to be paid is approved annually by
the Company's Board of Directors. The determination of the amount of
policyholder dividends is complex and varies by policy type. In general, the
aggregate amount of policyholders' dividends is related to actual interest,
mortality, morbidity, persistency and expense experience for the year and is
also based on management's judgment as to the appropriate level of statutory
surplus to be retained by the Company.

Revenue Recognition

Premiums from participating and non-participating traditional life
insurance and annuity policies with life contingencies are recognized as income
when due.

Federal Income Taxes

The provision for federal income taxes includes amounts currently payable
or recoverable and deferred income taxes, computed under the liability method,
resulting from temporary differences between the tax basis and book basis of
assets and liabilities. A valuation allowance is established for deferred tax
assets when it is more likely than not that an amount will not be realized.

Foreign Currency Translation

Gains or losses on foreign currency transactions are reflected in earnings.

Cumulative Effect of Accounting Changes

On January 1, 2001, the Company adopted SFAS No. 133, as amended by SFAS
No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities". The adoption of SFAS No. 133, as amended, resulted in a charge to
operations accounted for as a cumulative effect of accounting change of $1.6
million (net of tax of $0.4 million) as of January 1, 2001. In addition, as of
January 1, 2001, a $7.2 million (net of tax of $3.9 million) cumulative effect
of accounting change was recorded in other comprehensive income including (1)
the transition adjustment in the adoption of SFAS 133, as amended, an increase
of $0.8 million (net of tax of $0.4 million), and (2) the reclassification of
$603.1 million in securities from the held-to-maturity category to the
available-for-sale category, an increase of $6.4 million (net of tax of $3.4
million).

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements

In September 2001, the FASB's Emerging Issues Task Force reached a
consensus on Issue 01-10, "Accounting for the Impact of the Terrorist Attacks of
September 11, 2001." Issue 01-10 presents guidance relative to accounting for
and financial reporting of the events of September 11, 2001 (the Events),
including both how and when to measure, record and report losses and any
resulting liabilities which are directly attributable to the Events. Based on a
comprehensive review of the Company's operations, the Company believes that the
Events had no material financial impact on the Company's results of operations
or financial position.

In June 2001, the FASB issued SFAS No. 141, "Business Combinations." SFAS
No. 141 requires that all business combinations be accounted for under a single
method, the purchase method. Use of the pooling-of-interests method is no longer
permitted. SFAS No. 141 also clarifies the criteria to recognize intangible
assets separately from goodwill, and prohibits the amortization of goodwill
relating to acquisitions completed after July 1, 2001. SFAS No. 141 is effective
for business combinations initiated after June 30, 2001.The adoption of SFAS No.
141 did not have a material effect on the Company's results of operations or
financial position.

In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities," which
replaces SFAS No. 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities." SFAS No. 140 provides new accounting
and reporting standards which are based on consistent application of a financial
components approach that focuses on control. Under this approach, after a
transfer of financial assets, the Company recognizes the financial and servicing
assets it controls and the liabilities it has incurred, derecognizes financial
assets when control has been surrendered, and derecognizes liabilities when
extinguished. SFAS No. 140 provides consistent standards for distinguishing
transfers of financial assets that are sales from transfers that are secured
borrowings. SFAS No. 140 is effective for transfers and servicing of financial
assets and extinguishments of liabilities occurring after March 31, 2001. The
adoption of SFAS No. 140 did not have a material impact on the Company's results
of operations or financial position.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Codification

NOTE 2. RELATED PARTY TRANSACTIONS

John Hancock provides the Company with personnel, property, and facilities
in carrying out certain of its corporate functions. John Hancock annually
determines a fee (the parent company service fee) for these services and
facilities based on a number of criteria, which are periodically revised to
reflect continuing changes in the Company's operations. The parent company
service fee is included in deferred acquisition costs on the Company's balance
sheets, net investment income and other operating costs and expenses within the
Company's income statements. John Hancock charged the Company a service fee of
$159.9 million, $170.6 million and $199.3 million for the year ended December
31, 2001, 2000 and 1999, respectively. As of December 31, 2001 and 2000,
respectively, the Company owed John Hancock $17.9 million and $56.9 million
related to these services, which is included in other liabilities. John Hancock
has guaranteed that, if necessary, it will make additional capital contributions
to prevent the Company's shareholder's equity from declining below $1.0 million.

In 2001 the Company sold $200 million of corporate owned life insurance
(COLI) to its Parent to provide insurance coverage on key management employees
of the Parent. The death benefit on this COLI product would cover the cost of
replacing these employees, including recruiting, training, and development.

The Company has a modified coinsurance agreement with John Hancock to
reinsure 50% of 1994 through 2001 issues of flexible premium variable life
insurance and scheduled premium variable life insurance policies. In connection
with this agreement, John Hancock transferred to the Company $11.8 million,
$24.2 million, and $44.5 million of cash for tax, commission, and expense
allowances. This agreement decreased the Company's net gain from operations by
$1.7 million and $0.9 million in 2001 and 2000, respectively, and increased the
Company's net gain from operations by $20.6 million in 1999.

The Company has a modified coinsurance agreement with John Hancock to
reinsure 50% of the Company's 1995 in-force block and 50% of 1996 and all future
issue years of certain retail annuity contracts. In connection with this
agreement, the Company is holding a deposit liability of $107.5 million and
$102.2 million as of December 31, 2001 and 2000, respectively. This agreement
had no impact on the Company's net gain from operations.

Effective January 1, 1997, the Company entered into a stop-loss agreement
with John Hancock to reinsure mortality claims in excess of 100% of expected
mortality claims for all policies that are not reinsured under any other
indemnity agreement. In connection with the agreement, John Hancock received
$0.4 million, $1.0 million and $0.8 million from the Company in 2001, 2000 and
1999, respectively. This agreement decreased the Company's net gain from
operations by $0.8 million, $1.1 million and $0.5 million in 2001, 2000 and
1999, respectively.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2. RELATED PARTY TRANSACTIONS (CONTINUED)

At December 31, 2001, the Company had a $250.0 million line of credit with
an affiliate, John Hancock Financial Services, Inc. At December 31, 2000, the
Company had a $250.0 million line of credit with affiliate, John Hancock Capital
Corp. At December 31, 2001 and 2000, the Company had no outstanding borrowings
under these agreements.

NOTE 3. INVESTMENTS

The following information summarizes the components of net investment
income and net realized investment and other gains (losses), net:

YEAR ENDED DECEMBER 31,
2001 2000 1999
------- ------------- ---------
(IN MILLIONS)

NET INVESTMENT INCOME
Fixed maturities ........................ $160.1 $138.5 $127.1
Equity securities ....................... 0.3 0.2 --
Mortgage loans on real estate ........... 42.3 44.3 39.7
Real estate ............................. 2.3 4.1 3.6
Policy loans ............................ 21.1 17.1 13.7
Short-term investments .................. 6.3 19.4 4.5
Other ................................... 3.3 1.1 (2.0)
------ ------ ------
Gross investment income ................. 235.7 224.7 186.6
Less investment expenses ............... 8.7 11.3 12.0
------ ------ ------
Net investment income ................. $227.0 $213.4 $174.6
====== ====== ======
NET REALIZED INVESTMENT AND OTHER GAINS
(LOSSES), NET OF RELATED AMORTIZATION
OF DEFERRED POLICY ACQUISITION COSTS
Fixed maturities ........................ $(25.1) $(16.0) $ (5.9)
Equity securities ....................... 3.8 0.8 --
Mortgage loans on real estate and real
estate ................................. (1.2) (2.3) 0.9
Derivatives and other invested assets ... 12.0 3.1 (0.3)
Amortization adjustment for deferred
policy acquisition costs ............... 1.5 3.8 0.5
------ ------ ------
Net realized investment and other losses,
net of related amortization of deferred
policy acquisition costs ............... $ (9.0) $(10.6) $ (4.8)
====== ====== ======

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

Gross gains of $6.5 million, $1.5 million, and $0.5 million and gross
losses of $3.3 million, $6.0 million, and $5.3 million in 2001, 2000 and 1999,
respectively, were realized on the sale of available-for-sale securities.

The Company's investments in held-to-maturity securities and
available-for-sale securities are summarized below:

GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ------------
(IN MILLIONS)

DECEMBER 31, 2001
HELD-TO-MATURITY:
Corporate securities ................. $ 65.0 $ -- $ 0.8 $ 64.2
Mortgage-backed securities ........... 18.7 0.2 1.0 17.9
-------- ----- ----- --------
Total ............................... $ 83.7 $ 0.2 $ 1.8 $ 82.1
======== ===== ===== ========
AVAILABLE-FOR-SALE:
Corporate securities ................. $1,867.5 $67.5 $44.2 $1,890.8
Mortgage-backed securities ........... 296.7 6.3 4.7 298.3
Obligations of states and
political subdivisions .............. 0.9 -- -- 0.9
Debt securities issued by
foreign governments ................. 7.2 0.5 -- 7.7
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies ........... 219.6 1.1 5.9 214.8
-------- ----- ----- --------
Total fixed maturities ............... 2,391.9 75.4 54.8 2,412.5
Equity securities .................... 12.1 1.5 0.5 13.1
-------- ----- ----- --------
Total ............................... $2,404.0 $76.9 $55.3 $2,425.6
======== ===== ===== ========

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

The amortized cost and fair value of fixed maturities at December 31, 2001,
by contractual maturity, are shown below:

GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(IN MILLIONS)
DECEMBER 31, 2000
HELD-TO-MATURITY:
Corporate securities ............. $ 684.2 $23.4 $51.0 $ 656.6
Mortgage-backed securities ....... 29.3 0.2 1.2 28.3
Obligations of states and
political subdivisions .......... 1.9 -- -- 1.9
-------- ----- ----- --------
Total ......................... $ 715.4 $23.6 $52.2 $ 686.8
======== ===== ===== ========
AVAILABLE-FOR-SALE:
Corporate securities ............. $ 751.6 $20.6 $27.8 $ 744.4
Mortgage-backed securities ....... 239.1 3.6 3.7 239.0
Obligations of states and
political subdivisions ......... 0.9 -- -- 0.9
Debt securities issued by
foreign governments ............. 11.1 0.3 0.6 10.8
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies ...... 16.1 0.7 0.1 16.7
-------- ----- ----- --------
Total fixed maturities ........... 1,018.8 25.2 32.2 1,011.8
Equity securities ................ 7.1 2.8 1.8 8.1
-------- ----- ----- --------
Total ......................... $1,025.9 $28.0 $34.0 $1,019.9
======== ===== ===== ========

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

The amortized cost and fair value of fixed maturities at December 31, 2001,
by contractual maturity, are shown below:

AMORTIZED FAIR
COST VALUE

(IN MILLIONS)
-------------------
HELD-TO-MATURITY:
Due in one year or less ............................... $ -- $ --
Due after one year through five years ................. 3.0 3.0
Due after five years through ten years ................ 8.6 8.6
Due after ten years ................................... 53.4 52.6
-------- --------
65.0 64.2
Mortgage-backed securities ............................ 18.7 17.9
-------- --------
Total ................................................. $ 83.7 $ 82.1
======== ========
AVAILABLE-FOR-SALE:
Due in one year or less ............................... $ 97.5 $ 99.5
Due after one year through five years ................. 772.0 794.2
Due after five years through ten years ................ 935.2 929.4
Due after ten years ................................... 290.5 291.1
-------- --------
2,095.2 2,114.2
Mortgage-backed securities ............................ 296.7 298.3
-------- --------
Total ................................................. $2,391.9 $2,412.5
======== ========

Expected maturities may differ from contractual maturities because eligible
borrowers may exercise their right to call or prepay obligations with or without
call or prepayment penalties.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

Changes in the allowance for probable losses on mortgage loans on real
estate and real estate to be disposed of are summarized below.

BALANCE AT BALANCE AT
BEGINNING END OF
OF YEAR ADDITIONS DEDUCTIONS YEAR
---------- --------- ---------- ------------
(IN MILLIONS)

Year ended December 31, 2001
Mortgage loans on real estate ...... $5.0 $1.7 $1.2 $5.5
Real estate to be disposed of ...... 0.7 0.1 -- 0.8
---- ---- ---- ----
Total .............................. $5.7 $1.8 $1.2 $6.3
==== ==== ==== ====
Year ended December 31, 2000
Mortgage loans on real estate ...... $3.8 $1.2 $ -- $5.0
Real estate to be disposed of ...... -- 0.7 -- 0.7
---- ---- ---- ----
Total .............................. $3.8 $1.9 $ -- $5.7
==== ==== ==== ====
Year ended December 31, 1999
Mortgage loans on real estate ...... $3.7 $0.4 $0.3 $3.8
Real estate to be disposed of ...... 0.7 -- 0.7 --
---- ---- ---- ----
Total .............................. $4.4 $0.4 $1.0 $3.8
==== ==== ==== ====

DECEMBER 31
2001 2000
------ --------
(IN MILLIONS)
Impaired mortgage loans on real estate with provision for
losses .................................................... $ 2.4 $ 4.2
Provision for losses ....................................... (1.2) (1.2)
---- ----
Net impaired mortgage loans on real estate ................. $ 1.2 $ 3.0
==== ====

The average investment in impaired loans and the interest income recognized
on impaired loans were as follows:

YEAR ENDED DECEMBER 31
2001 2000 1999
------- ------- ---------
(IN MILLIONS)
Average recorded investment in impaired loans ... $3.3 $2.1 $--
Interest income recognized on impaired loans .... 0.5 0.3 --

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

At December 31, 2001, the mortgage portfolio was diversified by geographic
region and specific collateral property type as displayed below:

CARRYING GEOGRAPHIC CARRYING
PROPERTY TYPE AMOUNT CONCENTRATION AMOUNT
- ---------------------- ------------- ----------------------- ---------------
(IN MILLIONS) (IN MILLIONS)
Apartments .......... $115.1 East North Central .... $ 63.6
Hotels .............. 24.8 East South Central .... 25.8
Industrial .......... 72.1 Middle Atlantic ....... 50.6
Office buildings .... 146.4 Mountain .............. 35.5
Retail .............. 35.5 New England ........... 55.1
Mixed Use ........... 5.0 Pacific ............... 111.3
Agricultural ........ 168.9 South Atlantic ........ 152.9
Other ............... 18.6 West North Central .... 20.6
West South Central .... 67.7
Canada/Other .......... 3.3
Allowance for losses (5.5) Allowance for losses .. (5.5)
------ ------
Total ............... $580.9 Total ................. $580.9
====== ======

Bonds with amortized cost of $24.7 million were non-income producing for
year ended December 31, 2001.

NOTE 4. DERIVATIVES AND HEDGING INSTRUMENTS

The fair value of derivative instruments classified as assets at December
31, 2001 was $16.7 million, and appears on the consolidated balance sheet in
other assets. The fair value of derivative instruments classified as liabilities
at December 31, 2001 was $12.0 million and appears on the consolidated balance
sheet in other liabilities.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. DERIVATIVES AND HEDGING INSTRUMENTS (CONTINUED)

Fair Value Hedges

The Company uses equity collar agreements to reduce its equity market
exposure with respect to certain common stock investments that the Company
holds. A collar consists of a written call option that limits the Company's
potential for gain from appreciation in the stock price as well as a purchased
put option that limits the Company's potential for loss from a decline in the
stock price.

Cash Flow Hedges

The Company used interest rate cap and floor agreements to hedge the
interest rate risk associated with minimum interest rate guarantees in certain
of its life insurance and annuity businesses. Amounts are reclassified from
other comprehensive income if interest rates fall below certain levels.

In 2001, the Company recognized no gains or losses related to the
ineffective portion of its cash flow hedges, and a net gain of $0.2 million
related to the portion of the hedging instruments that was excluded from the
assessment of hedge effectiveness. This amount is recorded in net realized
investment and other gains and losses. All of the Company's hedged forecasted
transactions qualified as cash flow hedges in 2001.

In 2001, none of the Company's cash flow hedges have been discontinued
because of the probability that the original forecasted transaction would not
occur by the end of the originally specified time period documented at inception
of the hedging relationship.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. DERIVATIVES AND HEDGING INSTRUMENTS (CONTINUED)

Derivatives Not Designated as Hedging Instruments

The Company enters into interest rate swap agreements, interest rate
futures contracts, and interest rate cap and floor agreements to manage exposure
to interest rates as described above under Fair Value Hedges without designating
the derivatives as hedging instruments.

NOTE 5. INCOME TAXES

The Company is included in the consolidated federal income tax return of
John Hancock Financial Services, Inc. The federal income taxes of the Company
are allocated on a separate return basis with certain adjustments.

The components of income taxes were as follows:

YEAR ENDED DECEMBER 31
2001 2000 1999
------- ------- -------
(IN MILLIONS)
Current taxes:
Federal ..................................... $ 30.1 $ 15.2 $ (1.5)
Foreign ..................................... -- 0.6 0.1
------- ------- -------
30.1 15.8 (1.4)
Deferred taxes:
Federal ..................................... 32.1 28.0 36.6
------- ------- -------
Total income taxes........................... $ 62.2 $ 43.8 $ 35.2
======= ======= =======

A reconciliation of income taxes computed by applying the federal income
tax rate to income before income taxes and the consolidated income tax expense
charged to operations follows:

YEAR ENDED DECEMBER 31
2001 2000 1999
------- ------- -------
(IN MILLIONS)

Tax at 35% .................................. $ 73.0 $ 50.1 $ 36.3
Add (deduct):
Equity base tax ............................ (9.0) (5.6) --
Prior years taxes .......................... 2.1 -- (0.3)
Tax credits ................................ (0.4) (0.6) (0.1)
Foreign taxes .............................. -- 0.6 0.1
Tax exempt investment income ............... (5.6) (0.7) (0.7)
Other ...................................... 2.1 -- (0.1)
------- ------- -------
Total income taxes ........................ $ 62.2 $ 43.8 $ 35.2
======= ======= =======

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5. INCOME TAXES (CONTINUED)

The significant components of the Company's deferred tax assets and
liabilities were as follows:

DECEMBER 31
2001 2000
------- ------
(IN MILLIONS)
DEFERRED TAX ASSETS:
Policy reserve adjustments .................... $ 238.1 $110.0
Other postretirement benefits ................. 20.1 23.3
Book over tax basis of investments ............ 12.0 7.8
Interest ...................................... -- 7.5
Unrealized holding losses ..................... -- 1.4
------- ------
Total deferred tax assets .................... 270.2 150.0
DEFERRED TAX LIABILITIES:
Deferred policy acquisition costs ............. 373.7 199.1
Depreciation .................................. 2.1 1.8
Basis in partnerships ......................... 0.6 0.4
Market discount on bonds ...................... 1.2 0.6
Lease income .................................. 47.0 35.4
Unrealized gains .............................. 6.8 --
Other ......................................... -- 9.5
------- ------
Total deferred tax liabilities ............... 431.4 246.8
------- ------
Net deferred tax liabilities ................. $ 161.2 $ 96.8
======= ======

The Company received an income tax refund of $32.4 million and made income
tax payments of $62.9 million and $13.2 million in 2001, 2000 and 1999,
respectively.

NOTE 6 - REINSURANCE

The effect of reinsurance on premiums written and earned was as follows:

2001 2000 1999
PREMIUMS PREMIUMS PREMIUMS
WRITTEN EARNED WRITTEN EARNED WRITTEN EARNED
------- ------- ------- ------ ------- --------
(IN MILLIONS)
Life Insurance:
Direct ................... $ 82.0 $ 82.0 $34.1 $34.1 $12.1 $12.1
Ceded .................... (21.9) (21.9) (5.5) (5.5) (3.2) (3.2)
------ ------ ----- ----- ----- -----
Net life insurance
premiums ............... $ 60.1 $ 60.1 $28.6 $28.6 $ 8.9 $ 8.9
====== ====== ===== ===== ===== =====

For the year ended December 31, 2001, 2000 and 1999, benefits to policyholders
under life ceded reinsurance contracts were $3.8 million, $3.0 million and $ --
million, respectively.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6. REINSURANCE (CONTINUED)

Reinsurance ceded contracts do not relieve the Company from its obligations
to policyholders. The Company remains liable to its policyholders for the
portion reinsured to the extent that any reinsurer does not meet its obligations
for reinsurance ceded to it under the reinsurance agreements. Failure of the
reinsurers to honor their obligations could result in losses to the Company;
consequently, estimates are established for amounts deemed or estimated to be
uncollectible. To minimize its exposure to significant losses from reinsurance
insolvencies, the Company evaluates the financial condition of its reinsurers
and monitors concentration of credit risk arising from similar characteristics
of the reinsurer.

NOTE 7. COMMITMENTS AND CONTINGENCIES

The Company has extended commitments to purchase fixed maturity
investments, and other invested assets and issue mortgage loans on real estate
totaling $25.3 million, $14.3 million and $16.2 million, respectively, at
December 31, 2001. If funded, loans related to real estate mortgages would be
fully collateralized by related properties. The Company monitors the
creditworthiness of borrowers under long-term bond commitments and requires
collateral as deemed necessary. The estimated fair values of the commitments
described above aggregate $57.1 million at December 31, 2001. The majority of
these commitments expire in 2002.

In the normal course of its business operations, the Company is involved
with litigation from time to time with claimants, beneficiaries and others, and
a number of litigation matters were pending as of December 31, 2001. 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 or results of operations of the Company.

During 1997, the Company entered into a court-approved settlement relating
to a class action lawsuit involving certain individual life insurance policies
sold from 1979 through 1996. In entering into the settlement, the Company
specifically denied any wrongdoing. The total reserve held in connection with
the settlement to provide for relief to class members and for legal and
administrative costs associated with the settlement amounted to $7.0 million and
$66.3 million at December 31, 2001 and 2000, respectively. Costs incurred
related to the settlement were $14.1 million and $66.0 million in 2001 and 1999,
respectively. No such costs were incurred in 2000. The estimated reserve is
based on a number of factors, including the estimated cost per claim and the
estimated costs to administer the claims.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. SHAREHOLDER'S EQUITY

(a) Common Stock

The Company was established in 1979 as a stock insurance company with
50,000 shares outstanding, wholly owned by its parent, John Hancock Life
Insurance Company. The Company has one class of capital stock, common stock ($50
par value, 50,000 shares authorized).

(b) Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive loss are as follows:

ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSSES)
-----------------
(IN MILLIONS)

Balance at January 1, 1999 ................................ $ 12.3
Gross unrealized gains (losses) (net of deferred income
tax benefit of $18.0 million) ............................ (34.2)
Reclassification adjustment for gains (losses), realized in
net income (net of tax expense of $1.7 million) .......... (3.1)
Adjustment to deferred policy acquisition costs and
present value of future profits (net of deferred income
tax expense of $6.2 million) ............................. 11.6
------
Net unrealized gains (losses) ............................. (25.7)
------
Balance at December 31, 1999 .............................. $(13.4)
======

Balance at January 1, 2001 ................................ $ (2.2)
Gross unrealized gains (losses) (net of deferred income
tax expense of $7.2 million) ............................. 11.8
Reclassification adjustment for gains (losses), realized in
net income (net of tax benefit of $1.1 million) .......... 2.1
Adjustment to deferred policy acquisition costs and
present value of future profits (net of deferred income
tax benefit of $3.2 million) ............................. (6.0)
-----
Net unrealized gains (losses) ............................. 7.9
Change in accounting principle ............................ 7.2
-----
Balance at December 31, 2001 .............................. $ 12.9
=====

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. SHAREHOLDER'S EQUITY (CONTINUED)

Net unrealized investment gains (losses), included in the consolidated
balance sheet as a component of shareholder's equity, are summarized as follows:

2001 2000 1999
------- ------ --------
(IN MILLIONS)
Balance, end of year comprises:
Unrealized investment gains (losses) on:
Fixed maturities ............................... $20.6 ($7.0) ($28.7)
Equity investments ............................. 1.0 1.0 (1.4)
Derivatives and other .......................... 5.2 0.3 1.3
----- ----- ------
Total ............................................ 26.8 (5.7) (28.8)
Amounts of unrealized investment (gains) losses
attributable to:
Deferred policy acquisition cost and present
value of future profits ....................... (7.1) 2.1 8.1
Deferred federal income taxes .................. (6.8) 1.4 7.3
----- ----- ------
Total ............................................ (13.9) 3.5 15.4
----- ----- ------
Net unrealized investment gains .................. $12.9 ($2.2) ($13.4)
===== ===== ======

Prior to 2001, the Commissioner had provided the Company approval to
recognize as an admitted asset the pension plan prepaid expense in accordance
with the requirements of SFAS No. 87, "Employers' Accounting for Pensions."
Beginning in 2001, the Commissioner has provided the Company with approval to
phase-in over a three-year period the impact of implementing the material
provisions of statutory SSAP No. 8, "Pensions." The Company's pension plan
prepaid expense recorded for statutory purposes amounted to $64.3 million, $55.6
million and $42.3 million at December 31, 2001, 2000 and 1999 respectively.
Statutory net income is not impacted by this permitted practice.

Statutory net income and surplus include the accounts of the Company and
its wholly-owned subsidiary, Investors Partners Life Insurance Company.

2001 2000 1999
------- ------ --------
(IN MILLIONS)

Statutory net income ............................. $ 13.1 $ 26.6 $ 77.5
Statutory surplus ................................ 647.0 527.2 468.8

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. SHAREHOLDER'S EQUITY (CONTINUED)

Massachusetts has enacted laws governing the payment of dividends by
insurers. Under Massachusetts insurance law, no insurer may pay any shareholder
dividends from any source other than statutory unassigned funds without the
prior approval of Massachusetts Commissioner of Insurance. Massachusetts law
also limits the dividends an insurer may pay in any twelve month period, without
the prior permission of the Commonwealth of Massachusetts Insurance
Commissioner, to the greater of (i) 10% of its statutory policyholders' surplus
as of the preceding December 31 or (ii) the individual company's statutory net
gain from operations for the preceding calendar year, if such insurer is a life
company.

NOTE 9. SEGMENT INFORMATION

PROTECTION SEGMENT. Offers a variety of individual life insurance,
including participating whole life, term life, universal life and variable life
insurance. Products are distributed through multiple distribution channels,
including insurance agents and brokers and alternative distribution channels
that include banks, financial planners, direct marketing and the Internet.

ASSET GATHERING SEGMENT. Offers individual variable annuities. This segment
distributes its products through distribution channels including insurance
agents and brokers affiliated with the Company, securities brokerage firms,
financial planners, and banks.

The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. Allocations of net investment
income are based on the amount of assets allocated to each segment. Other costs
and operating expenses are allocated to each segment based on a review of the
nature of such costs, cost allocations utilizing time studies, and other
relevant allocation methodologies.

Amounts reported as segment adjustments in the tables below primarily
relate to: (i) certain net realized investment and other gains (losses), net of
related amortization adjustment for deferred policy acquisition costs; (ii)
benefits to policyholders and expenses incurred relating to the settlement of a
class action lawsuit against the Company involving certain individual life
insurance policies sold from 1979 through 1996; (iii) restructuring costs
related to our distribution systems and retail operations; (iv) the surplus tax
on mutual life insurance companies that was allocated by John Hancock to the
Company; (v) a charge for certain one time costs associated with John Hancock's
demutualization process; and (vi) cumulative effect of an accounting change.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9. SEGMENT INFORMATION (CONTINUED)

The following table summarizes selected financial information by segment
for the year ended or as of December 31 and reconciles segment revenues and
segment after-tax operating income to amounts reported in the consolidated
statements of income:

ASSET
PROTECTION GATHERING CONSOLIDATED
---------- --------- --------------
(IN MILLIONS)
YEAR ENDED DECEMBER 31, 2001
REVENUES:
Segment revenues ..................... $ 614.3 $ 62.2 $ 676.5
Net realized investment and other
gains (losses) ...................... (9.0) -- (9.0)
-------- -------- ---------
Revenues ............................. $ 605.3 $ 62.2 $ 667.5
======== ======== =========
Net investment income ................ $ 229.2 $ (2.2) $ 227.0
NET INCOME:
Segment after-tax operating income ... $ 130.0 $ 22.2 $ 152.2
Net realized investment and other
gains (losses) ...................... (5.6) -- (5.6)
Surplus tax .......................... 9.1 -- 9.1
Class action lawsuit ................. (9.2) -- (9.2)
Cumulative effect of accounting
change, net of tax .................. (1.6) -- (1.6)
-------- -------- ---------
Net income ........................... $ 122.7 $ 22.2 $ 144.9
======== ======== =========
SUPPLEMENTAL INFORMATION:
Equity in net income of investees
accounted for by the equity method .. $ 2.7 $ -- $ 2.7
Amortization of deferred policy
acquisition costs ................... 46.6 20.5 67.1
Income tax expense ................... 54.8 7.4 62.2
Segment assets ....................... $9,995.5 $1,717.7 $11,713.2
NET REALIZED INVESTMENT AND OTHER GAINS
(LOSSES) DATA:
Net realized investment and other
gains (losses) ...................... $ (10.5) -- $ (10.5)
Less amortization of deferred policy
acquisition costs related to net
realized investment and other gains
(losses) ............................ 1.5 -- 1.5
-------- -------- ---------
Net realized investment and other gains
(losses), net of related amortization
of deferred policy acquisition costs -
per consolidated financial
statements .......................... (9.0) -- (9.0)
Less income tax effect ............... 3.4 -- 3.4
-------- -------- ---------
Net realized investment and other gains
(losses), net-after-tax adjustment
made to calculate segment operating
income .............................. $ (5.6) -- $ (5.6)
======== ======== =========

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9. SEGMENT INFORMATION (CONTINUED)

ASSET
PROTECTION GATHERING CONSOLIDATED
---------- --------------- --------------
(IN MILLIONS)

YEAR ENDED DECEMBER 31, 2000
REVENUES:
Segment revenues ............... $ 530.8 $ 48.5 $ 579.3
Net realized investment and other
gains (losses), net ........... (10.6) -- (10.6)
-------- -------- ---------
Revenues ................. $ 520.2 $ 48.5 $ 568.7
======== ======== =========
Net investment income $ 215.9 $ (2.5) $ 213.4
NET INCOME:
Segment after-tax operating
income ........................ 96.0 6.3 102.3
Net realized investment and other
gains (losses), net ........... (6.8) -- (6.8)
Surplus tax .................... 5.4 0.2 5.6
Other demutualization related
costs ......................... (0.5) (0.1) (0.6)
Restructuring charges .......... (1.1) -- (1.1)
-------- -------- ---------
Net income ..................... $ 93.0 $ 6.4 $ 99.4
======== ======== =========
SUPPLEMENTAL INFORMATION:
Equity in net income of investees
accounted for by the equity
method ........................ $ 1.3 $ -- $ 1.3
Amortization of deferred policy
acquisition costs ............. 17.6 16.4 34.0
Income tax expense ............. 40.7 3.1 43.8
Segment assets ................. $9,326.9 $2,867.8 $12,194.7
NET REALIZED INVESTMENT AND OTHER
GAINS (LOSSES) DATA:
Net realized investment and other
losses. ....................... $ (14.4) -- $ (14.4)
Less amortization of deferred
policy acquisition costs
related to net realized
investment and other gains
(losses) ...................... 3.8 -- 3.8
-------- -------- ---------
Net realized investment and
other gains (losses), net
of related amortization of
deferred policy acquisition
costs - per consolidated
financial statements .......... (10.6) -- (10.6)
Less income tax effect ......... 3.8 -- 3.8
-------- -------- ---------
Net realized investment and other
gains (losses), net-after-tax
adjustment made to calculate
segment operating income ...... $ (6.8) -- $ (6.8)
======== ======== =========

100

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9. SEGMENT INFORMATION (CONTINUED)

ASSET
PROTECTION GATHERING CONSOLIDATED
---------- --------- ------------
(IN MILLIONS)

YEAR ENDED DECEMBER 31, 1999
REVENUES:
Segment revenues ...................... $ 488.0 $ 37.2 $ 525.2
Net realized investment and other
gains (losses), net .................. (4.8) -- (4.8)
---------- --------- ----------
Revenues .............................. $ 483.2 $ 37.2 $ 520.4
========== ========= ==========
Net investment income ................. $ 178.1 $ (3.5) $ 174.6
NET INCOME:
Segment after-tax operating income .... 108.0 6.8 114.8
Net realized investment and other
gains (losses), net .................. (3.1) -- (3.1)
Class action lawsuit .................. (42.9) -- (42.9)
Other demutualization related costs ... (0.3) (0.1) (0.4)
---------- --------- ----------
Net income ............................ $ 61.7 $ 6.7 $ 68.4
========== ========= ==========
SUPPLEMENTAL INFORMATION:
Equity in net income of investees
accounted for by the equity method ... $ (0.1) $ -- $ (0.1)
Amortization of deferred policy
acquisition costs .................... 4.6 8.5 13.1
Income tax expense .................... 31.8 3.4 35.2
Segment assets ........................ $ 9,104.6 $ 2,869.6 $ 11,974.2
NET REALIZED INVESTMENT AND OTHER GAINS
(LOSSES) DATA:
Net realized investment and other
gains (losses) ....................... $ (5.3) -- $ (5.3)
Less amortization of deferred policy
acquisition costs related to net
realized investment gains (losses) ... 0.5 -- 0.5
---------- --------- ----------
Net realized investment and other gains
(losses), net of related amortization
of deferred policy acquisition costs
- per consolidated financial
statements ........................... (4.8) -- (4.8)
Less income tax effect ................ 1.7 -- 1.7
---------- --------- ----------
Net realized investment and other
gains (losses), net-after-tax
adjustment made to calculate
segment operating income ............. $ (3.1) -- $ (3.1)
========== ========= ==========

The Company operates only in the United States. The Company has no
reportable major customers and revenues are attributed to countries based on the
location of customers.

101

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company to determine
the fair values of financial instruments:

The fair value for mortgage loans on real estate 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. Fair values for impaired mortgage loans are measured
based either on the present value of expected future cash flows discounted at
the loan's effective interest rate or the fair value of the underlying
collateral for loans that are collateral dependent.

The carrying amount in the balance sheet for policy loans, short-term
investments and cash and cash equivalents approximates their respective fair
values.

The fair value for fixed-rate deferred annuities is the cash surrender
value, which represents the account value less applicable surrender charges.
Fair values for immediate annuities without life contingencies are estimated
based on discounted cash flow calculations using current market rates.

The Company's derivatives include futures contracts, interest rate swap,
cap and floor agreements, currency rate swap agreements and equity collar
agreements. Fair values for these contracts are based on current settlement
values. These values are based on quoted market prices for the financial futures
contracts and brokerage quotes that utilize pricing models or formulas using
current assumptions for all swaps and other agreements.

The fair value for commitments approximates the amount of the initial
commitment.

102

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

The following table presents the carrying amounts and fair values of the
Company's financial instruments:

DECEMBER 31 DECEMBER 31
2001 2000

CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-------- -------- -------- --------
(IN MILLIONS) (IN MILLIONS)

ASSETS:
Fixed maturities:
Held-to-maturity ................. $ 83.7 $ 82.1 $ 715.4 $ 686.8
Available-for-sale ............... 2,412.5 2,412.5 1,011.8 1,011.8
Equity securities:
Available-for-sale ............... 13.1 13.1 8.1 8.1
Mortgage loans on real estate ..... 580.9 604.3 554.8 574.2
Policy loans ...................... 352.0 352.0 334.2 334.2
Short-term investments ............ -- -- 21.7 21.7
Cash and cash equivalents ........ 115.4 115.4 277.3 277.3
Derivatives:
Futures contracts, net ............ -- -- 0.1 0.1
Interest rate swap agreements ..... 8.8 8.8 -- --
Interest rate cap agreements ...... 3.5 3.5 2.1 2.1
Interest rate floor agreements .... 4.5 4.5 4.5 4.5
Currency rate swap agreements ..... 0.4 0.4 -- --
Equity collar agreements .......... 0.8 0.8 0.4 0.4
LIABILITIES:
Fixed rate deferred and immediate
annuities ......................... 53.1 50.3 63.8 60.4
Derivatives:
Interest rate swap agreements ..... 13.2 13.2 -- 1.2
Currency rate swap agreements ..... 0.1 0.1 0.6 0.6
Commitments ........................ -- 57.1 -- 62.9

103

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE I - SUMMARY OF INVESTMENTS --
OTHER THAN INVESTMENTS IN RELATED PARTIES
AS OF DECEMBER 31, 2001
(IN MILLIONS OF DOLLARS)

COLUMN A COLUMN B COLUMN C COLUMN D
AMOUNT AT WHICH
SHOWN IN THE
CONSOLIDATED
BALANCE
TYPE OF INVESTMENT COST/(2)/ VALUE SHEET
--------- -------- ---------------

Fixed maturity securities,
available-for-sale:
Bonds:
United States government and
government agencies
and authorities $ 219.6 $ 214.8 $ 214.8
States, municipalities and political
subdivisions 6.0 6.0 6.0
Foreign governments 7.2 7.6 7.6
Public utilities 189.3 192.9 192.9
Convertibles and bonds with warrants
attached 25.9 25.1 25.1
All other corporate bonds 1,897.9 1,920.5 1,920.5
Certificates of deposits -- -- --
Redeemable preferred stock 46.0 45.6 45.6
-------- -------- --------
Total fixed maturity securities,
available-for-sale 2,391.9 2,412.5 2,412.5
======== ======== ========
Equity securities,
available-for-sale:
Common stocks:
Public utilities -- -- --
Banks, trust and insurance companies -- -- --
Industrial, miscellaneous and all
other 3.8 5.0 5.0
Non-redeemable preferred stock 8.3 8.1 8.1
-------- -------- --------
Total equity securities,
available-for-sale 12.1 13.1 13.1
======== ======== ========
Fixed maturity securities, held-
to-maturity:
Bonds
United States government and
government agencies
and authorities -- -- --
States, municipalities and political
subdivisions -- -- --
Foreign governments -- -- --
Public utilities -- -- --
Convertibles and bonds with warrants
attached -- -- --
All other corporate bonds 5.1 5.1 5.1
Certificates of deposits 78.6 77.0 78.6
Redeemable preferred stock -- -- --
-------- -------- --------
Total fixed maturity securities,
held-to-maturity 83.7 82.1 83.7
======== ======== ========

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

104

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE I - SUMMARY OF INVESTMENTS --
OTHER THAN INVESTMENTS IN RELATED PARTIES (CONTINUED)
AS OF DECEMBER 31, 2001
(IN MILLIONS OF DOLLARS)

COLUMN A COLUMN B COLUMN C COLUMN D
AMOUNT AT WHICH
SHOWN IN THE
CONSOLIDATED
BALANCE
TYPE OF INVESTMENT COST/(2)/ VALUE SHEET
--------- -------- ------------------

Equity securities, trading:
Common stocks:
Public utilities -- -- --
Banks, trust and insurance companies -- -- --
Industrial, miscellaneous and all
other -- -- --
Non-redeemable preferred stock -- -- --
-------- -------- --------
Total equity securities, trading -- -- --
-------- -------- --------
Mortgage loans on real estate,
net/(1)/ $ 586.4 xxxx $ 580.9
Real estate, net:
Investment properties /(1)/ 21.4 xxxx 20.6
Acquired in satisfaction of
debt/(1)/ -- xxxx --
Policy loans 352.0 xxxx 352.0
Other long-term investments/(2)/ 39.6 xxxx 39.6
Short-term investments -- xxxx --
-------- -------- --------
Total investments $3,487.1 $2,507.7 $3,502.4
======== ======== ========

(2) Difference from Column B is primarily due to operating gains (losses) of
investments in limited partnerships.

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

105

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION
AS OF DECEMBER 31, 2001, 2000 AND 1999 AND FOR THE YEAR THEN ENDED
(IN MILLIONS OF DOLLARS)

2001:
Protection $ 918.4 $3,275.5 $221.0 $25.0 $60.1
Asset Gathering 142.4 63.2 -- -- --
-------- -------- ------ ----- -----
Total $1,060.8 $3,338.7 $221.0 $25.0 $60.1
======== ======== ====== ===== =====
2000:
Protection $ 819.3 $2,698.5 $212.0 $11.1 $28.6
Asset Gathering 174.8 70.0 -- -- --
-------- -------- ------ ----- -----
Total $ 994.1 $2,768.5 $212.0 $11.1 $28.6
======== ======== ====== ===== =====
1999:
Protection $ 707.8 $2,515.7 $175.2 $15.7 $ 8.9
Asset Gathering 147.3 50.6 -- -- --
-------- -------- ------ ----- -----
Total $ 855.1 $2,566.3 $175.2 $15.7 $ 8.9
======== ======== ====== ===== =====

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

106

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION (CONTINUED)
AS OF DECEMBER 31, 2001, 2000 AND 1999 AND FOR THE YEAR THEN ENDED
(IN MILLIONS OF DOLLARS)

2001:
Protection $229.2 $285.5 $46.6 $ 72.8
Asset Gathering (2.2) 8.6 20.5 3.4
------ ------ ----- ------
Total $227.0 $294.1 $67.1 $ 76.2
====== ====== ===== ======
2000:
Protection $215.9 $242.2 $17.6 $100.5
Asset Gathering (2.5) 6.4 16.4 16.3
------ ------ ----- ------
Total $213.4 $248.6 $34.0 $116.8
====== ====== ===== ======
1999:
Protection $178.1 $192.3 $ 4.6 $100.6
Asset Gathering (3.5) 68.2 8.5 16.9
------ ------ ----- ------
Total $174.6 $260.5 $13.1 $117.5
====== ====== ===== ======

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

107

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY AND SUBSIDIARY

SCHEDULE IV - REINSURANCE
AS OF DECEMBER 31, 2001
(IN MILLIONS OF DOLLARS)

ASSUMED PERCENTAGE
CEDED TO FROM OF AMOUNT
GROSS OTHER OTHER NET ASSUMED TO
AMOUNT COMPANIES COMPANIES AMOUNT NET
---------- --------- --------- --------- -----------

2001
Life insurance in
force $119,332.2 $56,571.3 $35.1 $62,796.0 0.1%
---------- --------- ----- --------- ---
Premiums:
Life insurance $ 82.0 $ 21.9 $ -- $ 60.1 --
Accident and health
insurance -- -- -- -- --
P&C -- -- -- -- --
---------- --------- ----- --------- ---
Total $ 82.0 $ 21.9 $ -- $ 60.1 0.0%
========== ========= ===== ========= ===
2000
Life insurance in
force $ 98,737.2 $39,495.8 $37.1 $59,278.5 0.1%
---------- --------- ----- --------- ---
Premiums:
Life insurance $ 34.1 $ 5.5 $ -- $ 28.6 --
Accident and health
insurance -- -- -- -- --
P&C -- -- -- -- --
---------- --------- ----- --------- ---
Total $ 34.1 $ 5.5 $ -- $ 28.6 0.0%
========== ========= ===== ========= ===
1999
Life insurance in
force $ 75,674.7 $19,217.5 $38.5 $56,495.7 0.0%
---------- --------- ----- --------- ---
Premiums:
Life insurance $ 12.1 $ 3.2 $ -- $ 8.9 --
Accident and health
insurance -- -- -- -- --
P&C -- -- -- -- --
---------- --------- ----- --------- ---
Total $ 12.1 $ 3.2 $ -- $ 8.9 0.0%
========== ========= ===== ========= ===

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

108

APPENDIX A - DETAILS ABOUT OUR GUARANTEE PERIODS

INVESTMENTS THAT SUPPORT OUR GUARANTEE PERIODS

We invest the non-unitized separate account assets, according to our
detailed investment policies and guidelines, in fixed income obligations,
including:

. corporate bonds,

. mortgages,

. mortgage-backed and asset-backed securities, and

. government and agency issues.

We invest primarily in domestic investment-grade securities. In addition,
we use derivative contracts only for hedging purposes, to reduce ordinary
business risks associated with changes in interest rates, and not for
speculating on future changes in the financial markets. Notwithstanding the
foregoing, we are not obligated to invest according to any particular strategy.

GUARANTEED INTEREST RATES

We declare the guaranteed rates from time to time as market conditions and
other factors dictate. We advise you of the guaranteed rate for a selected
guarantee period at the time we:

. receive your premium payment,

. effectuate your transfer, or

. renew your guarantee period

109

COMPUTATION OF MARKET VALUE ADJUSTMENT

We determine the amount of the market value adjustment by multiplying the
amount being taken from the guarantee period (before any applicable withdrawal
charge) by a factor expressed by the following formula:

( 1 + g ) /n/
(---------------)/--/ - 1
( 1 + c + 0.005 )/12/

where,

. G is the guaranteed rate in effect for the current guarantee period.

. C is the current guaranteed rate in effect for new guarantee periods
with duration equal to the number of years remaining in the current
guarantee period (rounded to the nearest whole number of years). If we
are not currently offering such a guarantee period, we will declare a
guarantee rate, solely for this purpose, consistent with interest
rates currently available.

. N is the number of complete months from the date of withdrawal to the
end of the current guarantee period. (If less than one complete month
remains, N equals one unless the withdrawal is made on the last day of
the guarantee period, in which case no adjustment applies.)

SAMPLE CALCULATION 1: POSITIVE ADJUSTMENT

- -------------------------------------------------------------------------------------

Amount withdrawn or transferred $10,000
- -------------------------------------------------------------------------------------
Guarantee period 7 years

- -------------------------------------------------------------------------------------
Time of withdrawal or transfer beginning of 3rd year of guaranteed period
- -------------------------------------------------------------------------------------
Guaranteed rate (g) 8%
- -------------------------------------------------------------------------------------
Guaranteed rate for new 5 year 7%
guarantee (c)
- -------------------------------------------------------------------------------------
Remaining guarantee period (n) 60 months
- -------------------------------------------------------------------------------------

Market value adjustment:

[( 1 + 0.08 ) /60/ ]
10,000 x [(-----------------) /--/ - 1] = 234.73
[(1 + 0.07 + 0.005 ) /12/ ]

Amount withdrawn or transferred (adjusted for market value adjustment): $10,000
+ $234.73 = $10,234.73

110

SAMPLE CALCULATION 2: NEGATIVE ADJUSTMENT

- -------------------------------------------------------------------------------------

Amount withdrawn or transferred $10,000
- -------------------------------------------------------------------------------------
Guarantee period 7 years
- -------------------------------------------------------------------------------------
Time of withdrawal or transfer beginning of 3rd year of guaranteed period
- -------------------------------------------------------------------------------------
Guaranteed rate (g) 8%
- -------------------------------------------------------------------------------------
Guaranteed rate for new 5 year 9%
guarantee (c)
- -------------------------------------------------------------------------------------
Remaining guarantee period(n) 60 months
- -------------------------------------------------------------------------------------

Market value adjustment:

[( 1 + 0.08 )/60/ ]
10,000 x [(----------------)/--/ - 1] = - 666.42
[(1 + 0.09 + 0.005)/12/ ]

Amount withdrawn or transferred (adjusted for market value adjustment): $10,000
- - 666.42 = $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 guaranteed period
- -------------------------------------------------------------------------------------
Guaranteed rate (g) 8%
- -------------------------------------------------------------------------------------
Guaranteed rate for new 5 year 7.75%
guarantee (c)
- -------------------------------------------------------------------------------------
Remaining guarantee period(n) 60 months
- -------------------------------------------------------------------------------------

Market value adjustment:

[( 1 + 0.08 /60/ ]
10,000 x [(------------------)/--/ - 1] = - 114.94
[(1 + 0.0775 + 0.005)/12/ ]

Amount withdrawn or transferred (adjusted for market value adjustment): $10,000
- - 114.94 = $9,885.06

------------------------------------------------------------------------

* All interest rates shown have been arbitrarily chosen for purposes of these
examples. In most cases they will bear little or no relation to the rates we are
actually guaranteeing at any time.

111

APPENDIX B - EXAMPLE OF WITHDRAWAL CHARGE CALCULATION

ASSUME THE FOLLOWING FACTS:

. On January 1, 2001, you make a $5,000 initial premium payment and we issue
you a contract.

. On January 1, 2002, you make a $1,000 premium payment.

. On January 1, 2003, you make a $1,000 premium payment.

. On January 1, 2004, the total value of your contract is $7,500 because of
the extra credits and favorable investment earnings.

Now assume you make a partial withdrawal of $7,000 (no tax withholding) on
January 2, 2004. In this case, assuming no prior withdrawals, we would deduct a
CDSL of $474.19. We withdraw a total of $7,474.19 from your contract.

$7,000.00 -- withdrawal request payable to you
+ 474.19 -- withdrawal charge payable to us
---------
$7,474.19 -- total amount withdrawn from your contract

HERE IS HOW WE DETERMINE THE WITHDRAWAL CHARGE:

(1) We FIRST distribute to you the $500 profit you have in your contract
($7,500 total contract value less $7,000 of premiums you have paid)
under the free withdrawal provision.

(2) Next we repay to you the $5,000 premium you paid in 2001 Under the
free withdrawal provision, $200 of that premium is charge free ($7,000
total premiums paid x 10%; less the $500 free withdrawal in the same
contract year described in paragraph 1 above). We assess a withdrawal
charge on the remaining balance of $4,800 from your 2001 premium.
Because you made that premium payment 3 years ago, the withdrawal
charge percentage is 7%. We deduct the resulting $336 from your
contract to cover the withdrawal charge on your 2001 premium payment.
We pay the remainder of $4,464 to you as a part of your withdrawal
request.

$5,000
-200 -- free withdrawal amount (payable to you)
------
$4,800
x.07
------
$ 336 -- withdrawal charge on 2001 premium payment (payable to us)

$4,800
-336
------
$4,464 -- part of withdrawal request payable to you

(3) We next deem the entire amount of your 2002 PREMIUM PAYMENT to be
withdrawn and we assess a withdrawal charge on that $1,000 amount.
Because you made this premium payment 2 years ago, the withdrawal
charge percentage is 7%. We deduct the resulting $70 from your
contract to cover the withdrawal charge on your 2002 premium payment.
We pay the remainder of $930 to you as a part of your withdrawal
request.

$1,000
x .07
------
$ 70 -- withdrawal charge on 2002 premium payment (payable to us)

112

$1,000
- 70
------
$ 930 -- part of withdrawal request payable to you

(4) We NEXT determine what additional amount we need to withdraw to
provide you with the total $7,000 you requested, after the deduction
of the withdrawal charge on that additional amount. We have already
allocated $500 from profits under paragraph 1 above, $200 of
additional free withdrawal amount under paragraph 2, $4,608 from
your 2001 premium payment under paragraph 2, and $930 from your 2003
premium payment under paragraph 3. Therefore, $742 is needed to
reach $7,000.

$7,000 -- total withdrawal amount requested
- 500 -- profit
- 200 -- free withdrawal amount
-4,464 -- payment deemed from initial premium payment
- 930 -- payment deemed from 2002 premium payment
------
$ 906 -- additional payment to you needed to reach $7,000

We know that the withdrawal charge percentage for this remaining amount is
7%, because you are already deemed to have withdrawn all premiums you paid prior
to 2003. We use the following formula to determine how much more we need to
withdraw:

Remainder due to you = Withdrawal needed - [applicable withdrawal charge
percentage times withdrawal needed]

$906 = x - [.07x]
$906 = .94x
$906/.93 = x
$974.19 = x
$974.19 -- deemed withdrawn from 2003 premium payment
- $906.00 -- part of withdrawal request payable to you
---------
$ 68.19 -- withdrawal charge on 2003 premium deemed withdrawn (payable
to us)

113

APPENDIX C - EXAMPLES OF EARNINGS ENHANCEMENT DEATH BENEFIT CALCULATION

The following are examples of the optional earnings enhancement death
benefit. We have assumed that there are earnings under the contracts in each
case. Actual investment performance may be greater or lower than the amounts
shown.

EXAMPLE 1 - EARNINGS ENHANCEMENT DEATH BENEFIT WITH STANDARD DEATH BENEFIT, NO
ADJUSTMENTS FOR WITHDRAWALS OR ADDITIONAL PREMIUM PAYMENTS

Assume:

. You elect the earnings enhancement death benefit rider (but not the
enhanced death benefit rider) when you purchase your contract,

. At the time of purchase, you and the annuitant are each under age 70 and
you pay an initial premium of $100,000,

. You allocate the premium to a variable investment option, and make no
transfers of contract value to other investment options,

. We determine the death benefit before the Maturity Date, in the fourth
year of your contract on a day when the total value of your contract is
$180,000.

Calculation of Standard Death Benefit

Calculation of Earnings Enhancement Amount

Calculation of Net Premiums and Adjusted Net Premiums - To determine "Net
Premiums," we reduce the premiums you paid ($100,000) by the amount of any
withdrawals in excess of earnings ($0, with no adjustment for withdrawal
charges). In this example, the Net Premiums is $100,000. To determine "Adjusted
Net Premiums," we reduce the Net Premiums ($100,000) by any premiums you made,
other than the initial premium, during the 12 months before we calculated the
death benefit ($0). In this example, the "Adjusted Net Premiums" is $100,000.

Calculation of Maximum Benefit Amount - The maximum benefit amount under
the earnings enhancement death benefit rider in this example is 80% of the
Adjusted Net Premiums ($100,000), or $80,000.

The earnings enhancement amount is 40% of the difference between the
standard death benefit ($180,000) and your Net Premiums ($100,000), up to the
maximum benefit amount. In this example, 40% of the difference is $32,000, which
is less than the maximum benefit amount ($80,000). The earnings enhancement
amount is therefor $32,000.

The total Death Benefit in this example is the standard death benefit
($180,000) plus the earnings enhancement amount ($32,000), or $212,000.

EXAMPLE 2 - EARNINGS ENHANCEMENT DEATH BENEFIT WITH ENHANCED DEATH BENEFIT,
ADJUSTED FOR WITHDRAWAL AND ADDITIONAL PREMIUM

Assume:

. You elect the earnings enhancement death benefit rider and the enhanced
death benefit rider when you purchase your contract,

114

. At the time of purchase, you are over age 70 and you pay an initial premium
of $100,000,

. You allocate the premium to a variable investment option, and make no
transfers of contract value to other investment options,

. On the seventh anniversary of your contract, your total value in the
contract is $175,000, which is the highest value on any anniversary date

. On the day after the seventh anniversary of your contract, you make a
withdrawal of $80,000,

. On the eighth anniversary of your contract, the total value of your
contract is $110,000, and you make an additional premium payment of $10,000
at the end of the eighth year of your contract

. We determine the death benefit before the Maturity Date in the middle of
the ninth year of your contract, on a day when the total value of your
contract is $120,000.

Calculation of Enhanced Death Benefit

In this example, the enhanced death benefit is the highest of an
accumulated premium "roll-up" amount, a "highest anniversary value" amount and
the value of your contract on the date the death benefit is determined.

Calculation of Premium Roll-up - We calculate the amount of each premium
you have paid, accumulated at a 5% effective annual rate, adjusted for any
withdrawals. In this example, the accumulated value of your initial premium,
after adjustment for the $80,000 withdrawal, is $65,319.75, and the accumulated
value of your second premium is $10,246.95. The total amount of the premium
"roll-up" is $75,566.70.

The total value of your contract on the date the death benefit is
determined ($120,000, with no market value adjustment) is higher than the
premium roll-up amount ($75,566.70) and higher than the "highest anniversary
value" amount ($105,000). The enhanced death benefit is therefor $120,000.

Calculation of Earnings Enhancement Amount

Calculation of Net Premiums and Adjusted Net Premiums - To determine "Net
Premiums," we reduce the premiums you paid by the amount of any withdrawals in
excess of earnings (including withdrawal charges). In this example, you withdrew
$80,000 at a time when your earnings were $75,000 and no withdrawal charges were
imposed. The amount withdrawn in excess of earnings is therefore $5,000. Net
Premiums is the amount of premiums paid ($110,000) less amounts withdrawn in
excess of earnings ($5,000), or $105,000. To determine "Adjusted Net Premiums,"
we reduce the Net Premiums ($105,000) by any premiums you made during the 12
months before we calculated the death benefit ($10,000). In this example, the
"Adjusted Net Premiums" is $95,000.

Calculation of Maximum Benefit Amount - The maximum benefit amount under
the earnings enhancement death benefit rider in this example is 50% of your
Adjusted Net Premiums ($95,000), or $47,500.

The earnings enhancement amount is 25% of the difference between the
enhanced death benefit ($120,000) and your Net Premiums ($105,000), up to the
maximum benefit amount. In this example, 25% of the difference is $3,750, which
is less than the maximum benefit amount ($47,500). The earnings enhancement
amount is therefor $3,750.

The total Death Benefit in this example is the enhanced death benefit
($120,000) plus the earnings enhancement amount ($3,750), or $123,750.

115

PROSPECTUS DATED MAY 1, 2002

- --------------------------------------------------------------------------------
REVOLUTION VALUE VARIABLE ANNUITY
- --------------------------------------------------------------------------------

a deferred combination fixed and variable annuity contract issued by
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY ("JHVLICO")
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT JF
The contract enables you to earn fixed rates of interest that we guarantee
for stated periods of time ("guarantee periods") and investment-based
returns in the following variable investment options:

- ---------------------------------------------------------------------------------------------------------

VARIABLE INVESTMENT OPTION MANAGED BY
- -------------------------- ----------

Equity Index ................. SSgA Funds Management, Inc.
Large Cap Value .............. T. Rowe Price Associates, Inc.
Large Cap Value CORE/SM/ ..... Goldman Sachs Asset Management
Large Cap Growth ............. Independence Investment LLC
Large Cap Aggressive Growth .. Alliance Capital Management L.P.
Growth & Income .............. Independence Investment LLC and Putnam Investment Management LLC
Fundamental Value ............ Wellington Management Company, LLP
Multi Cap Growth ............. Janus Capital Management LLC
Fundamental Growth ........... Putnam Investment Management LLC
Small/Mid Cap CORE/SM/ ....... Goldman Sachs Asset Management
Small/Mid Cap Growth ......... Wellington Management Company, LLP
Small Cap Equity ............. Capital Guardian Trust Company
Small Cap Value .............. T. Rowe Price Associates, Inc.
Small Cap Growth ............. John Hancock Advisers, LLC
V.A. Relative Value .......... John Hancock Advisers, LLC
AIM V.I. Premier Equity ...... A I M Advisors, Inc.
AIM V.I. Capital Development . A I M Advisors, Inc.
Fidelity VIP Growth .......... Fidelity Management & Research Company
Fidelity VIP Contrafund(R) ... Fidelity Management & Research Company
MFS Investors Growth Stock ... MFS Investment Management(R)
MFS Research ................. MFS Investment Management(R)
MFS New Discovery ............ MFS Investment Management(R)
International Equity Index ... Independence Investment LLC
International Opportunities .. T. Rowe Price International, Inc.
Fidelity VIP Overseas ........ Fidelity Management & Research Company
Emerging Markets Equity ...... Morgan Stanley Investment Management Inc.
Janus Aspen Worldwide Growth . Janus Capital Management LLC
Real Estate Equity ........... Independence Investment LLC and Morgan Stanley Investment Management Inc.
Health Sciences .............. Putnam Investment Management LLC
V.A. Financial Industries .... John Hancock Advisers, LLC
V.A. Technology .............. John Hancock Advisers, LLC
Managed ...................... Independence Investment LLC and Capital Guardian Trust Company
Global Balanced .............. Capital Guardian Trust Company
Short-Term Bond .............. Independence Investment LLC
Bond Index ................... Mellon Bond Associates, LLP
Active Bond .................. John Hancock Advisers, LLC
V.A. Strategic Income ........ John Hancock Advisers, LLC
High Yield Bond .............. Wellington Management Company, LLP
Global Bond .................. Capital Guardian Trust Company
Money Market ................. Wellington Management Company, LLP
- ------------------------------------------------------------------------------------------------------------

The variable investment options shown on page 1 are those available as of the
date of this prospectus. We may add, modify or delete variable investment
options in the future.

JOHN HANCOCK ANNUITY SERVICING OFFICE
-------------------------------------

Mail Delivery Phone:
------------- ------
1-800-824-0335
529 Main Street
Charlestown, MA 02129 Fax:
----
1-617-886-3070

********************************************************************************

Please note that the SEC has not approved or disapproved these securities, or
determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.

GUIDE TO THIS PROSPECTUS

This prospectus contains information that you should know before you buy a
contract or exercise any of your rights under the contract. We have arranged
the prospectus in the following way:

. The first section contains an "INDEX OF KEY WORDS."

. Behind the index is the "FEE TABLE." This section highlights the various
fees and expenses you will pay directly or indirectly, if you purchase a
contract.

. Behind the Basic Information is "ADDITIONAL INFORMATION." This section
gives more details about the contract. It generally does not repeat
information contained in the Basic Information.

The Series Funds' prospectuses are attached at the end of this prospectus. You
should save these prospectuses for future reference.

- --------------------------------------------------------------------------------
IMPORTANT NOTICES

We've also filed with the SEC a "Statement of Additional Information," dated
May 1, 2002. This Statement contains detailed information not included in the
prospectus. Although a separate document from this prospectus, the Statement of
Additional Information has the same legal effect as if it were a part of this
prospectus. We will provide you with a free copy of the Statement upon your
request. To give you an idea what's in the Statement, we have included a copy
of the Statement's table of contents on page 66.

The contracts are not 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.

- -------------------------------------------------------------------------------

INDEX OF KEY WORDS

We define or explain each of the following key words used in this prospectus
on the pages shown below:

KEY WORD PAGE

Accumulation units...................................33
Annuitant............................................14
Annuity payments.....................................17
Annuity period.......................................17
Contract year........................................15
Date of issue........................................15
Date of maturity.....................................33
Free withdrawal amount...............................22
Funds.................................................2
Guarantee periods....................................16
Investment options...................................18
Market value adjustment..............................16
Premium payments.....................................14
Surrender............................................21
Surrender value......................................23
Total value of your contract.........................16
Variable investment options.......................cover
Withdrawal charge....................................21
Withdrawal...........................................21

FEE TABLE

CONTRACTOWNER TRANSACTION EXPENSES AND ANNUAL CONTRACT FEE

. Maximum Withdrawal Charge (as % of amount withdrawn) 7%

. Annual Contract Fee (applies only to contracts of less than $50,000) $30

SEPARATE ACCOUNT ANNUAL EXPENSES (AS A % OF THE AVERAGE TOTAL VALUE OF THE CONTRACT)

. Asset-based Charge (for administration and mortality and expense risk) 1.25%
This charge doesn't apply to amounts held in the guarantee periods

ANNUAL FUND EXPENSES (BASED ON % OF AVERAGE NET ASSETS)

The following figures for the funds are based on historical fund expenses, as
a percentage (rounded to two decimal places) of each fund's average daily net
assets for 2001, except as indicated in the Notes appearing at the end of this
table. Expenses of the funds are not fixed or specified under the terms of the
policy, and those expenses may vary from year to year.

JOHN HANCOCK VARIABLE SERIES
TRUST I (NOTE 1):
Equity Index ............................ 0.13% N/A 0.07% 0.20% 0.20%
Large Cap Value ......................... 0.75% N/A 0.08% 0.83% 0.83%
Large Cap Value CORE/SM/ ................ 0.75% N/A 0.10% 0.85% 0.88%
Large Cap Growth ........................ 0.38% N/A 0.03% 0.41% 0.41%
Large Cap Aggressive Growth ............. 0.87% N/A 0.10% 0.97% 1.06%
Growth & Income ......................... 0.67% N/A 0.05% 0.72% 0.72%
Fundamental Value* ...................... 0.89% N/A 0.10% 0.99% 1.20%
Multi Cap Growth* ....................... 0.93% N/A 0.10% 1.03% 1.03%
Fundamental Growth ...................... 0.90% N/A 0.10% 1.00% 1.19%
Small/Mid Cap CORE/SM/ .................. 0.80% N/A 0.10% 0.90% 1.15%
Small/Mid Cap Growth .................... 0.97% N/A 0.10% 1.07% 1.07%
Small Cap Equity ........................ 0.90% N/A 0.10% 1.00% 1.02%
Small Cap Value ......................... 0.95% N/A 0.10% 1.05% 1.08%
Small Cap Growth ........................ 1.05% N/A 0.10% 1.15% 1.17%
International Equity Index .............. 0.17% N/A 0.10% 0.27% 0.40%
International Opportunities ............. 1.14% N/A 0.10% 1.24% 1.39%
Emerging Markets Equity ................. 1.52% N/A 0.10% 1.62% 4.24%
Real Estate Equity ...................... 1.00% N/A 0.07% 1.07% 1.07%
Health Sciences ......................... 1.00% N/A 0.10% 1.10% 1.19%

JOHN HANCOCK VARIABLE SERIES
TRUST I - CONTINUED (NOTE 1):
Managed ............................... 0.67% N/A 0.06% 0.73% 0.73%
Global Balanced ....................... 1.05% N/A 0.10% 1.15% 1.36%
Short-Term Bond ....................... 0.60% N/A 0.08% 0.68% 0.68%
Bond Index ............................ 0.15% N/A 0.09% 0.24% 0.24%
Active Bond ........................... 0.62% N/A 0.05% 0.67% 0.67%
High Yield Bond ....................... 0.80% N/A 0.10% 0.90% 1.00%
Global Bond ........................... 0.85% N/A 0.10% 0.95% 0.95%
Money Market .......................... 0.25% N/A 0.07% 0.32% 0.32%

JOHN HANCOCK DECLARATION TRUST
(NOTE 2):
V.A. Relative Value ................... 0.60% N/A 0.14% 0.74% 0.74%
V.A. Financial Industries ............. 0.80% N/A 0.09% 0.89% 0.89%
V.A. Technology ....................... 0.80% N/A 0.25% 1.05% 1.08%
V.A. Strategic Income ................. 0.60% N/A 0.10% 0.70% 0.70%

AIM VARIABLE INSURANCE FUNDS -
SERIES I SHARES:
AIM V.I. Premier Equity Fund* * ....... 0.60% N/A 0.25% 0.85% 0.85%

AIM VARIABLE INSURANCE FUNDS -
SERIES II SHARES:
AIM V.I. Capital Development Fund ..... 0.75% 0.25% 0.41% 1.41% 1.41%

VARIABLE INSURANCE PRODUCTS FUND -
SERVICE CLASS (NOTE 3):
Fidelity VIP Growth ................... 0.58% 0.10% 0.10% 0.78% 0.78%
Fidelity VIP Overseas ................. 0.73% 0.10% 0.20% 1.03% 1.03%

VARIABLE INSURANCE PRODUCTS FUND
II - SERVICE CLASS (NOTE 3):
Fidelity VIP Contrafund(R) ............ 0.58% 0.10% 0.10% 0.78% 0.78%

MFS VARIABLE INSURANCE TRUST -
INITIAL CLASS SHARES (NOTE 4):
MFS Investors Growth Stock ............ 0.75% N/A 0.17% 0.92% 0.92%
MFS Research .......................... 0.75% N/A 0.15% 0.90% 0.90%
MFS New Discovery ..................... 0.90% N/A 0.16% 1.06% 1.09%

JANUS ASPEN SERIES - SERVICE SHARES
CLASS (NOTE 5):
Janus Aspen Worldwide Growth .......... 0.65% 0.25% 0.04% 0.94% 0.94%

NOTES TO ANNUAL FUND EXPENSES
(1) Under its current investment management agreements with the John Hancock
Variable Series Trust I, John Hancock Life Insurance Company reimburses a
fund when the fund's "other fund expenses" exceed 0.10% of the fund's
average daily net assets (0.00% for Equity Index). Percentages shown for
the Large Cap Value and Small Cap Value funds are calculated as if the
current management fee schedules, which apply to these funds effective
May 1, 2001, were in effect for all of 2001. Percentages shown for the
Multi Cap Growth, Small/Mid Cap Growth, Small Cap Growth, International
Opportu-

nities, Emerging Markets, Short-Term Bond and High Yield Bond funds
are calculated as if the current management fee schedules, which apply to
these funds effective October 1, 2001, were in effect for all of 2001.
Percentages shown for the Health Sciences Fund are annualized. "CORE/SM/"
is a service mark of Goldman, Sachs & Co.

* Fundamental Value was formerly "Large/Mid Cap Value" and Multi Cap Growth
was formerly "Mid Cap Growth."

(2)Percentages shown for John Hancock Declaration Trust funds reflect the
investment management fees currently payable and other fund expenses
allocated in 2001. John Hancock Advisers, LLC has agreed to limit
temporarily other expenses of each fund to 0.25% of the fund's average daily
assets, at least until April 30, 2003.

**AIM V.I. Premier Equity Fund was formerly "AIM V.I. Value Fund."

(3)Actual annual class operating expenses were lower for each of the Fidelity
VIP funds shown because a portion of the brokerage commissions that the fund
paid was used to reduce the fund's expense. In addition, through
rearrangements with the fund's custodian, credits realized as a result of
uninvested cash balances are used to reduce a portion of the fund's
custodian expenses. These offsets may be discontinued at any time.

(4)MFS Variable Insurance Trust funds have an expense offset arrangement
which reduces each fund's custodian fee based upon the amount of cash
maintained by the fund with its custodian and dividend disbursing agent.
Each fund may enter into other similar arrangements and directed brokerage
arrangements, which would also have the effect of reducing the fund's
expenses. "Other Operating Expenses" do not take into account these expense
reductions, and are therefore higher than the actual expenses of the funds.
Had these fee reductions been taken into account, "Total Fund Operating
Expenses with Reimbursement" would equal 0.90% for MFS Investors Growth
Stock, 0.89% for MFS Research and 1.05% for MFS New Discovery. MFS
Investment Management(R) (also doing business as Massachusetts Financial
Services Company) has contractually agreed, subject to reimbursement, to
bear expenses for the MFS New Discovery Fund, such that the fund's "Other
Expenses" (after taking into account the expense offset arrangement
described above) does not exceed 0.15% annually. This contractual fee
arrangement will continue until at least May 1, 2003, unless changed with
the consent of the board of trustees which oversees the fund.

(5)Percentages shown for the Janus Aspen Worldwide Growth Fund are based upon
expenses for the year ended December 31, 2001. Expenses are shown without
the effect of any expense offset arrangement.

EXAMPLES

Examples III and IV assume you have purchased a contract with no optional
benefit riders. We refer to this contract as the "No Rider Contract."

Example I If you "surrender" (turn in) your All Rider Contract at the end of
- ---------
the applicable time period, you would pay:

- --------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Equity Index $ 91 $131 $173 $310
- --------------------------------------------------------------------------------
Large Cap Value $ 97 $149 $204 $368
- --------------------------------------------------------------------------------
Large Cap Value CORE/SM/ $ 97 $150 $205 $370
- --------------------------------------------------------------------------------
Large Cap Growth $ 93 $137 $184 $330
- --------------------------------------------------------------------------------
Large Cap Aggressive Growth $ 99 $154 $211 $381
- --------------------------------------------------------------------------------
Growth & Income $ 96 $146 $199 $359
- --------------------------------------------------------------------------------
Fundamental Value $ 99 $154 $212 $383
- --------------------------------------------------------------------------------
Multi Cap Growth $ 99 $155 $213 $386
- --------------------------------------------------------------------------------
Fundamental Growth $ 99 $154 $212 $384
- --------------------------------------------------------------------------------
Small/Mid Cap CORE/SM/ $ 98 $152 $207 $375
- --------------------------------------------------------------------------------
Small/Mid Cap Growth $100 $156 $215 $390
- --------------------------------------------------------------------------------
Small Cap Equity $ 99 $154 $212 $384
- --------------------------------------------------------------------------------
Small Cap Value $ 99 $156 $214 $388
- --------------------------------------------------------------------------------
Small Cap Growth $ 98 $152 $208 $376
- --------------------------------------------------------------------------------
V.A. Relative Value $ 96 $147 $200 $360
- --------------------------------------------------------------------------------
AIM V.I. Premier Equity $ 97 $150 $205 $370
- --------------------------------------------------------------------------------
AIM V.I. Capital Development $103 $166 $231 $419
- --------------------------------------------------------------------------------
Fidelity VIP Growth $ 97 $148 $202 $364
- --------------------------------------------------------------------------------
Fidelity VIP Contrafund(R) $ 97 $148 $202 $364
- --------------------------------------------------------------------------------
MFS Investors Growth Stock $ 98 $152 $208 $377
- --------------------------------------------------------------------------------
MFS Research $ 98 $152 $207 $375
- --------------------------------------------------------------------------------
MFS New Discovery $100 $156 $215 $389
- --------------------------------------------------------------------------------
International Equity Index $ 92 $133 $177 $317
- --------------------------------------------------------------------------------
International Opportunities $101 $161 $223 $404
- --------------------------------------------------------------------------------
Fidelity VIP Overseas $ 99 $155 $213 $386
- --------------------------------------------------------------------------------
Emerging Markets Equity $105 $172 $241 $436
- --------------------------------------------------------------------------------
Janus Aspen Worldwide Growth $ 98 $153 $209 $378
- --------------------------------------------------------------------------------
Real Estate Equity $100 $156 $215 $390
- --------------------------------------------------------------------------------
Health Sciences $100 $157 $217 $392
- --------------------------------------------------------------------------------
V.A. Financial Industries $ 98 $151 $207 $374
- --------------------------------------------------------------------------------
V.A. Technology $ 99 $156 $214 $388
- --------------------------------------------------------------------------------
Managed $ 96 $147 $199 $359
- --------------------------------------------------------------------------------
Global Balanced $100 $159 $219 $397
- --------------------------------------------------------------------------------
Short-Term Bond $ 96 $145 $197 $355
- --------------------------------------------------------------------------------
Bond Index $ 91 $132 $175 $314
- --------------------------------------------------------------------------------
Active Bond $ 96 $145 $196 $354
- --------------------------------------------------------------------------------
V.A. Strategic Income $ 96 $146 $198 $357
- --------------------------------------------------------------------------------
High Yield Bond $ 98 $152 $207 $375
- --------------------------------------------------------------------------------
Global Bond $ 98 $153 $210 $379
- --------------------------------------------------------------------------------
Money Market $ 92 $134 $179 $321
- --------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- ----------------------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------
Equity Index $28 $ 86 $146 $310
- ----------------------------------------------------------------------------------------------------
Large Cap Value $34 $104 $177 $368
- ----------------------------------------------------------------------------------------------------
Large Cap Value CORE/SM/ $34 $105 $178 $370
- ----------------------------------------------------------------------------------------------------
Large Cap Growth $30 $ 92 $157 $330
- ----------------------------------------------------------------------------------------------------
Large Cap Aggressive Growth $36 $109 $184 $381
- ----------------------------------------------------------------------------------------------------
Growth & Income $33 $101 $172 $359
- ----------------------------------------------------------------------------------------------------
Fundamental Value $36 $109 $185 $383
- ----------------------------------------------------------------------------------------------------
Multi Cap Growth $36 $110 $186 $386
- ----------------------------------------------------------------------------------------------------
Fundamental Growth $36 $109 $185 $384
- ----------------------------------------------------------------------------------------------------
Small/Mid Cap CORE/SM/ $35 $107 $180 $375
- ----------------------------------------------------------------------------------------------------
Small/Mid Cap Growth $37 $111 $188 $390
- ----------------------------------------------------------------------------------------------------
Small Cap Equity $36 $109 $185 $384
- ----------------------------------------------------------------------------------------------------
Small Cap Value $36 $111 $187 $388
- ----------------------------------------------------------------------------------------------------
Small Cap Growth $35 $107 $181 $376
- ----------------------------------------------------------------------------------------------------
V.A. Relative Value $33 $102 $173 $360
- ----------------------------------------------------------------------------------------------------
AIM V.I. Premier Equity $34 $105 $178 $370
- ----------------------------------------------------------------------------------------------------
AIM V.I. Capital Development $40 $121 $204 $419
- ----------------------------------------------------------------------------------------------------
Fidelity VIP Growth $34 $103 $175 $364
- ----------------------------------------------------------------------------------------------------
Fidelity VIP Contrafund(R) $34 $103 $175 $364
- ----------------------------------------------------------------------------------------------------
MFS Investors Growth Stock $35 $107 $181 $377
- ----------------------------------------------------------------------------------------------------
MFS Research $35 $107 $180 $375
- ----------------------------------------------------------------------------------------------------
MFS New Discovery $37 $111 $188 $389
- ----------------------------------------------------------------------------------------------------
International Equity Index $29 $ 88 $150 $317
- ----------------------------------------------------------------------------------------------------
International Opportunities $38 $116 $196 $404
- ----------------------------------------------------------------------------------------------------
Fidelity VIP Overseas $36 $110 $186 $386
- ----------------------------------------------------------------------------------------------------
Emerging Markets Equity $42 $127 $214 $436
- ----------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth $35 $108 $182 $378
- ----------------------------------------------------------------------------------------------------
Real Estate Equity $37 $111 $188 $390
- ----------------------------------------------------------------------------------------------------
Health Sciences $37 $112 $190 $392
- ----------------------------------------------------------------------------------------------------
V.A. Financial Industries $35 $106 $180 $374
- ----------------------------------------------------------------------------------------------------
V.A. Technology $36 $111 $187 $388
- ----------------------------------------------------------------------------------------------------
Managed $33 $102 $172 $359
- ----------------------------------------------------------------------------------------------------
Global Balanced $37 $114 $192 $397
- ----------------------------------------------------------------------------------------------------
Short-Term Bond $33 $100 $170 $355
- ----------------------------------------------------------------------------------------------------
Bond Index $28 $ 87 $148 $314
- ----------------------------------------------------------------------------------------------------
Active Bond $33 $100 $169 $354
- ----------------------------------------------------------------------------------------------------
V.A. Strategic Income $33 $101 $171 $357
- ----------------------------------------------------------------------------------------------------
High Yield Bond $35 $107 $180 $375
- ----------------------------------------------------------------------------------------------------
Global Bond $35 $108 $183 $379
- ----------------------------------------------------------------------------------------------------
Money Market $29 $ 89 $152 $321
- ----------------------------------------------------------------------------------------------------

Example III If you "surrender" (turn in) your No Rider Contract at the end of
the applicable time period, you would pay:

- ----------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years

- ----------------------------------------------------------------------------------
Equity Index $78 $ 93 $108 $181
- ----------------------------------------------------------------------------------
Large Cap Value $85 $112 $142 $248
- ----------------------------------------------------------------------------------
Large Cap Value CORE/SM/ $85 $113 $143 $250
- ----------------------------------------------------------------------------------
Large Cap Growth $81 $ 99 $120 $204
- ----------------------------------------------------------------------------------
Large Cap Aggressive Growth $86 $117 $149 $263
- ----------------------------------------------------------------------------------
Growth & Income $84 $109 $136 $237
- ----------------------------------------------------------------------------------
Fundamental Value $86 $117 $150 $265
- ----------------------------------------------------------------------------------
Multi Cap Growth $87 $118 $152 $269
- ----------------------------------------------------------------------------------
Fundamental Growth $87 $117 $151 $266
- ----------------------------------------------------------------------------------
Small/Mid Cap CORE/SM/ $86 $114 $145 $255
- ----------------------------------------------------------------------------------
Small/Mid Cap Growth $87 $120 $154 $273
- ----------------------------------------------------------------------------------
Small Cap Equity $87 $117 $151 $266
- ----------------------------------------------------------------------------------
Small Cap Value $87 $119 $153 $271
- ----------------------------------------------------------------------------------
Small Cap Growth $86 $115 $146 $256
- ----------------------------------------------------------------------------------
V.A. Relative Value $84 $110 $137 $239
- ----------------------------------------------------------------------------------
AIM V.I. Premier Equity $85 $113 $143 $250
- ----------------------------------------------------------------------------------
AIM V.I. Capital Development $91 $130 $171 $306
- ----------------------------------------------------------------------------------
Fidelity VIP Growth $84 $111 $139 $243
- ----------------------------------------------------------------------------------
Fidelity VIP Contrafund(R) $84 $111 $139 $243
- ----------------------------------------------------------------------------------
MFS Investors Growth Stock $86 $115 $147 $257
- ----------------------------------------------------------------------------------
MFS Research $86 $114 $145 $255
- ----------------------------------------------------------------------------------
MFS New Discovery $87 $119 $154 $272
- ----------------------------------------------------------------------------------
International Equity Index $79 $ 95 $112 $189
- ----------------------------------------------------------------------------------
International Opportunities $89 $125 $163 $290
- ----------------------------------------------------------------------------------
Fidelity VIP Overseas $87 $118 $152 $269
- ----------------------------------------------------------------------------------
Emerging Markets Equity $93 $136 $182 $326
- ----------------------------------------------------------------------------------
Janus Aspen Worldwide Growth $86 $116 $148 $260
- ----------------------------------------------------------------------------------
Real Estate Equity $87 $120 $154 $273
- ----------------------------------------------------------------------------------
Health Sciences $88 $120 $156 $276
- ----------------------------------------------------------------------------------
V.A. Financial Industries $85 $114 $145 $254
- ----------------------------------------------------------------------------------
V.A. Technology $87 $119 $153 $271
- ----------------------------------------------------------------------------------
Managed $84 $109 $137 $238
- ----------------------------------------------------------------------------------
Global Balanced $88 $122 $158 $281
- ----------------------------------------------------------------------------------
Short-Term Bond $83 $108 $134 $233
- ----------------------------------------------------------------------------------
Bond Index $79 $ 94 $111 $186
- ----------------------------------------------------------------------------------
Active Bond $83 $107 $133 $232
- ----------------------------------------------------------------------------------
V.A. Strategic Income $84 $108 $135 $235
- ----------------------------------------------------------------------------------
High Yield Bond $86 $114 $145 $255
- ----------------------------------------------------------------------------------
Global Bond $86 $116 $148 $261
- ----------------------------------------------------------------------------------
Money Market $80 $ 97 $115 $194
- ----------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years

- ----------------------------------------------------------------------------------------------------
Equity Index $15 $48 $ 83 $181
- ----------------------------------------------------------------------------------------------------
Large Cap Value $22 $67 $115 $248
- ----------------------------------------------------------------------------------------------------
Large Cap Value CORE/SM/ $22 $68 $116 $250
- ----------------------------------------------------------------------------------------------------
Large Cap Growth $18 $54 $ 94 $204
- ----------------------------------------------------------------------------------------------------
Large Cap Aggressive Growth $23 $72 $123 $263
- ----------------------------------------------------------------------------------------------------
Growth & Income $21 $64 $110 $237
- ----------------------------------------------------------------------------------------------------
Fundamental Value $23 $72 $124 $265
- ----------------------------------------------------------------------------------------------------
Multi Cap Growth $24 $73 $126 $269
- ----------------------------------------------------------------------------------------------------
Fundamental Growth $24 $72 $124 $266
- ----------------------------------------------------------------------------------------------------
Small/Mid Cap CORE/SM/ $23 $69 $119 $255
- ----------------------------------------------------------------------------------------------------
Small/Mid Cap Growth $24 $75 $128 $273
- ----------------------------------------------------------------------------------------------------
Small Cap Equity $24 $72 $124 $266
- ----------------------------------------------------------------------------------------------------
Small Cap Value $24 $74 $127 $271
- ----------------------------------------------------------------------------------------------------
Small Cap Growth $23 $70 $119 $256
- ----------------------------------------------------------------------------------------------------
V.A. Relative Value $21 $65 $111 $239
- ----------------------------------------------------------------------------------------------------
AIM V.I. Premier Equity $22 $68 $116 $250
- ----------------------------------------------------------------------------------------------------
AIM V.I. Capital Development $28 $85 $144 $306
- ----------------------------------------------------------------------------------------------------
Fidelity VIP Growth $21 $66 $113 $243
- ----------------------------------------------------------------------------------------------------
Fidelity VIP Contrafund(R) $21 $66 $113 $243
- ----------------------------------------------------------------------------------------------------
MFS Investors Growth Stock $23 $70 $120 $257
- ----------------------------------------------------------------------------------------------------
MFS Research $23 $69 $119 $255
- ----------------------------------------------------------------------------------------------------
MFS New Discovery $24 $74 $127 $272
- ----------------------------------------------------------------------------------------------------
International Equity Index $16 $50 $ 87 $189
- ----------------------------------------------------------------------------------------------------
International Opportunities $26 $80 $136 $290
- ----------------------------------------------------------------------------------------------------
Fidelity VIP Overseas $24 $73 $126 $269
- ----------------------------------------------------------------------------------------------------
Emerging Markets Equity $30 $91 $155 $326
- ----------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth $23 $71 $121 $260
- ----------------------------------------------------------------------------------------------------
Real Estate Equity $24 $75 $128 $273
- ----------------------------------------------------------------------------------------------------
Health Sciences $25 $75 $129 $276
- ----------------------------------------------------------------------------------------------------
V.A. Financial Industries $22 $69 $118 $254
- ----------------------------------------------------------------------------------------------------
V.A. Technology $24 $74 $127 $271
- ----------------------------------------------------------------------------------------------------
Managed $21 $64 $110 $238
- ----------------------------------------------------------------------------------------------------
Global Balanced $25 $77 $132 $281
- ----------------------------------------------------------------------------------------------------
Short-Term Bond $20 $63 $108 $233
- ----------------------------------------------------------------------------------------------------
Bond Index $16 $49 $ 85 $186
- ----------------------------------------------------------------------------------------------------
Active Bond $20 $62 $107 $232
- ----------------------------------------------------------------------------------------------------
V.A. Strategic Income $21 $63 $109 $235
- ----------------------------------------------------------------------------------------------------
High Yield Bond $23 $69 $119 $255
- ----------------------------------------------------------------------------------------------------
Global Bond $23 $71 $122 $261
- ----------------------------------------------------------------------------------------------------
Money Market $17 $52 $ 89 $194
- ----------------------------------------------------------------------------------------------------

BASIC INFORMATION

This "Basic Information" section provides answers to commonly asked questions
about the contract. Here are the page numbers where the questions and answers
appear:

QUESTION STARTING ON PAGE
-------- ----------------

What is the contract? ........................................................ 14

Who owns the contract? ....................................................... 14

Is the owner also the annuitant? ............................................. 14

How can I invest money in a contract? ........................................ 14

How will the value of my investment in the contract change over time? ........ 16

What annuity benefits does the contract provide? ............................. 17

To what extent can JHVLICO vary the terms and conditions of its contracts? ... 17

What are the tax consequences of owning a contract? .......................... 17

How can I change my contract's investment allocations? ....................... 18

What fees and charges will be deducted from my contract? ..................... 21

How can I withdraw money from my contract? ................................... 23

What happens if the owner or the annuitant dies
before my contract's date of maturity? ...................................... 25

What other benefits can I purchase under a contract? ......................... 28

Can I return my contract? .................................................... 29

WHAT IS THE CONTRACT?

The contract is a deferred payment variable annuity contract. An "annuity
contract" provides a person (known as the annuitant or "payee") with a series of
periodic payments. Because this contract is also a "deferred payment" contract,
the "annuity payments" will begin on a future date, called the contract's "date
of maturity." Under a "variable" annuity contract, the amount you have invested
can increase or decrease in value daily based upon the value of the variable
investment options chosen. If your annuity is provided under a master group
contract, the term "contract" as used in this prospectus refers to the
certificate you will be issued and not to the master group contract.

WHO OWNS THE CONTRACT?

IS THE OWNER ALSO THE ANNUITANT?

HOW CAN I INVEST MONEY IN A CONTRACT?

Premium payments

We call the investments you make in your contract premiums or premium
payments. In general, you need at least a $5,000 initial premium payment to
purchase a contract. If you purchase your contract under any of the
tax-qualified plans shown on page 39 or if you purchase your contract through
the automatic investment plan, different minimums may apply. If you choose to
contribute more money into your contract, each subsequent premium payment must
be at least $200 ($100 for the annuity direct deposit program). If your
contract's total value ever falls to zero, we may terminate it. Therefore, you
may need to pay more premiums to keep the contract in force.

Applying for a contract

"delaying effectiveness" is that we will not allow allocations to the variable
investment options until we receive your signed application.) In those
situations, if we do not receive your signed application within our required
time period, we will deem the contract void from the beginning and return your
premium payment.

We measure the years and anniversaries of your contract from its date of
issue. We use the term "contract year" to refer to each period of time between
anniversaries of your contract's date of issue.

Limits on premium payments

------------------------------------------------------------------------
YOU MAY NOT MAKE ANY PREMIUM
PAYMENTS AFTER THE ANNUITANT
IF YOUR CONTRACT IS USED TO FUND REACHES AGE
------------------------------------------------------------------------
a "tax qualified plan"* 70 1/2**
------------------------------------------------------------------------
a non-tax qualified plan 85
------------------------------------------------------------------------

* as that term is used in "Tax Information," beginning on page 36.
** except for a Roth IRA, which has no age limit.

We will not issue a contract if any proposed owner or annuitant is older than
age 84. We may, however, waive this underwriting limit.

Ways to make premium payments

Premium payments made by check or money order should be:

. drawn on a U.S. bank,

. drawn in U.S. dollars, and

. made payable to "John Hancock."

We will not accept credit card checks. Nor will we accept starter or third
party checks that fail to meet our administrative requirements.

Once we have issued your contract and it becomes effective, we credit you with
any additional premiums you pay as of the day we receive them at the John
Hancock Annuity Servicing Office.

Premium payments by wire

. issue a contract;

. accept premium payments; or

. allow other transactions.

HOW WILL THE VALUE OF MY INVESTMENT IN THE CONTRACT CHANGE OVER TIME?

At any time before the date of maturity, the total value of your contract
equals

. the total amount you invested,

. minus all charges we deduct,

. minus all withdrawals you have made,

. plus or minus any positive or negative MVAs that we have made at the time of
any premature withdrawals or transfers you have made from a guarantee period,

. plus or minus each variable investment option's positive or negative
investment return that we credit daily to any of your contract's value while
it is in that option, and

. plus the interest we credit to any of your contract's value while it is in a
guarantee period or in the guarantee rate account (see "Dollar-cost averaging
value program" on page 19).

WHAT ANNUITY BENEFITS DOES THE CONTRACT PROVIDE?

You should carefully review the discussion under "The annuity period,"
beginning on page 33, for information about all of these choices you can make.

TO WHAT EXTENT CAN JHVLICO VARY THE TERMS AND CONDITIONS OF ITS CONTRACTS?

State law insurance requirements

Variations in charges or rates

WHAT ARE THE TAX CONSEQUENCES OF OWNING A CONTRACT?

. partial withdrawal (including systematic withdrawals),

. full withdrawal ("surrender"),

. payment of any death benefit proceeds, and

. periodic payments under one of our annuity payment options.

How much you will be taxed on a distribution is based upon complex tax rules
and depends on matters such as:

. the type of the distribution,

. when the distribution is made,

. the nature of any tax qualified retirement plan for which the contract is
being used, if any, and

. the circumstances under which the payments are made.

If your contract is issued in connection with a tax-qualified retirement
plan, all or part of your premium payments may be tax-deductible.

HOW CAN I CHANGE MY CONTRACT'S INVESTMENT ALLOCATIONS?

Allocation of premium payments

Transferring your assets

Up to 12 times during each year of your contract, you may transfer, free of
any charge,

. all or part of the assets held in one VARIABLE INVESTMENT OPTION to any other
available variable investment option or guarantee period, or

. transfer more than $1,000,000 in a contract year into any one variable
investment option or guarantee period, without our prior approval,

. make any transfer that would cause you to exceed the above-mentioned maximum
of 18 investment options,

. make any transfers, during the annuity period, to or from a guarantee period,
or

. make any transfer during the annuity period that would result in more than
four investment options being used at once.

We reserve the right to prohibit a transfer less than 30 days prior to the
contract's date of maturity.

Procedure for transferring your assets

. your name,

. daytime telephone number,

. contract number,

. the names of the investment options to and from which assets are being
transferred, and

. the amount of each transfer.

The request becomes effective on the day we receive your request, in proper
form, at the John Hancock Annuity Servicing Office.

Telephone transfers

Dollar-cost averaging value program

You may elect to deposit any new premium payment of $5,000 or more in the
guarantee rate account. Your deposits under this program will be depleted over
either a 6 or 12 month period. The assets in this account attributable to a new
premium payment will be automatically transferred to one or more variable
investment options over the period you initially selected, but the period will
begin on the date your new premium is deposited in the selected guarantee rate
account. At the time of each deposit, you will designate:

. the variable investment options to which assets will be transferred; and

. the percentage amount to be transferred to each such variable investment
option.

Under our current administrative rules, you may have multiple deposits under
this program at the same time, but the time period for each such deposit must be
the same (i.e., all must be for 6 month periods or all must be for 12 month
periods). Transfers to the guarantee periods are not permitted under this
program, and transfers of your account value from a variable investment option
are not permitted to initiate the program. (You may, however, change your
variable investment allocation instructions at any time in writing or, if you
have authorized telephone transfers, by telephone.) Assets in the account will
earn a fixed rate of return at the effective annual rate in effect at the time
the deposit is made into the account. Such rate will apply to any portion of the
deposit remaining in the account until the full amount of such deposit has been
transferred to the selected variable investment options. We will declare the
rate for the account from time to time.

The guarantee rate account is part of our general account. You have no
interest in or preferential claim on any of the assets held in our general
account. The investments we purchase with amounts you allocate to the guarantee
rate account belong to us; any favorable investment performance on the assets
allocated to the account belongs to us. Instead, you earn interest at the
applicable fixed rate of return.

The dollar-cost averaging value program and the standard dollar-cost averaging
program (described below) cannot be used at the same time.

Your participation in the dollar-cost averaging value program will end if you
request a partial withdrawal from the guaranteed account, or if you request a
transfer from the guaranteed account that is in addition to the automatic
transfers.

Standard dollar-cost averaging program

You may elect, at no cost, to automatically transfer assets from any variable
investment option to one or more other variable investment options on a monthly,
quarterly, semiannual, or annual basis. The following conditions apply to the
standard dollar-cost averaging program:

. You may elect the program only if the total value of your contract equals
$15,000 or more.

. The amount of each transfer must equal at least $250.

. You may change your variable investment allocation instructions at any time
in writing or, if you have authorized telephone transfers, by telephone.

. You may not use the standard dollar-cost averaging program and the
dollar-cost averaging value program at the same time.

. You may discontinue the program at any time.

. The program automatically terminates when the variable investment option from
which we are taking the transfers has been exhausted.

. Automatic transfers to or from guarantee periods are not permitted.

. We reserve the right to suspend or terminate the program at any time.

Strategic rebalancing

a variable investment option with relatively lower current investment
performance to one with relatively higher current investment performance.

Once elected, strategic rebalancing will continue until we receive notice of
cancellation of the option or notice of the death of the insured person.

The guarantee periods do not participate in and are not affected by strategic
rebalancing. We reserve the right to modify, terminate or suspend the strategic
rebalancing program at any time.

WHAT FEES AND CHARGES WILL BE DEDUCTED FROM MY CONTRACT?

Asset-based charge

We deduct a daily asset-based charge that compensates us primarily for our
administrative expenses and the mortality and expense risks that we assume under
the contracts. On an annual basis, this charge equals 1.25% of the value of the
assets you have allocated to the variable investment options. (This charge does
not apply to assets you have in our guarantee periods.)

Annual contract fee

Prior to the date of maturity of your contract, we will deduct $30 each year
from your contract if it has a total value on the contract anniversary of less
than $50,000. We deduct this annual contract fee at the beginning of each
contract year after the first contract year. We also deduct it if you surrender
your contract unless your total value is $50,000 or more at the time of
surrender. We take the deduction proportionally from each variable investment
option and each guarantee period you are then using. We reserve the right to
increase the annual contract fee to up to $50.

Premium taxes

We make deductions for any applicable premium or similar taxes based on the
amount of a premium payment. Currently, certain local jurisdictions assess a tax
of up to 5% of each premium payment.

Withdrawal charge

sales load." We use this charge to help defray expenses relating to the sales of
the contracts, including commissions paid and other distribution costs.

The withdrawal charge percentage depends upon the number of years that have
elapsed from the date you paid the premium to the date of its withdrawal, as
follows:

------------------------------------------------------------
YEARS FROM DATE OF PREMIUM PAYMENT TO
DATE OF SURRENDER OR WITHDRAWAL WITHDRAWAL CHARGE*
------------------------------------------------------------
7 or more ......................... 0%
------------------------------------------------------------
6 but less than 7 ................. 1%
------------------------------------------------------------
5 but less than 6 ................. 2%
------------------------------------------------------------
4 but less than 5 ................. 3%
------------------------------------------------------------
3 but less than 4 ................. 4%
------------------------------------------------------------
2 but less than 3 ................. 5%
------------------------------------------------------------
1 but less than 2 ................. 6%
------------------------------------------------------------
less than 1 ....................... 7%
------------------------------------------------------------

* AS A PERCENTAGE OF THE AMOUNT OF SUCH PREMIUM THAT WE CONSIDER TO HAVE BEEN
WITHDRAWN (INCLUDING THE WITHDRAWAL CHARGE), AS EXPLAINED IN THE TEXT
IMMEDIATELY BELOW.

You will find examples of how we compute the withdrawal charge in Appendix B
to this prospectus.

When withdrawal charges don't apply: We don't assess a withdrawal charge in
the following situations:

. on amounts applied to an annuity option at the contract's date of maturity or
to pay a death benefit;

. on certain withdrawals if you have elected the rider that waives the
withdrawal charge; and

Other charges

- --------------------------------------------------------------------------------------------------

Waiver of withdrawal charge 0.10% of that portion of your contract's total value
attributable to premiums that are still subject to surrender
charges
- --------------------------------------------------------------------------------------------------
Enhanced death benefit 0.25% of your contract's total value*
- --------------------------------------------------------------------------------------------------
Earnings enhancement death benefit 0.25% of your contract's total value
- --------------------------------------------------------------------------------------------------
Accumulated value 0.35% of your initial premium payment (we reserve the
enhancement** right to increase this percentage on a uniform basis for
all riders issued in the same state)
- --------------------------------------------------------------------------------------------------
Guaranteed retirement income benefit 0.30% of your contract's total value
- --------------------------------------------------------------------------------------------------

* Rate is applicable to enhanced death benefit riders issued after May 1,
2002. In certain states, and for riders issued prior to May 1, 2002, a lower
rate may apply.

**If you choose the accumulated value enhancement, you must also choose the
waiver of withdrawal charge.

We deduct the charge proportionally from each of your investment options,
based on your value in each.

HOW CAN I WITHDRAW MONEY FROM MY CONTRACT?

Surrenders and partial withdrawals

Prior to your contract's date of maturity, if the annuitant is living, you
may:

. surrender your contract for a cash payment of its "surrender value," or

. make a partial withdrawal of the surrender value.

The surrender value of a contract is the total value of a contract, after any
market value adjustment, minus the annual contract fee, any applicable premium
-----
tax, any withdrawal charges, and any applicable rider charges. We will determine
the amount surrendered or withdrawn as of the date we receive your request in
proper order at the John Hancock Annuity Servicing Office.

We will deduct any partial withdrawal proportionally from each of your
--------------
investment options based on the value in each, unless you direct otherwise.

Without our prior approval, you may not make a partial withdrawal

. for an amount less than $100, or

. if the remaining total value of your contract would be less than $1,000.

We reserve the right to terminate your contract if the value of your contract
becomes zero.

You generally may not make any surrenders or partial withdrawals once we begin
making payments under an annuity option.

Waiver of withdrawal charge rider

If your state permits, you may purchase an optional waiver of withdrawal
charge rider at the time of application. The "covered persons" under the rider
are the owner and the owner's spouse, unless the owner is a trust. If the owner
is a trust, the "covered persons" are the annuitant and the annuitant's spouse.
Under this rider, we will waive withdrawal charge on any withdrawals, if a
"covered person" has been diagnosed with one of the critical illnesses listed in
the rider, or if all the following conditions apply:

. a covered person becomes confined to a nursing home beginning at least 30
days after we issue your contract;

. such covered person remains in the nursing home for at least 90 consecutive
days receiving nursing care; and

. the covered person's confinement is prescribed by a doctor and medically
necessary because of a covered physical or mental impairment.

You may not purchase this rider if either of the covered persons (1) is older
than 74 years at application or (2) was confined to a nursing home within the
past two years.

There is a charge for this rider, as set forth under "Other charges" on page
20, above. This rider (and the related charges) will terminate on the contract's
date of maturity, upon your surrendering the contract, or upon your written
request that we terminate it.

For a more complete description of the terms and conditions of this benefit,
you should refer directly to the rider. We will provide you with a copy on
request. In certain marketing materials, this rider may be referred to as
"CARESolutions."

If you purchase this rider:

. you will have access to a list of long-term care providers in your area who
provide special discounts to persons who belong to the national program.

You should carefully review the tax considerations for optional benefit riders
on page 37 before selecting this optional benefit rider.

Systematic withdrawal plan

systematic withdrawal is subject to any withdrawal charge or market value
adjustment that would apply to an otherwise comparable non-systematic
withdrawal. See "How will the value of my investment in the contract change over
time?" beginning on page 16, and "What fees and charges will be deducted from my
contract?" beginning on page 21. The same tax consequences also generally will
apply.

The following conditions apply to systematic withdrawal plans:

. You may elect the plan only if the total value of your contract equals
$25,000 or more.

. The amount of each systematic withdrawal must equal at least $100.

. If the amount of each withdrawal drops below $100 or the total value of your
contract becomes less that $5,000, we will suspend the plan and notify you.

. You may cancel the plan at any time.

. We reserve the right to modify the terms or conditions of the plan at any
time without prior notice.

WHAT HAPPENS IF THE OWNER OR THE ANNUITANT DIES BEFORE MY CONTRACT'S DATE OF
MATURITY?

We will pay a death benefit to the contract's beneficiary, depending on the
form of ownership and whether there is one annuitant or joint annuitants:

. If your contract is owned by a single natural person and has a single
annuitant, the death benefit is payable on the earlier of the owner's death
and the annuitant's death.

We calculate the death benefit value as of the day we receive, in proper
order at the John Hancock Annuity Servicing Office:

. proof of death before the contract's date of maturity, and

. any required instructions as to method of settlement.

We will generally pay the death benefit in a single sum to the beneficiary
you chose, unless

Standard death benefit

The standard death benefit is the greater of:
-------

. the total value of your contract, adjusted by any then-applicable market
value adjustment, or

. the total amount of premium payments made, minus any partial withdrawals.

Enhanced death benefit rider

Under this rider, we will pay an enhanced death benefit (instead of the
standard death benefit) that is the greatest of:

. the total value of your contract (adjusted by any market value adjustment) as
of the date we receive due proof of the annuitant's death.

. the owner, if there is only one owner under your contract and the death
benefit is payable because the owner dies before the Maturity Date,

. the oldest owner, if there are joint owners under your contract and the death
benefit is payable because either owner dies before the Maturity Date,

. the annuitant, if there is only one annuitant under your contract and the
death benefit is payable because the annuitant dies before the Maturity Date,

If an owner is also an annuitant, we will generally consider that person to be
an "owner" instead of an "annuitant" for purposes of determining the rider's
measuring life.

You may elect to enhance the standard death benefit by purchasing an
enhanced death benefit rider:

. only if this rider is available in your state; and

. only when you apply for the contract; and

You should carefully review the tax considerations for optional benefit riders
on page 37 before selecting this optional benefit rider.

Earnings enhancement death benefit rider

Under this rider, the death benefit may be increased by an earnings
enhancement amount. The earnings enhancement amount is determined as follows:

. if there are joint annuitants under your contract, we will not count the age
of the older annuitant for either of these purposes unless the older
annuitant is also an owner.

This rider is unavailable if your contract is purchased in connection with a
tax-qualified retirement plan. In addition, you may elect to purchase an
earnings enhancement death benefit rider:

. only if this rider is available in your state; and

. only when you apply for the contract (we may waive this restriction, however,
for contracts purchased prior to October 15, 2001 or prior to the date this
rider was available in your state); and

. only if each owner and each annuitant is under age 75 at the time you apply
for the rider.

The earnings enhancement amount decreases if you withdraw earnings that
accumulate under your contract. This rider may not be appropriate for you if you
expect to withdraw earnings.

WHAT OTHER BENEFITS CAN I PURCHASE UNDER A CONTRACT?

Accumulated value enhancement

Under this rider, we will make a contribution to the total value of the
contract on a monthly basis if the covered person (who must be an owner and the
annuitant):

. is unable to perform at least 2 activities of daily living without human
assistance or has a cognitive impairment, AND

. is receiving certain qualified services described in the rider.

The amount of the contribution (called the "Monthly Benefit") is shown in the
specifications page of the contract. However, the rider contains an
inflation protection feature that will increase the Monthly Benefit by 5% each
year after the 7th contract year. The specifications page of the contract also
contains a limit on how much the total value of the contract can be increased by
this rider (the "benefit limit"). The rider must be in effect for 7 years before
any increase will occur.

You may elect this rider only when you apply for the contract. Under our
current administrative rules, the Monthly Benefit (without regard to the
inflation protection feature) is equivalent to 1% of your initial premium, up to
a maximum premium of $300,000. We may reduce this $300,000 limit further,
however, if you own additional annuity contracts issued by John Hancock and its
affiliates that provide a similar benefit. In that case, the maximum Monthly
Benefit will be reduced so that monthly benefit payments under all of the
annuity contracts do not exceed $108,000 (subject to upward adjustment for
various inflation protection features). The $300,000 limit applies only to the
calculation of the Monthly Benefit under the accumulated value enhancement
rider. (See "Limits on Premium Payments" on page __for a general description of
other premium limits under the contract).

You cannot elect this rider unless you have also elected the waiver of
withdrawal charge rider. There is a monthly charge for this rider. The charge is
described under "Other charges" on page 23.

In certain marketing materials, this rider may be referred to as
"CARESolutions Plus."

You should carefully review the tax considerations for optional benefit riders
on page 37 before selecting this optional benefit rider.

Guaranteed retirement income benefit

Under this rider, we will guarantee the amount of annuity payments you
receive, if the following conditions are satisfied:

. The date of maturity must be within the 30 day period following a contract
anniversary.

There is a monthly charge for this rider, which is described at page 20 under
"Other charges." The rider (and the related charges) automatically terminate if
your contract is surrendered or the annuitant dies. After you've held your
contract for 10 years, you can terminate the rider by written request.

CAN I RETURN MY CONTRACT?

In most cases, you have the right to cancel your contract within 10 days (or
longer in some states ) after you receive it. To cancel your contract, simply
deliver or mail it to:

. JHVLICO at the address shown on page 2, or

. the JHVLICO representative who delivered the contract to you.

In most states, you will receive a refund equal to the total value of your
contract on the date of cancellation, adjusted by any then-applicable market
value adjustments and increased by any charges for premium taxes deducted by us
to that date. In some states, or if your contract was issued as an "IRA," you
will receive a refund of any premiums you've paid. The date of cancellation will
be the date we receive the contract.

ADDITIONAL INFORMATION

This section of the prospectus provides additional information that is not
contained in the Basic Information section on pages 13 through 29.

CONTENTS OF THIS SECTION STARTING ON PAGE

Description of JHVLICO ................................... 31

Who should purchase a contract? .......................... 31

How we support the variable investment options ........... 31

How we support the guarantee periods ..................... 32

How the guarantee periods work ........................... 32

The accumulation period .................................. 33

The annuity period ....................................... 32

Variable investment option valuation procedures .......... 35

Distributions following death of owner ................... 36

Miscellaneous provisions ................................. 36

Tax information .......................................... 36

Further information about JHVLICO ........................ 42

Management's discussion and analysis ..................... 44

Performance information .................................. 64

Reports .................................................. 65

Voting privileges ........................................ 65

Certain changes .......................................... 65

Distribution of contracts ................................ 66

Experts .................................................. 66

Registration statement ................................... 66

JHVLICO financial statements ............................. 71

Appendix A - Details About Our Guarantee Periods ......... 109

Appendix B - Example of Withdrawal Charge Calculation .... 112

Appendix C - Examples of Earnings Enhancement Death
Benefit Calculation ..................................... 114

DESCRIPTION OF JHVLICO

WHO SHOULD PURCHASE A CONTRACT?

. traditional individual retirement annuity plans ("Traditional IRAs")
satisfying the requirements of Section 408 of the Code;

. non-deductible IRA plans ("Roth IRAs") satisfying the requirements of
Section 408A of the Code;

. SIMPLE IRA plans adopted under Section 408(p) of the Code;

. Simplified Employee Pension plans ("SEPs") adopted under Section 408(k)
of the Code; and

. annuity purchase plans adopted under Section 403(b) of the Code by public
school systems and certain other tax-exempt organizations.

We do not currently offer the contracts to every type of tax-qualified plan,
and we may not offer the contracts for all types of tax-qualified plans in the
future. In certain circumstances, we may also make the contracts available for
purchase under deferred compensation plans maintained by a state or political
subdivision or tax exempt organization under Section 457 of the Code or by
pension or profit-sharing plans qualified under section 401(a) of the Code. We
provide general federal income tax information for contracts purchased in
connection with tax qualified retirement plans beginning on page 38.

HOW WE SUPPORT THE VARIABLE INVESTMENT OPTIONS

All of JHVLICO's general assets also support JHVLICO's obligations under the
contracts, as well as all of its other obligations and liabilities. These
general assets consist of all JHVLICO's assets that are not held in the Account
(or in another separate account) under variable annuity or variable life
insurance contracts that give their owners a preferred claim on those assets.

HOW WE SUPPORT THE GUARANTEE PERIODS

HOW THE GUARANTEE PERIODS WORK

. withdraw all or a portion of any such amount from the contract,

. allocate all or a portion of such amount to a new guarantee period or periods
of the same or different duration as the expiring guarantee period, or

. allocate all or a portion of such amount to one or more of the variable
investment options.

Guaranteed interest rates

- --------------------------------------------------------------------------------
We make the final determination of guaranteed rates and guarantee periods to be
declared. We cannot predict or assure the level of any future guaranteed rates
or the availability of any future guarantee periods.
- --------------------------------------------------------------------------------

Calculation of market value adjustment ("MVA")

. death benefits pursuant to your contract,

. amounts you apply to an annuity option, and

. amounts paid in a single sum in lieu of an annuity.

Here is how the MVA works:

- --------------------------------------------------------------------------------
We compare

. the guaranteed rate of the guarantee period from which
the assets are being taken WITH
. the guaranteed rate we are currently offering for guarantee periods of
the same duration as remains on the guarantee period from which the
assets are being taken.

If the first rate exceeds the second by more than 1/2%, the market value
adjustment produces an increase in your contract's value.

If the first rate does not exceed the second by at least 1/2%, the market
value adjustment produces a decrease in your contract's value.
- --------------------------------------------------------------------------------

For this purpose, we consider that the amount withdrawn from the guarantee
period includes the amount of any negative MVA and is reduced by the amount of
any positive MVA.

The mathematical formula and sample calculations for the market value
adjustment appear in Appendix A.

THE ACCUMULATION PERIOD

Your value in our variable investment options

Valuation of accumulation units

To determine the number of accumulation units that a specific transaction will
purchase or cancel, we use the following formula:

- --------------------------------------------------------------------------------
dollar amount of transaction
DIVIDED BY
value of one accumulation unit for the applicable
variable investment option at the time of such
transaction
- --------------------------------------------------------------------------------

Therefore, at any time prior to the date of maturity, the total value of your
contract in a variable investment option can be computed according to the
following formula:

- --------------------------------------------------------------------------------
number of accumulation units in the variable
investment options
TIMES

value of one accumulation unit for the applicable
variable investment option at that time
- --------------------------------------------------------------------------------

Your value in the guarantee periods

On any date, the total value of your contract in a guarantee period equals:

. the amount of premium payments or transferred amounts allocated to the
guarantee period, MINUS

. the amount of any withdrawals or transfers paid out of the guarantee
period, MINUS

. the amount of any negative market value adjustments resulting from such
withdrawals or transfers, PLUS

. the amount of any positive market value adjustments resulting from such
withdrawals and transfers, MINUS

. the amount of any charges and fees deducted from that guarantee period,
PLUS

. interest compounded daily on any amounts in the guarantee period from time to
time at the effective annual rate of interest we have declared for that
guarantee period.

THE ANNUITY PERIOD

Annuity payments are made to the annuitant, if still living. If more than one
annuitant is living at the date of maturity, the payments are made to the
younger of them.

Date of maturity

Unless we otherwise permit, the date of maturity must be

. at least 6 months after the date the first premium payment is applied to
your contract, and

. no later than the maximum age specified in your contract (normally age 95).

Choosing fixed or variable annuity payments

Once annuity payments commence, you may not make transfers from fixed to
variable or from variable to fixed.

Selecting an annuity option

Prior to the date of maturity, you may select a different annuity option.
However, if the total value of your contract on the date of maturity is not at
least $5,000, Option A: "life annuity with 10 years guaranteed" will apply,
regardless of any other election that you have made. You may not change the form
of annuity option once payments commence.

If the initial monthly payment under an annuity option would be less than
$50, we may make a single sum payment equal to the total surrender value of your
contract on the date the initial payment would be payable. Such single payment
would replace all other benefits.

Subject to that $50 minimum limitation, your beneficiary may elect an annuity
option if:

. you have not made an election prior to the annuitant's death;

. the beneficiary is entitled to payment of a death benefit of at least $5,000
in a single sum; and

. the beneficiary notifies us of the election prior to the date the proceeds
become payable.

Variable monthly annuity payments

The amount of each subsequent variable annuity payment under that variable
investment option depends upon the investment performance of that variable
investment option.

Here's how it works:

. if that actual net investment return exceeds the "assumed investment rate"
(explained below), the current monthly payment will be larger than the
previous one.

. if the actual net investment return is less than the assumed investment rate,
the current monthly payment will be smaller than the previous one.

Assumed investment rate

The assumed investment rate for any variable portion of your annuity payments
will be 3 1/2% per year, except as follows.

Fixed monthly annuity payments

. the applicable fixed annuity purchase rate shown in the appropriate table in
the contract; or

. the rate we currently offer at the time of annuitization. (This current rate
may be based on the sex of the annuitant, unless prohibited by law.)

Annuity options

OPTION B: LIFE ANNUITY WITHOUT FURTHER PAYMENT ON DEATH OF PAYEE - We will
make monthly payments to the payee as long as he or she lives. We guarantee no
minimum number of payments.

If the payee is more than 85 years old on the date of maturity, the following
two options are not available without our consent:

. Option A: "life annuity with 5 years guaranteed" and

. Option B: "life annuity without further payment on the death of payee."

VARIABLE INVESTMENT OPTION VALUATION PROCEDURES

We compute the net investment return and accumulation unit values for each
variable investment option as of the end of each business day. A business day is
any date on which the New

DISTRIBUTIONS FOLLOWING DEATH OF OWNER

- --------------------------------------------------------------------------------
IF DEATH BENEFITS ARE PAYABLE UPON YOUR DEATH BEFORE ANNUITY PAYMENTS HAVE
BEGUN:

. if the contract's designated beneficiary is your surviving spouse, your spouse
may elect to continue the contract in force as the owner. In that case:
(1)we will not pay a death benefit, but the total value of your contract will
equal the death benefit that would have been payable under your contract
(including amounts payable under any optional death benefit riders). Any
additional amount that we credit to your contract will be allocated to the
investment options in the same ratio as the investment allocations held at the
time of death and will not be subject to any future surrender or withdrawal
charges; and
(2) your spouse may elect to add or continue any optional death benefit riders
under his or her name, subject to our then current underwriting standards and
the deduction of rider charges at our then current rates. For purposes of
calculating the amount your spouse's Death Benefit, we will treat the total
value of your contract (including any step-up in value) as the initial premium
and the date the rider is added or continued as the rider's date of issue.
. if the beneficiary is not your surviving spouse OR if the beneficiary is your
surviving spouse but chooses not to continue the contract, the "entire
interest" (as discussed below) in the contract on the date of your death must
be:
(1) paid out in full within five years of your death or
(2) applied in full towards the purchase of a life annuity on the beneficiary
with payments commencing within one year of your death.
. the "entire interest" in the contract on the date of your death equals the
standard death benefit (or any enhanced death benefit) and, if an earnings
enhancement benefit rider is then in force, any earnings enhancement death
benefit amount, that may then be payable.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
IF YOU DIE ON OR AFTER ANNUITY PAYMENTS HAVE BEGUN:
. any remaining amount that we owe must be paid out at least as rapidly as
under the method of making annuity payments that is then in use.
- --------------------------------------------------------------------------------

Notice of the death of an owner or annuitant should be furnished promptly to
the John Hancock Annuity Servicing Office.

MISCELLANEOUS PROVISIONS

Assignment; change of owner or beneficiary

. the rights of any assignees of record and

. certain other conditions referenced in the contract.

An assignment, pledge, or other transfer may be a taxable event. See "Tax
information" below. Therefore, you should consult a competent tax adviser before
taking any such action.

TAX INFORMATION

Our income taxes

We are taxed as a life insurance company under the Internal Revenue Code (the
"Code"). The Account is taxed as part of our operations and is not taxed
separately.

The contracts permit us to deduct a charge for any taxes we incur that are
attributable to the operation or existence of the contracts or the Account.

Currently, we do not anticipate making a charge for such taxes. If the level
of the current taxes

increases, however, or is expected to increase in the future, we reserve the
right to make a charge in the future.

Special Considerations for Optional Benefit Riders

If you have elected an optional death benefit rider, it is our understanding
that the charges relating to these riders are not subject to current taxation.
The Internal Revenue Service ("IRS") might take the position, however, that
each charge associated with the rider is deemed a partial withdrawal from the
contract subject to current income tax to the extent of any gains and, if
applicable, the 10% penalty tax for premature distributions from annuities. We
understand that you are not prevented from adding any of our optional death
benefit riders to your contract if it is issued as an IRA. However, the law is
unclear because IRAs generally may not invest in "life insurance contracts."
Therefore, it is possible that a Contract may be disqualified as an IRA if it
has an optional death benefit rider added to it. If so, you may be subject to
increased taxes.

Contracts not purchased to fund a tax qualified plan

Undistributed gains

Annuity payments

Surrenders, withdrawals and death benefits

preceding section entitled "Distribution following death of owner."

Penalty for premature withdrawals

Puerto Rico annuity contracts not purchased to fund a tax qualified plan

Under the Puerto Rico tax laws, distributions from a contract not purchased
to fund a tax qualified plan ("Non-Qualified Contract") before annuitization are
treated as non-taxable return of principal until the principal is fully
recovered. Thereafter, all distributions are fully taxable. Distributions after
annuitization are treated as part taxable income and part non-taxable return of
principal. The amount excluded from gross income after annuitization is equal to
the amount of the distribution in excess of 3% of the total purchase payments
paid, until an amount equal to the total purchase payments paid has been
excluded. Thereafter, the entire distribution from a Non-Qualified Contract is
included in gross income. Puerto Rico does not currently impose an early
withdrawal penalty tax. Generally, Puerto Rico does not require income tax to be
withheld from distributions of income.

Diversification requirements

Contracts purchased for a tax qualified plan

We have no responsibility for determining whether a particular retirement
plan or a particular contribution to the plan satisfies the applicable
requirements of the Code, or whether a particular employee is eligible for
inclusion under a plan. In general, the Code imposes limitations on the amount
of annual compensation that can be contributed into a tax-qualified plan, and
contains rules to limit the amount you can contribute to all of your
tax-qualified plans. Trustees and administrators of tax qualified plans may,
however, generally invest and reinvest existing plan assets without regard to
such Code imposed limitations on contributions. Certain distributions from tax
qualified plans may be transferred directly to another plan, unless funds are
added from other sources, without regard to such limitations.

Tax-free rollovers

For tax years beginning in 2002, if permitted under your plans, you may make
a tax-free rollover from:

. a traditional IRA to another traditional IRA,

. a traditional IRA to another tax-qualified plan, including a Section 403(b)
plan

. any tax-qualified plan (other than a Section 457 deferred compensation plan
maintained by a tax-exempt organization) to a traditional IRA,

. a Section 457 deferred compensation plan maintained by a tax-exempt
organization to another Section 457 deferred compensation plan maintained by
a tax-exempt organization and

. a traditional IRA to a Roth IRA, subject to special restrictions discussed
below.

Traditional IRAs

. 100% of compensation includable in your gross income, or

The amount of your deduction is based on the following factors:

. whether you or your spouse is an active participant in an employer sponsored
retirement plan,

. your federal income tax filing status, and

. your "Modified Adjusted Gross Income."

The tax law requires that annuity payments under a traditional IRA contract
begin no later than April 1 of the year following the year in which the owner
attains age 70 1/2.

Roth IRAs

Distributions. If you hold your Roth IRA for at least five years the payee
-------------
will not owe any federal income taxes or early withdrawal penalties on amounts
paid out from the contract:

. after you reach age 59 1/2,

. on your death or disability, or

. to qualified first-time home buyers (not to exceed a lifetime limitation of
$10,000) as specified in the Code.

Conversion to a Roth IRA. You can convert a traditional IRA to a Roth IRA,
------------------------
unless

. you have adjusted gross income over $100,000, or

. you are a married taxpayer filing a separate return.

The Roth IRA annual contribution limit does not apply to converted amounts.

SIMPLE IRA plans

In general, a small business employer may establish a SIMPLE IRA retirement
plan if the employer employed 100 or fewer employees earning at least $5,000
during the preceding year. As an eligible employee of the business, you may make
pre-tax contributions to the SIMPLE IRA plan. You may specify the percentage of
compensation that you want to contribute under a qualified salary reduction
arrangement, provided the amount does not exceed the SIMPLE IRA annual
contribution limit. The SIMPLE IRA annual limit is $7,000 for tax years
beginning in 2002, $8,000 for 2003, $9,000 for 2004, and $10,000 for 2005.After
that, the annual limit is indexed for inflation in $500 increments as provided
in the Code. Your employer must elect to make a matching contribution of up to
3% of your compensation or a non-elective contribution equal to 2% of your
compensation.

Simplified Employee Pension plans (SEPs)

Distributions. The requirements for minimum distributions from a SEP-IRA,
-------------
and rules on taxation of distributions from a SEP-IRA, are generally the same as
those discussed above for distributions from a traditional IRA.

Section 403(b) plans

. on the employee's separation from service, death, or disability,

. with respect to distributions of assets held under a 403(b) contract as of
December 31, 1988, and

. transfers and exchanges to other products that qualify under Section 403(b).

Minimum distributions under a 403(b) contract must begin no later than
April 1 of the year following the year in which the employee reaches age 70 1/2
or, if later, retires

Pension and profit sharing plans qualified under Section 401(a)

In general, an employer may deduct from its taxable income premium payments
it makes under a qualified pension or profit-sharing plan described in Section
401(a) of the Code. Employees participating in the plan generally do not have to
pay tax on such contributions when made. Special requirements apply if a 401(a)
plan covers an employee classified under the Code as a "self-employed
individual" or as an "owner-employee."

The non-taxable portion of each annuity payment is determined, under the
Code, according to one formula if the payments are variable and a somewhat
different formula if the payments are fixed. In each case, speaking generally,
the formula seeks to allocate an appropriate amount of the investment in the
contract to each payment. Favorable procedures may also be available to
taxpayers who had attained age 50 prior to January 1, 1986.

"Top-heavy" plans

Section 457 deferred compensation plans

Under the provisions of Section 457 of the Code, you can exclude a portion of
your compensation from gross income if you participate in a deferred
compensation plan maintained by:

. a state,

. a political subdivision of a state,

. an agency or instrumentality or a state or political subdivision of a state,
or

. a tax-exempt organization.

The deferred compensation plan must satisfy several conditions, including the
following:

. the plan must not permit distributions prior to your separation from service
(except in the case of an unforeseen emergency), and

. all compensation deferred under the plan shall remain solely the employer's
property and may be subject to the claims of its creditors.

Elective Deferral Limits

Elective Catch-up Limits

A participant in a Section 403(b) plan, a Section 457 Plan or in certain other
types of tax-qualified pension and profit sharing plans that are commonly
referred to as "401(k)" plans and "SARSEPS" who is age 50 or older may increase
contributions by an amount up to $1,000 for tax years beginning in 2002, $2,000
for 2003, $3,000 for 2004, $4,000 for 2005 and $5,000 for 2006. After that, for
the tax years beginning in 2007, the elective catch-up contribution limit is
indexed for inflation in $500 increments as provided in the Code.

Withholding on rollover distributions

Puerto Rico annuity contracts purchased to fund a tax-qualified plan

The provisions of the tax laws of Puerto Rico vary significantly from those
under the Internal Revenue Code of the United States with respect to the various
"tax qualified" plans described above. Although we may offer variable annuity
contracts in Puerto Rico in connection with "tax qualified" plans, the text of
the prospectus under the subsection "Contracts purchased for a tax qualified
plan" is inapplicable in Puerto Rico and should be disregarded.

See your own tax adviser

FURTHER INFORMATION ABOUT JHVLICO

JHVLICO markets its policies through

. John Hancock's sales organization, which includes a career agency system
composed of company-supported independent general agencies and,

. various unaffiliated broker-dealers and certain financial institutions
with which John Hancock and JHVLICO have sales agreements.

In 1993, JHVLICO acquired Colonial Penn Annuity and Life Insurance Company and
renamed it John Hancock Life Insurance Company of America. On March 5, 1998, the
name of the company was changed from John Hancock Life Insurance Company of
America to Investors Partner Life Insurance Company ("IPL").

Selected financial data

Certain prior year amounts have been reclassified to conform to the current
year presentation.

Past results are not necessarily indicative of future results.
- -------------------------------------------------------------------------------

INCOME STATEMENT DATA:
Premiums .............. $ 60.1 $ 28.6 $ 8.9 $ 1,272.3 $ 872.7
Universal life and
investment-type
product charges ..... 365.4 337.1 341.5 -- --
Net investment
income .............. 227.0 213.4 174.6 122.8 89.7
Net realized
investment and
other gains
(losses) ............ (9.0) (10.6) (4.8) -- --
Other revenue ......... 24.0 0.2 0.2 618.1 449.1
---------- ---------- ---------- ---------- ----------
TOTAL REVENUES ........ 667.5 568.7 520.4 2,013.2 1,411.5

Total benefits and
expenses ............ 458.8 425.5 416.8 1,963.9 1,342.5
Federal income tax
expense (credit) .... 62.2 43.8 35.2 33.1 38.5
Net realized capital
gains (losses) ...... -- -- -- (0.6) (3.0)
Cumulative effect of
accounting change,
net of tax .......... (1.6) -- -- -- --
---------- ---------- ---------- ---------- ----------
NET INCOME/NET GAIN ... $ 144.9 $ 99.4 $ 68.4 $ 15.6 $ 27.5
========== ========== ========== ========== ==========

BALANCE SHEET DATA:
Total assets .......... $ 11,713.2 $ 12,194.7 $ 11,974.2 $ 8,599.0 $ 6,521.5
Total liabilities/
obligations ......... 10,747.6 11,389.1 11,279.2 8,268.2 6,199.8
Total stockholder's
equity/policyholders'
contingency
reserve ............. $ 965.6 $ 805.6 $ 695.0 $ 330.8 $ 321.7

MANAGEMENT'S DISCUSSION AND ANALYSIS

Forward-Looking Information

Readers are also directed to other risks and uncertainties discussed, as
well as to further discussion of the risks described above, in other documents
that may be filed by JHVLICO with the United States Securities and Exchange
Commission from time to time. JHVLICO specifically disclaims any obligation to
update or revise any forward-looking information, whether as a result of new
information, future developments, or otherwise.

Overview

Our revenues are derived principally from:

. .premiums on individual life insurance and annuities with life contingencies;

. .product charges from variable and universal life insurance products and
annuities;

. .net investment income and net realized investment and other gains (losses)
on general account assets.

Our profitability depends in large part upon: (1) the adequacy of our
product pricing, which is primarily a function of competitive conditions, our
ability to assess and manage trends in mortality and morbidity experience, our
ability to generate investment earnings and our ability to maintain

Critical Accounting Policies

General

Amortization of Deferred Policy Acquisition Costs

Investment in Debt and Equity Securities

Income Taxes

Results of Operations

The table below presents our consolidated results of operations for the years
indicated.

- ------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31
------------------------------
2001 2000 1999
---- ---- ----
(IN MILLIONS)

REVENUES
Premiums ..................... $ 60.1 $ 28.6 $ 8.9
Universal life and
investment-type product
charges ..................... 365.4 337.1 341.5
Net investment income ........ 227.0 213.4 174.6
Net realized investment and
other gains (losses), net of
related amortization of
deferred policy acquisition
costs/(1)/ .................. (9.0) (10.6) (4.8)
Other revenues ............... 24.0 0.2 0.2
------ ------ ------
Total revenues ............... 667.5 568.7 520.4
------ ------ ------

BENEFITS AND EXPENSES
Benefits to policyholders .... 294.1 248.6 260.5
Other operating costs and
expenses .................... 76.2 116.8 117.5
Amortization of deferred
policy acquisition costs,
excluding amounts related to
net realized investment and
other gains (losses)/(2)/ .. 67.1 34.0 13.1
Dividends to policyholders ... 21.4 26.1 25.7
------ ------ ------
Total benefits and expenses . 458.8 425.5 416.8
------ ------ ------
Income before income taxes and
cumulative effect of
accounting change ............ 208.7 143.2 103.6
Income taxes .................. 62.2 43.8 35.2
------ ------ ------
Income before cumulative effect
of accounting change ......... 146.5 99.4 68.4
Cumulative effect of accounting
change, net of tax ........... (1.6) -- --
------ ------ ------
Net income .................... $ 144.9 $ 99.4 $ 68.4
====== ====== ======

- ------------------------------------------------------------------

(1) Net of related amortization of deferred policy acquisition costs of $(1.5)
million, $(3.8) million, and $(0.5) million for the years ended 2001, 2000, and
1999, respectively.

(2) Excluding amounts related to net realized investment and other gains
(losses) of $(1.5) million, $(3.8) million, and $(0.5) million for the years
ended 2001, 2000 and 1999, respectively.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Income taxes were $62.2 million in 2001, compared to $43.8 million for 2000.
Our effective tax rate was 29.8% in 2001, as compared to 30.6% in 2000.

Year Ended December 31, 2000 Compared to Year Ended
December 31, 1999

Income taxes were $43.8 million in 2000, compared to $35.2 million for 1999.
Our effective tax rate was 30.6% in 2000, as compared to 34.0% in 1999.

Results of Operations by Segment

- -------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31
------------------------------
2001 2000 1999
---- ---- ----
(IN MILLIONS)

SEGMENT DATA:/(1)/
SEGMENT AFTER-TAX OPERATING INCOME:
Protection Segment ....................... $130.0 $ 96.0 $108.0
Asset Gathering Segment .................. 22.2 6.3 6.8
------ ------ ------
Total segment after-tax operating
income ................................. 152.2 102.3 114.8

AFTER-TAX ADJUSTMENTS:
Net realized investment and other gains
(losses), net ........................... (5.6) (6.8) (3.1)
Surplus tax .............................. 9.1 5.6 --
Class action lawsuit ..................... (9.2) -- (42.9)
Other demutualization related costs ...... -- (0.6) (0.4)
Restructuring charges .................... -- (1.1) --
------ ------ ------
Total after-tax adjustments ............. (5.7) (2.9) (46.4)
------ ------ ------

GAAP REPORTED:
Income before cumulative effect of change
in accounting principle .................. 146.5 99.4 68.4
Cumulative effect of change in
accounting principle, net of tax ........ (1.6) -- --
------ ------ ------
Net income ............................... $144.9 $ 99.4 $ 68.4
====== ====== ======

- -------------------------------------------------------------------------------

(1) See "Adjustments to GAAP Reported Net Income" set forth below.

Adjustments to GAAP Reported Net Income

- --------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31
---------------------------------------
2001 2000 1999
---------- ---------- -----------
(IN MILLIONS)

Net realized investment and
other gains (losses) ...................... $(10.5) $(14.4) $(5.3)
Less amortization of deferred
policy acquisition costs
related to net realized
investment and other gains
(losses) .................................. 1.5 3.8 0.5
------ ------ -----
Net realized investment and
other gains, net of related
amortization of deferred
policy acquisition costs
per audited consolidated
financial statements ...................... (9.0) (10.6) (4.8)
Less income tax effect ..................... 3.4 3.8 1.7
------ ------ -----
Net realized investment and
other gains (losses), net - after-tax
adjustment to calculate segment
after-tax operating income ................ $ (5.6) $ (6.8) $(3.1)
====== ====== =====

- --------------------------------------------------------------------------------

Protection Segment

The following table presents certain summary financial data relating to the
Protection Segment for the periods indicated.
- --------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31
-------------------------------
2001 2000 1999
---- ---- ----
(IN MILLIONS)
OPERATING RESULTS:
Revenues

Premiums ..................................... $ 60.1 $ 28.6 $ 8.9
Universal life and investment-type product
charges ..................................... 324.7 286.0 300.8
Net investment income ........................ 229.2 215.9 178.1
Other revenue ................................ 0.3 0.3 0.2
------ ------ ------
Total revenues .............................. 614.3 530.8 488.0
Benefits and expenses
Benefits to policyholders .................... 271.3 242.2 192.3
Other operating costs and expenses ........... 72.8 98.1 100.6
Amortization of deferred policy
acquisition costs, excluding amounts
related to net realized investment and other
gains (losses) .............................. 46.6 17.6 4.6
Dividends to policyholders ................... 21.4 26.1 25.7
------ ------ ------
Total benefits and expenses ................. 412.1 384.0 323.2
Segment pre-tax operating income .............. 202.2 146.8 164.8
Income taxes .................................. 72.2 50.8 56.8
------ ------ ------
Segment after-tax operating income /(1)/ ...... 130.0 96.0 108.0
After-tax adjustments: /(1)/
Net realized investment and other gains
(losses), net ............................... (5.6) (6.8) (3.1)
Surplus tax .................................. 9.1 5.4 --
Class action lawsuit, net .................... (9.2) -- (42.9)
Other demutualization related costs .......... -- (0.5) (0.3)
Restructuring charges ........................ -- (1.1) --
------ ------ ------
Total after-tax adjustments ................. (5.7) (3.0) (46.3)
------ ------ ------

GAAP REPORTED:
Income before cumulative effect of change in
accounting principle ......................... 124.3 93.0 61.7
Cumulative effect of change in accounting
principle, net of tax ........................ (1.6) -- --
------ ------ ------
Net income .................................... $122.7 $ 93.0 $ 61.7
====== ====== ======
- --------------------------------------------------------------------------------
(1) See "Adjustments to GAAP Reported Net Income" included in this MD&A section
of the prospectus.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Asset Gathering Segment

The following table presents certain summary financial data relating to the
Asset Gathering Segment for the periods indicated.

Universal life and investment-type
product charges .............................. $40.7 $51.1 $40.7
Net investment income ......................... (2.2) (2.5) (3.5)
Other revenue ................................. 23.7 (0.1) --
----- ----- -----
Total revenues ............................... 62.2 48.5 37.2
Benefits and expenses
Benefits to policyholders ..................... 8.7 6.4 2.2
Other operating costs and expenses ............ 3.4 16.1 16.3
Amortization of deferred policy
acquisition costs, excluding amounts related
to net realized investment and other
gains (losses) .............................. 20.5 16.4 8.5
----- ----- -----
Total benefits and expenses .................. 32.6 38.9 27.0
Segment pre-tax operating income ............... 29.6 9.6 10.2
Income taxes ................................... 7.4 3.3 3.4
----- ----- -----
Segment after-tax operating income /(1)/ ....... 22.2 6.3 6.8
After-tax adjustments: /(1)/
Surplus tax ................................... -- 0.2 --
Other demutualization related costs ........... -- (0.1) (0.1)
----- ----- -----
Total after-tax adjustments .................. -- 0.1 (0.1)
----- ----- -----
Net income ..................................... $22.2 $ 6.4 $ 6.7
===== ===== =====
- --------------------------------------------------------------------------------

(1) See "Adjustments to GAAP Reported Net Income" included in this MD&A section
of the prospects.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

General Account Investments

Overall Composition of the General Account

- --------------------------------------------------------------------------------
AS OF DECEMBER 31, AS OF DECEMBER 31,
2001 2000
-------------------- ---------------------
CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL
------------- ----- ------------- -----
(IN MILLIONS) (IN MILLIONS)

Fixed maturity securities /(1)/ ... $2,496.2 69.0% $1,727.2 57.9%
Mortgage loans /(2)/ .............. 580.9 16.0 554.8 18.6
Real estate ....................... 20.6 0.6 23.9 0.8
Policy loans /(3)/ ................ 352.0 9.7 334.2 11.2
Equity securities ................. 13.1 0.4 8.1 0.3
Other invested assets ............. 39.6 1.1 34.8 1.2
Short-term investments ............ 0.0 0.0 21.7 0.7
Cash and cash equivalents /(4)/ ... 115.4 3.2 277.3 9.3
-------- ----- -------- -----
Total invested assets ............ $3,617.8 100.0% $2,982.0 100.0%
======== ===== ======== =====
- --------------------------------------------------------------------------------

(2) The fair value of the mortgage loan portfolio was $604.3 million and $467.3
million as of December 31, 2001 and December 31, 2000, respectively.

(3) Policy loans are secured by the cash value of the underlying life insurance
policies and do not mature in a conventional sense, but expire in conjunction
with the related policy liabilities.

(4) Cash and cash equivalents are included in total invested assets for the
purposes of calculating yields on the income producing assets for JHVLICO.

The following table shows the composition by issuer of the fixed maturity
securities portfolio.

FIXED MATURITY SECURITIES -- BY ISSUER
- -------------------------------------------------------------------------------------
AS OF DECEMBER 31, AS OF DECEMBER 31,
2001 2000
-------------------- ---------------------
CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL
----- ----- ----- -----
(IN MILLIONS) (IN MILLIONS)

Corporate securities ................... $1,955.8 78.3% $1,428.6 82.7%
MBS/ABS ................................ 317.1 12.7 268.2 15.5
U.S. Treasury securities and
obligations of
U.S. government agencies .............. 214.8 8.6 16.7 1.0
Debt securities issued by foreign
governments ........................... 7.6 0.3 10.9 0.6
Obligations of states and political
subdivisions .......................... 0.9 0.1 2.8 0.2
-------- ----- -------- -----
Total .................................. $2,496.2 100.0% $1,727.2 100.0%
======== ===== ======== =====
- -------------------------------------------------------------------------------------

FIXED MATURITY SECURITIES -- BY CREDIT QUALITY

- --------------------------------------------------------------------------------------
AS OF AS OF
DEC. 31, DEC. 31,
2001 2000
--------------------- --------------------
S&P
SVO EQUIVALENT CARRYING % OF CARRYING % OF
RATING/(1)/ DESIGNATION/(2)/ VALUE/(3)/ TOTAL VALUE/(3)/ TOTAL
------ ------------------- ------------- ------ ------------- -------
(IN MILLIONS) (IN MILLIONS)

1 AAA/AA/A ............ $ 910.4 37.2% $ 634.2 37.6%
2 BBB ................. 1,237.9 50.5 774.5 46.0
3 BB .................. 190.2 7.8 187.2 11.1
4 B ................... 59.7 2.4 61.4 3.7
5 CCC and lower ....... 27.7 1.1 9.2 0.5
6 In or near default .. 24.7 1.0 18.3 1.1
-------- ----- -------- -----
Total ............... $2,450.6 100.0% $1,684.8 100.0%
======== ===== ======== =====
- --------------------------------------------------------------------------------------

(1)For securities that are awaiting an SVO rating, JHVLICO has assigned a rating
based on an analysis that it believes is equivalent to that used by the SVO.

(2)Comparisons between SVO and S&P ratings are published by the National
Association of Insurance Commissioners.

(3)Does not include redeemable preferred stock with a carrying value of $45.6
million and $42.4 million as of December 31, 2001 and December 31, 2000,
respectively.

MORTGAGE LOANS. As of December 31, 2001 and 2000, we held mortgage loans with
carrying values of $0.6 billion, which included $0.2 billion of agricultural
loans.

- ------------------------------------------------------------------------------
AS OF AS OF
DEC. 31 DEC. 31,
2001, 2000
------------------- -------------------
CARRYING % OF CARRYING % OF
VALUES TOTAL VALUES TOTAL
-------- ----- -------- -----
(IN MILLIONS) (IN MILLIONS)

Apartments ................. $114.4 19.7% $128.3 23.1%
Office Buildings ........... 145.3 25.0 98.0 17.8
Retail ..................... 35.3 6.1 45.4 8.2
Agricultural ............... 166.3 28.6 163.9 29.5
Industrial ................. 71.6 12.3 76.8 13.8
Hotels ..................... 24.6 4.2 15.0 2.7
Mixed Use .................. 4.9 0.9 13.4 2.4
Other ...................... 18.5 3.2 14.0 2.5
------ ----- ------ -----
Total ..................... $580.9 100.0% $554.8 100.0%
====== ===== ====== =====
- -----------------------------------------------------------------------------

The following table shows the distribution of JHVLICO's mortgage loan
portfolio by geographical region.

MORTGAGE LOANS -- BY ACLI REGION

- -------------------------------------------------------------------------------
AS OF DEC. 31, 2001 AS OF DEC. 31, 2000
---------------------------- --------------------
NUMBER CARRYING % OF CARRYING % OF
OF LOANS VALUES TOTAL VALUES TOTAL
-------- -------- ----- -------- -----
(IN MILLIONS) (IN MILLIONS)

East North Central ......... 18 $ 63.1 10.9% $ 67.6 12.2%
East South Central ......... 17 24.3 4.2 27.5 5.0
Middle Atlantic ............ 12 50.3 8.6 26.8 4.8
Mountain ................... 13 35.3 6.1 35.4 6.4
New England ................ 13 54.7 9.4 44.2 8.0
Pacific .................... 48 110.5 19.0 119.3 21.5
South Atlantic ............. 41 151.7 26.1 155.2 28.0
West North Central ......... 6 20.5 3.5 16.8 3.0
West South Central ......... 21 67.3 11.6 58.8 10.5
Canada ..................... 1 3.2 0.6 3.2 0.6
--- ------ ----- ------ -----
Total ..................... 190 $580.9 100.0% $ 554.8 100.0%
=== ====== ===== ====== =====
- -------------------------------------------------------------------------------

Investment Results

the 10-year U.S. Treasury rate of 34 basis points from December 31, 1999 to
December 31, 2000.

- --------------------------------------------------------------------------------------
FOR THE YEAR ENDED
DECEMBER 31,
-----------------------------------------------------------------
2001 2000 1999
---- ---- ----
YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT
----- -------- ----- -------- ----- --------
(IN MILLIONS) (IN MILLIONS) (IN MILLIONS)

GENERAL ACCOUNT
ASSETS-EXCLUDING
POLICY LOANS
Gross income ........ 7.26% $ 214.6 8.23% $ 207.5 7.56% $ 172.8
Ending
assets-excluding
policy loans ....... 3,265.8 2,647.8 2,397.2
POLICY LOANS
Gross income ........ 6.15 21.1 5.50 17.1 5.08 13.7
Ending assets ....... 352.0 334.2 287.4
Total gross income 7.14 235.7 7.93 224.6 7.29 186.5
Less: investment
expenses ........... (8.7) (11.2) (11.9)
-------- -------- --------
Net investment
income ............. 6.88% $ 227.0 7.53% $ 213.4 6.83% $ 174.6
======== ======== ========
- --------------------------------------------------------------------------------------

Liquidity and Capital Resources

- --------------------------------------------------------------------------------
AS OF AS OF
DEC. 31, 2001 DEC. 31, 2000
------------- -------------
AMOUNT % AMOUNT %
------ --- ------ ---
(IN MILLIONS) (IN MILLIONS)
Subject to discretionary
withdrawal at contract value less
surrender charge .................... $45.4 75.0% $54.7 75.1%
Not subject to discretionary
withdrawal provisions ............... 7.6 12.6 7.1 9.8
Subject to discretionary
withdrawal adjustment:
At contract value ................... 7.5 12.4 11.0 15.1
----- ----- ----- -----
Total annuity reserves and deposit
funds liability ..................... $60.5 100.0% $72.8 100.0%
===== ===== ===== =====
- --------------------------------------------------------------------------------

Quantitative and Qualitative Disclosures About Market Risk

Capital Markets Risk Management

JHVLICO maintains a disciplined, comprehensive approach to managing capital
market risks inherent in its business operations. To mitigate these risks, and
effectively

Credit Risk

Interest Rate Risk

We manage interest rate sensitive segments of our business, and their
supporting investments, under one of two broadly defined risk management methods
designed to provide an appropriate matching of assets and liabilities. For
guaranteed rate products, where contractual liability cash flows are highly
predictable we apply sophisticated duration-matching techniques to manage the
segment's exposure to both parallel and non-parallel yield curve movements.
Typically this approach involves a duration mismatch tolerance of less than +/ -
.05 years, with other techniques used for limiting exposure to non-parallel
risk. Duration measures the sensitivity of the fair value of assets and
liabilities to changes in interest rates. For example, should interest rates
increase by 100 basis points, the fair value of an asset with a 5-year duration
is expected to decrease in value by approximately 5.0%. For non-guaranteed rate
products we apply scenario-modeling techniques to develop

investment policies with what we believe to be the optimal risk/ return tradeoff
given our risk constraints. Each scenario is based on near term reasonably
possible hypothetical changes in interest rates that illustrate the potential
impact of such events.

Derivative Instruments

- ---------------------------------------------------------------------------------------------
AS OF DECEMBER 31, 2001
-------------------------------------------------------
FAIR VALUE
-----------------------------------
WEIGHTED- -100 +100
AVERAGE BASIS BASIS
NOTIONAL TERM POINT AS OF POINT
AMOUNT (YEARS) CHANGE/(2)/ 12/31/01 CHANGE/(2)/
-------- ------- ----------- -------- -----------
(IN MILLIONS, EXCEPT FOR WEIGHTED-AVERAGE TERM)

Interest rate swaps ............ $1,341.8 3.9 $(24.0) $(4.2) $14.0
Futures contracts /(1)/ ........ 33.8 8.1 (1.4) (0.2) 1.0
Interest rate floors ........... 239.4 5.8 1.8 3.5 6.4
Interest rate caps ............. 361.4 8.4 1.9 1.2 0.2
-------- ------ ----- -----
Totals ......................... $1,976.4 5.0 $(21.7) $ 0.3 $21.6
======== ====== ===== =====
- ---------------------------------------------------------------------------------------------

(1)Represents the notional value on open contracts as of December 31, 2001.

(2)The selection of a 100 basis point immediate change in interest rates should
not be construed as a prediction by us of future market events but rather as an
illustration of the potential impact of such an event.

As of December 31, 2001, JHVLICO had no outstanding fixed income obligations.

Separate Accounts

Competition

The life insurance business is highly competitive. There are numerous stock
and other types of insurers in the life/health insurance business in the United
States.

Employees and Facilities

Transactions with John Hancock

See Note 2 to our audited consolidated GAAP financial statements included
elsewhere in this prospectus for additional information on related party
transactions.

Legal Proceedings

Sales Practice Class Action Settlement

Regulation

Our business is subject to extensive regulation at both the state and Federal
level, including regulation under state insurance and Federal and state
securities laws.

State Insurance Regulation

Regulation Governing Potential Acquisitions of Control

Surplus and Capital Requirements

Risk-Based Capital

Statutory Investment Valuation Reserves

IRIS Ratios

Regulation of Investments

Valuation of Life Insurance Policies Model Regulation

Federal Insurance Initiatives and Legislation

Tax Legislation

Securities Laws

Directors and Executive Officers

The directors and executive officers of JHVLICO and their principal
occupations during the past five years are as follows:

- ----------------------------------------------------------------------------------------
Directors and Executive Officers Principal Occupations
- -------------------------------- ---------------------

David F. D'Alessandro ................. Chairman of the Board of JHVLICO; Chairman,
President and Chief Executive Officer, John
Hancock Life Insurance Company.
Michele G. Van Leer ................... Vice Chairman of the Board and President of
JHVLICO; Senior Vice President, John Hancock
Life Insurance Company.
Ronald J. Bocage ...................... Director, Vice President and Counsel of JHVLICO;
Vice President and Counsel, John Hancock Life
Insurance Company.
Todd G. Engelsen ...................... Director and Vice President of JHVLICO; Vice
President, John Hancock Life Insurance Company
Bruce M. Jones ........................ Director and Vice President of JHVLICO; Senior
Vice President, John Hancock Life Insurance
Company.
Daniel L. Ouellette ................... Director and Vice President of JHVLICO; Senior
Vice President, John Hancock Life Insurance
Company.
Barbara L. Luddy ...................... Director, Vice President and Actuary of JHVLICO;
Senior Vice President, John Hancock Life
Insurance Company.
Robert R. Reitano ..................... Director, Vice President and Chief Investment
officer of JHVLICO; Senior Vice President and
Chief Investment Strategist, John Hancock Life
Insurance Company.
Paul Strong ........................... Director and Vice President of JHVLICO; Vice
President, John Hancock Life Insurance Company.
Roger G. Nastou ....................... Vice President, Investments, of JHVLICO; Vice
President, John Hancock Life Insurance Company
Julie H. Indge ........................ Treasurer of JHVLICO; Assistant Treasurer, John
Hancock Life Insurance Company
Earl W. Baucom ........................ Controller of JHVLICO; Senior Vice President and
Controller, John Hancock Life Insurance Company.
Peter Scavongelli ..................... Secretary of JHVLICO; State Compliance Officer,
John Hancock Life Insurance Company
- ----------------------------------------------------------------------------------------

The business address of all directors and executive officers of JHVLICO is
John Hancock Place, Boston, Massachusetts 02117.

Executive Compensation

Directors of JHVLICO receive no compensation in addition to their compensation
as employees of JHLICO.

- ------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
------------------- ----------------------
Name Title Salary Bonus Other LTIP All Other
---- ----- ------ ----- ----- ---- ---------

D. F. D'Alessandro Chairman $37,632 $61,555 $3,041 $49,428 $0
- ------------------------------------------------------------------------------------

PERFORMANCE INFORMATION

Total return at the Account level is the percentage change between:

. the value of a hypothetical investment in a variable investment option at
the beginning of the relevant period, and

. the value at the end of such period.

At the Account level, total return reflects adjustments for:

. the mortality and expense risk charges, and

. the annual contract fee.

Current yield and effective yield reflect all the recurring charges at the
Account level, but will not reflect any premium tax charge or any charge for
optional benefit riders.

REPORTS

At least annually, we will send you (1) a report showing the number and
value of the accumulation units in your contract and (2) the financial
statements of the Series Funds.

VOTING PRIVILEGES

At meetings of the Series Funds' shareholders, we will generally vote all
the shares of each Fund that we hold in the Account in accordance with
instructions we receive from the owners of contracts that participate in the
corresponding variable investment option.

CERTAIN CHANGES

Changes to the Account

We reserve the right, subject to applicable law, including any required
shareholder approval,

. to add or delete variable investment options,

. to change the underlying investment vehicles,

. to operate the Account in any form permitted by law, and

. to terminate the Account's registration under the 1940 Act, if such
registration should no longer be legally required.

Unless otherwise required under applicable laws and regulations, notice to
or approval of owners will not be necessary for us to make such changes.

Variations in charges or rates for eligible classes

We may allow a reduction in or the elimination of any contract charges, or
an increase in a credited interest rate for a guarantee period. The affected
contracts would involve sales to groups or classes of individuals under special
circumstances that we expect to result in a reduction in our expenses associated
with the sale or maintenance of the contracts, or that we expect to result in
mortality or other risks that are different from those normally associated with
the contracts.

The entitlement to such variation in charges or rates will be determined by
us based upon such factors as the following:

. the size of the initial premium payment,

. the size of the group or class,

. the total amount of premium payments expected to be received from the group
or class and the manner in which the premium payments are remitted,

. 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 or morbidity risks associated with that group or class;

. the purpose for which the contracts are being purchased and whether that
purpose makes it likely that the costs and expenses will be reduced, or

. the level of commissions paid to selling broker-dealers or certain
financial institutions with respect to contracts within the same group or
class.

We will make any reduction in charges or increase in initial guarantee
rates according to our rules in effect at the time an application for a contract
is approved. We reserve the right to change these rules from time to time. Any
variation in charges or rates 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.
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.

DISTRIBUTION OF CONTRACTS

Signator Investors, Inc. ("Signator") acts as principal distributor of the
contracts sold through this prospectus. Signator is registered as a
broker-dealer under the Securities Exchange Act of 1934, and a member of the
National Association of Securities Dealers, Inc. Signator's address is 200
Clarendon Street, John Hancock Place, Boston, Massachusetts 02117. Signator is a
subsidiary of John Hancock.

You can purchase a contract through registered representatives of
broker-dealers and certain financial institutions who have entered into selling
agreements with JHVLICO and Signator. We pay broker-dealers compensation for
promoting, marketing and selling our variable insurance and variable annuity
products. In turn, the broker-dealers pay a portion of the compensation to their
registered representatives, under their own arrangements. Signator will also pay
its own registered representatives for sales of the contracts to their
customers. We do not expect the compensation we pay to such broker-dealers
(including Signator) and financial institutions to exceed 8.0% of premium
payments (on a present value basis) for sales of the contracts described in this
prospectus. For limited periods of time, we may pay additional compensation to
broker-dealers as part of special sales promotions. We offer these contracts on
a continuous basis, but neither JHVLICO nor Signator is obligated to sell any
particular amount of contracts. We also reimburse Signator for direct and
indirect expenses actually incurred in connection with the marketing of these
contracts.

EXPERTS

REGISTRATION STATEMENT

page of SAI

DISTRIBUTION ............................. 2
CALCULATION OF PERFORMANCE DATA .......... 2
CALCULATION OF ANNUITY PAYMENTS .......... 10
ADDITIONAL INFORMATION ABOUT
DETERMINING UNIT VALUES ................. 12
PURCHASES AND REDEMPTIONS OF FUND
SHARES .................................. 13
THE ACCOUNT .............................. 13
DELAY OF CERTAIN PAYMENTS ................ 13
LIABILITY FOR TELEPHONE TRANSFERS ........ 14
VOTING PRIVILEGES ........................ 15
FINANCIAL STATEMENTS ..................... 16

CONDENSED FINANCIAL INFORMATION

JOHN HANCOCK VARIABLE ANNUITY ACCOUNT JF

Period from
Year Ended Year Ended August 10, 1999
December 31, December 31, to December 31,
2001 2000 1999
------------ ------------ ----------------

EQUITY INDEX
Accumulation share value:
Beginning of period ................................. $20.22 $22.54 $10.00
End of period ....................................... $17.58 $20.22 $22.54
Number of Accumulation Shares outstanding at end of
period ............................................... 804,600 507,320 76,098
GROWTH & INCOME
Accumulation share value:
Beginning of period (Note 2) ........................ $8.82 $10.00 --
End of period ....................................... $7.36 $8.82 --
Number of Accumulation Shares outstanding at end of
period ............................................... 1,817,947 12,749 --
LARGE CAP VALUE
Accumulation share value:
Beginning of period (Note 3) ........................ $10.00 -- --
End of period ....................................... $11.38 -- --
Number of Accumulation Shares outstanding at end of
period ............................................... 334,667 -- --
LARGE CAP VALUE CORE/SM/
Accumulation share value:
Beginning of period ................................. $10.71 $10.31 $10.00
End of period ....................................... $10.07 $10.71 $10.31
Number of Accumulation Shares outstanding at end of
period ............................................... 1,056,790 520,128 92,493
LARGE CAP GROWTH
Accumulation share value:
Beginning of period (Note 3) ........................ $10.00 -- --
End of period ....................................... $8.13 -- --
Number of Accumulation Shares outstanding at end of
period ............................................... 77,662 -- --
LARGE CAP AGGRESSIVE GROWTH
Accumulation share value:
Beginning of period ................................. $9.60 $11.97 $10.00
End of period ....................................... $8.09 $9.60 $11.97
Number of Accumulation Shares outstanding at end of
period ............................................... 1,205,414 1,040,129 178,388
FUNDAMENTAL VALUE
Accumulation share value:
Beginning of period ................................. $11.68 $10.43 $10.00
End of period ....................................... $10.73 $11.68 $10.43
Number of Accumulation Shares outstanding at end of
period ............................................... 802,605 347,760 64,904
MULTI CAP GROWTH
Accumulation share value:
Beginning of period (Note 1) ........................ $7.11 $10.00 --
End of period ....................................... $4.43 $7.11 --
Number of Accumulation Shares outstanding at end of
period ............................................... 1,636,323 629,910 --
FUNDAMENTAL GROWTH
Accumulation share value:
Beginning of period ................................. $14.74 $15.39 $10.00
End of period ....................................... $9.86 $14.74 $15.39
Number of Accumulation Shares outstanding at end of
period ............................................... 589,572 525,081 38,912
SMALL/MID CAP CORE/SM/
Accumulation share value:
Beginning of period ................................. $13.16 $12.73 $11.00
End of period ....................................... $13.06 $13.16 $12.73
Number of Accumulation Shares outstanding at end of
period ............................................... 220,092 114,891 9,532

Period from
Year Ended Year Ended August 10, 1999
December 31, December 31, to December 31,
2001 2000 1999
------------ ------------ ---------------

SMALL/MID CAP GROWTH
Accumulation share value:
Beginning of period ................................. $20.47 $18.98 $18.07
End of period ....................................... $20.79 $20.47 $18.98
Number of Accumulation Shares outstanding at end of
period ............................................... 242,085 136,439 14,779
SMALL CAP EQUITY
Accumulation share value:
Beginning of period (Note 2) ........................ $8.30 $10.00 --
End of period ....................................... $7.90 $8.30 --
Number of Accumulation Shares outstanding at end of
period ............................................... 79,406 535 --
SMALL CAP VALUE
Accumulation share value:
Beginning of period ................................. $13.87 $10.46 $10.00
End of period ....................................... $16.31 $13.87 $10.46
Number of Accumulation Shares outstanding at end of
period ............................................... 546,648 241,338 --
SMALL CAP GROWTH
Accumulation share value:
Beginning of period ................................. $16.44 $21.19 $14.27
End of period ....................................... $14.19 $16.44 $21.19
Number of Accumulation Shares outstanding at end of
period ............................................... 715,728 608,753 59,529
V.A. RELATIVE VALUE
Accumulation share value:
Beginning of period (Note 1) ........................ $9.20 $10.00 --
End of period ....................................... $8.84 $9.20 --
Number of Accumulation Shares outstanding at end of
period ............................................... 560,990 172,283 --
AIM V.I. PREMIER EQUITY
Accumulation share value:
Beginning of period ................................. $9.92 $11.77 $10.00
End of period ....................................... $8.57 $9.92 $11.77
Number of Accumulation Shares outstanding at end of
period ............................................... 3,090,645 2,548,369 302,772
FIDELITY VIP GROWTH - SERVICE CLASS
Accumulation share value:
Beginning of period ................................. $10.57 $12.04 $10.00
End of period ....................................... $8.59 $10.57 $12.04
Number of Accumulation Shares outstanding at end of
period ............................................... 2,501,361 1,875,307 205,097
FIDELITY VIP CONTRAFUND(R) - SERVICE CLASS
Accumulation share value:
Beginning of period ................................. $10.69 $11.61 $10.00
End of period ....................................... $9.25 $10.69 $11.61
Number of Accumulation Shares outstanding at end of
period ............................................... 1,645,859 1,447,471 237,990
MFS INVESTORS GROWTH STOCK - INITIAL CLASS
Accumulation share value:
Beginning of period ................................. $11.45 $12.36 $10.00
End of period ....................................... $8.58 $11.45 $12.36
Number of Accumulation Shares outstanding at end of
period ............................................... 1,280,675 971,077 158,192
MFS RESEARCH - INITIAL CLASS
Accumulation share value:
Beginning of period ................................. $11.14 $11.86 $10.00
End of period ....................................... $8.67 $11.14 $11.86
Number of Accumulation Shares outstanding at end of
period ............................................... 970,571 672,010 73,452
MFS NEW DISCOVERY - INITIAL CLASS
Accumulation share value:
Beginning of period ................................. $14.77 $15.26 $10.00
End of period ....................................... $13.85 $14.77 $15.26
Number of Accumulation Shares outstanding at end of
period ............................................... 533,377 431,090 36,557

Period from
Year Ended Year Ended August 10, 1999
December 31, December 31, to December 31,
2001 2000 1999
------------ ------------ ---------------

INTERNATIONAL OPPORTUNITIES
Accumulation share value:
Beginning of period (Note 3) ........................ $10.00 -- --
End of period ....................................... $8.33 -- --
Number of Accumulation Shares outstanding at end of
period ............................................... 20,457 -- --
FIDELITY VIP OVERSEAS - SERVICE CLASS
Accumulation share value:
Beginning of period ................................. $9.97 $12.48 $10.00
End of period ....................................... $7.75 $9.97 $12.48
Number of Accumulation Shares outstanding at end of
period ............................................... 960,931 1,107,608 30,517
EMERGING MARKETS EQUITY
Accumulation share value:
Beginning of period (Note 3) ........................ $10.00 -- --
End of period ....................................... $9.85 -- --
Number of Accumulation Shares outstanding at end of
period ............................................... 7,941 -- --
JANUS ASPEN WORLDWIDE GROWTH - SERVICE SHARES CLASS
Accumulation share value:
Beginning of period (Note 2) ........................ $9.03 $10.00 --
End of period ....................................... $6.90 $9.03 --
Number of Accumulation Shares outstanding at end of
period ............................................... 322,018 128,709 --
REAL ESTATE EQUITY
Accumulation share value:
Beginning of period (Note 2) ........................ $10.95 $10.00 --
End of period ....................................... $11.43 $10.95 --
Number of Accumulation Shares outstanding at end of
period ............................................... 138,332 1,766 --
HEALTH SCIENCES
Accumulation share value:
Beginning of period (Note 3) ........................ $10.00 -- --
End of period ....................................... $9.73 -- --
Number of Accumulation Shares outstanding at end of
period ............................................... 100,786 -- --
V.A. FINANCIAL INDUSTRIES
Accumulation share value:
Beginning of period ................................. $17.90 $14.25 $10.00
End of period ....................................... $14.58 $17.90 $14.25
Number of Accumulation Shares outstanding at end of
period ............................................... 855,100 642,376 113,876
V.A. TECHNOLOGY
Accumulation share value:
Beginning of period (Note 1) ........................ $7.28 $10.00 --
End of period ....................................... $4.02 $7.28 --
Number of Accumulation Shares outstanding at end of
period ............................................... 1,348,542 679,427 --
MANAGED
Accumulation share value:
Beginning of period (Note 2) ........................ $9.73 $10.00 --
End of period ....................................... $9.34 $9.73 --
Number of Accumulation Shares outstanding at end of
period ............................................... 868,814 89 --
GLOBAL BALANCED
Accumulation share value:
Beginning of period ................................. $11.65 $12.98 $12.24
End of period ....................................... $10.76 $11.65 $12.98
Number of Accumulation Shares outstanding at end of
period ............................................... 128,318 63,735 5,361
SHORT TERM BOND
Accumulation share value:
Beginning of period ................................. $13.30 $12.48 $12.34
End of period ....................................... $14.20 $13.30 $12.48
Number of Accumulation Shares outstanding at end of
period ............................................... 440,240 126,421 15,433

Period from
Year Ended Year Ended August 10, 1999
December 31, December 31, to December 31,
2001 2000 1999
------------ ------------ ---------------

BOND INDEX
Accumulation share value:
Beginning of period ................................. $10.63 $9.63 $9.65
End of period ....................................... $11.31 $10.63 $9.63
Number of Accumulation Shares outstanding at end of
period ............................................... 833,929 327,502 47,232
ACTIVE BOND
Accumulation share value:
Beginning of period (Note 3) ........................ $10.00 -- --
End of period ....................................... $10.39 -- --
Number of Accumulation Shares outstanding at end of
period ............................................... 1,154,989 -- --
V.A. STRATEGIC INCOME
Accumulation share value:
Beginning of period ................................. $12.64 $12.62 $12.25
End of period ....................................... $13.05 $12.64 $12.62
Number of Accumulation Shares outstanding at end of
period ............................................... 813,003 535,897 58,942
HIGH YIELD BOND
Accumulation share value:
Beginning of period ................................. $9.04 $10.27 $10.00
End of period ....................................... $9.12 $9.04 $10.27
Number of Accumulation Shares outstanding at end of
period ............................................... 644,021 333,028 48,898
GLOBAL BOND
Accumulation share value:
Beginning of period (Note 2) ........................ $10.60 $10.00 --
End of period ....................................... $10.31 $10.60 --
Number of Accumulation Shares outstanding at end of
period ............................................... 71,857 -- --
MONEY MARKET
Accumulation share value:
Beginning of period (Note 3) ........................ $10.00 -- --
End of period ....................................... $10.12 -- --
Number of Accumulation Shares outstanding at end of
period ............................................... 4,289,180 -- --

(1) Values shown for 2000 begin on May 1, 2000.

(2) Values shown for 2000 begin on November 1, 2000.

(3) Values shown for 2001 begin on May 1, 2001.

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
John Hancock Variable Life Insurance Company

We have audited the accompanying consolidated balance sheets of John
Hancock Variable Life Insurance Company as of December 31, 2001 and 2000, and
the related consolidated statements of income, changes in shareholder's equity
and comprehensive income, and cash flows for each of the three years in the
period ended December 31, 2001. Our audits also included the financial statement
schedules. These financial statements and schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of John Hancock
Variable Life Insurance Company at December 31, 2001 and 2000, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.

As discussed in Note 1 to the consolidated financial statements, in 2001
the Company changed its method of accounting for derivatives.

/s/ ERNST & YOUNG LLP

Boston, Massachusetts
March 21, 2002

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS

DECEMBER 31
2001 2000
--------- ----------
(IN MILLIONS)

ASSETS
Investments--Notes 3 and 4
Fixed maturities:
Held-to-maturity--at amortized cost
(fair value: 2001--$82.1; 2000--$686.8) .......... $ 83.7 $ 715.4
Available-for-sale--at fair value
(cost: 2001--$2,391.9; 2000--$1,018.8) ........... 2,412.5 1,011.8
Equity securities:
Available-for-sale--at fair value
(cost: 2001--$12.1; 2000--$7.1) .................. 13.1 8.1
Mortgage loans on real estate ...................... 580.9 554.8
Real estate ........................................ 20.6 23.9
Policy loans ....................................... 352.0 334.2
Short-term investments ............................. -- 21.7
Other invested assets .............................. 39.6 34.8
--------- ---------
Total Investments ................................ 3,502.4 2,704.7

Cash and cash equivalent ........................... 115.4 277.3
Accrued investment income .......................... 60.8 52.1
Premiums and accounts receivable. .................. 12.5 7.0
Deferred policy acquisition costs .................. 1,060.8 994.1
Reinsurance recoverable--Note 6 .................... 110.4 48.4
Other assets ....................................... 121.8 28.2
Separate accounts assets. .......................... 6,729.1 8,082.9
--------- ---------
Total Assets ..................................... $11,713.2 $12,194.7
========= =========

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS (CONTINUED)

DECEMBER 31
2001 2000
--------- ----------
(IN MILLIONS)

LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities
Future policy benefits ............................ $ 3,335.4 $ 2,754.2
Policyholders' funds .............................. 3.0 14.2
Unearned revenue .................................. 221.0 212.0
Unpaid claims and claim expense reserves .......... 25.0 11.1
Dividends payable to policyholders ................ 0.3 0.1
Income taxes--Note 5 .............................. 191.1 64.2
Other liabilities ................................. 242.7 250.4
Separate accounts liabilities ..................... 6,729.1 8,082.9
--------- ---------
Total Liabilities ............................... 10,747.6 11,389.1
Shareholder's Equity--Note 8
Common stock, $50 par value; 50,000 shares
authorized;
50,000 shares issued and outstanding ............. 2.5 2.5
Additional paid in capital ........................ 572.4 572.4
Retained earnings ................................. 377.8 232.9
Accumulated other comprehensive loss .............. 12.9 (2.2)
--------- ---------
Total Shareholder's Equity ...................... 965.6 805.6
--------- ---------
Total Liabilities and Shareholder's Equity ...... $11,713.2 $12,194.7
========= =========

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31
2001 2000 1999
------ ------ ------
(IN MILLIONS)

REVENUES
Premiums .............................................. $ 60.1 $ 28.6 $ 8.9
Universal life and investment-type product charges .... 365.4 337.1 341.5
Net investment income--Note 3 ......................... 227.0 213.4 174.6
Net realized investment and other gains (losses),
net of related amortization of deferred policy
acquisition costs of $(1.5), $(3.8) and $(0.5),
respectively--Notes 1, 3, and 9 ...................... (9.0) (10.6) (4.8)
Other revenue ......................................... 24.0 0.2 0.2
------ ------ ------
Total revenues. ....................................... 667.5 568.7 520.4
BENEFITS AND EXPENSES
Benefits to policyholders ............................. 294.1 248.6 260.5
Other operating costs and expenses .................... 76.2 116.8 117.5
Amortization of deferred policy acquisition costs,
excluding amounts related to net realized
investment and other gains (losses) of $(1.5),
$(3.8) and $(0.5), respectively--Notes 1, 3 and 9 .... 67.1 34.0 13.1
Dividends to policyholders ............................ 21.4 26.1 25.7
------ ------ ------
Total benefits and expenses ........................... 458.8 425.5 416.8
------ ------ ------
Income before income taxes and cumulative effect
of accounting change ................................. 208.7 143.2 103.6
Income taxes--Note 5 .................................. 62.2 43.8 35.2
------ ------ ------
Income before cumulative effect of accounting
change ............................................... 146.5 99.4 68.4
Cumulative effect of accounting change, net of tax .... (1.6) -- --
------ ------ ------
Net income ............................................ $144.9 $ 99.4 $ 68.4
====== ====== ======

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY

AND COMPREHENSIVE INCOME

ACCUMULATED
ADDITIONAL OTHER TOTAL OUTSTANDING
COMMON PAID IN RETAINED COMPREHENSIVE SHAREHOLDER'S SHARES (IN
STOCK CAPITAL EARNINGS INCOME EQUITY THOUSANDS)
------ ---------- -------- ------------- ------------- -------------
(IN MILLIONS)

BALANCE AT JANUARY 1, 1999 ............. $2.5 $377.5 $ 65.1 $ 12.3 $457.4 50.0
Comprehensive income:
Net income ............................. 68.4 68.4
Other comprehensive income, net of tax:
Net unrealized losses ................. (25.7) (25.7)
------
Comprehensive income. .................. 42.7
Capital contribution ................... 194.9 194.9
---- ------ ------ ------ ------ ----
BALANCE AT DECEMBER 31, 1999 ........... $2.5 $572.4 $133.5 $(13.4) $695.0 50.0
==== ====== ====== ====== ====== ====
Comprehensive income:
Net income ............................. 99.4 99.4
Other comprehensive income, net of tax:
Net unrealized gains .................. 11.2 11.2
------
Comprehensive income ................... 110.6
---- ------ ------ ------ ------ ----
BALANCE AT DECEMBER 31, 2000 ........... $2.5 $572.4 $232.9 (2.2) $805.6 50.0
==== ====== ====== ====== ====== ====
Comprehensive income:
Net income ............................ 144.9 144.9
Other comprehensive income, net of tax:
Net unrealized gains .................. 7.9 7.9
------
Comprehensive income ................... 152.8
Change in accounting principle ......... 7.2 7.2
---- ------ ------ ------ ------ ----
BALANCE AT DECEMBER 31, 2001 .......... $2.5 $572.4 $377.8 $ 12.9 $965.6 50.0
==== ====== ====== ====== ====== ====

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31
2001 2000 1999
---------- -------- ----------
(IN MILLIONS)

Cash flows from operating activities:
Net income ...................................... $ 144.9 $ 99.4 $ 68.4
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Amortization of discount - fixed maturities .. (0.4) (1.9) 1.2
Realized investment losses, net .............. 9.0 10.6 4.8
Change in deferred policy acquisition
costs ....................................... (74.1) (141.5) (126.5)
Depreciation and amortization ................ 0.3 1.9 0.6
Increase in accrued investment income ........ (8.6) (10.2) (3.5)
Decrease (increase) in premiums and
accounts receivable ......................... (5.5) 0.3 (2.4)
(Increase) decrease in other assets and
other liabilities, net ...................... (159.2) 70.7 (58.2)
Increase (decrease) in policy liabilities
and accruals, net ........................... 289.1 (401.1) (377.6)
Increase in income taxes ..................... 118.7 22.5 33.8
---------- ------- -------
Net cash provided (used) by operating
activities .................................. 314.2 (349.3) (459.4)
Cash flows from investing activities:
Sales of:
Fixed maturities available-for-sale ............ 184.6 194.6 204.3
Equity securities available-for-sale ........... 6.0 1.0 0.6
Real estate .................................... 3.3 0.2 17.9
Short-term investments and other invested
assets ........................................ -- 1.3 1.5
Maturities, prepayments and scheduled
redemptions of:
Fixed maturities held-to-maturity .............. 4.5 79.9 75.8
Fixed maturities available-for-sale ............ 180.4 91.5 53.6
Short-term investments and other invested
assets ........................................ 46.5 10.1 --
Mortgage loans on real estate .................. 66.4 85.6 35.8
Purchases of:
Fixed maturities held-to-maturity .............. (5.1) (127.2) (98.8)
Fixed maturities available-for-sale ............ (1,112.3) (424.7) (250.9)
Equity securities available-for-sale ........... (6.1) (0.6) (4.0)
Real estate .................................... (0.6) (0.4) (2.2)
Short-term investments and other invested
assets ........................................ (39.6) (38.8) (14.6)
Mortgage loans on real estate issued ........... (85.0) (100.5) (90.3)
Other, net ..................................... (25.6) (41.5) (30.6)
---------- ------- -------
Net cash used in investing activities ......... (782.6) (269.5) (101.9)

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

YEAR ENDED DECEMBER 31
2001 2000 1999
--------- ------------- -----------
(IN MILLIONS)

Cash flows from financing activities:
Capital contribution from parent company .. -- -- $ 194.9
Universal life and investment-type
contract deposits ........................ $1,220.7 $1,067.2 1,026.3
Universal life and investment-type
contract maturities and withdrawals ...... (914.2) (430.7) (380.7)
Repayment of long term debt ............... -- -- (61.9)
-------- -------- --------
Net cash provided by financing
activities ............................... 306.5 636.5 778.6
-------- -------- --------
Net (decrease) increase in cash and
cash equivalents ......................... (161.9) 17.7 217.3
Cash and cash equivalents at beginning
of year ................................... 277.3 259.6 42.3
-------- -------- --------
Cash and cash equivalents at end of year ... $ 115.4 $ 277.3 $ 259.6
======== ======== ========

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

John Hancock Variable Life Insurance Company (the Company) is a
wholly-owned subsidiary of John Hancock Life Insurance Company (John Hancock or
the Parent). The Company, domiciled in the Commonwealth of Massachusetts, issues
variable and universal life insurance policies, individual whole and term life
policies and fixed and variable annuity contracts. Those policies primarily are
marketed through John Hancock's sales organization, which includes a career
agency system composed of Company-supported independent general agencies and a
direct brokerage system that markets directly to external independent brokers.
Policies are also sold through various unaffiliated securities broker-dealers
and certain other financial institutions. Currently, the Company writes business
in all states except New York.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, Investors Partner Life Insurance
Company (IPL). All significant intercompany transactions and balances have been
eliminated.

Certain prior year amounts have been reclassified to conform to the current
year presentation.

Reorganization and Initial Public Offering

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Investments

The Company classifies its debt and equity investment securities into one
of three categories: held-to-maturity, available-for-sale or trading. The
Company determines the appropriate classification of debt securities at the time
of purchase and re-evaluates such designation as of each balance sheet date.
Fixed maturity investments include bonds, mortgage-backed securities, and
redeemable preferred stock and are classified as held-to-maturity or
available-for-sale.Those bonds and mortgage-backed securities that the Company
has the positive intent and ability to hold to maturity are classified as
held-to-maturity and carried at amortized cost. Fixed maturity investments not
classified as held-to-maturity are classified as available-for-sale and are
carried at fair value. Unrealized gains and losses related to available-for-sale
securities are reflected in shareholder's equity, net of related amortization of
deferred policy acquisition costs and applicable taxes. The amortized cost of
debt securities is adjusted for amortization of premiums and accretion of
discounts to maturity. Such amortization is included in investment income. The
amortized cost of fixed maturity investments is adjusted for impairments in
value deemed to be other than temporary, and such adjustments are reported as a
component of net realized investment and other gains (losses).

Equity securities include common stock and non-redeemable preferred stock.
Equity securities that have readily determinable fair values are carried at fair
value. For equity securities which the Company has classified as
available-for-sale, unrealized gains and losses are reflected in shareholder's
equity, as described above for fixed maturity securities. Impairments in value
deemed to be other than temporary are reported as a component of net realized
investment and other gains (losses).

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Policy loans are carried at unpaid principal balances, which approximate
fair value.

Short-term investments are carried at amortized cost, which approximates
fair value.

Net realized investment and other gains (losses), other than those related
to separate accounts for which the Company does not bear the investment risk,
are determined on the basis of specific identification and are reported net of
related amortization of deferred policy acquisition costs.

Derivative Financial Instruments

In certain cases, the Company uses hedge accounting as allowed by Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities," by designating derivative instruments as
either fair value hedges or cash flow hedges. For derivative instruments that
are designated and qualify as fair value hedges, the change in fair value of the
derivative instrument as well as the offsetting change in fair value of the
hedged item are recorded in net realized investment and other gains (losses).
Basis adjustments are amortized into income through net realized investment and
other gains (losses). For derivative instruments that are designated and qualify
as cash flow hedges, the effective portion of the change in fair value of the
derivative instrument is recorded in other comprehensive income, and then
reclassified into income when the hedged item affects income. Hedge
effectiveness is assessed quarterly by a variety of techniques including
regression analysis and cumulative dollar offset. In certain cases, there is no
hedge ineffectiveness because the derivative instrument was constructed such
that all the terms of the derivative exactly match the hedged risk in the hedged
item. If a hedge becomes ineffective, the hedge accounting described above
ceases.

Cash and Cash Equivalents

Cash and cash equivalents include cash and all highly liquid debt
investments with a maturity of three months or less when purchased.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Deferred Policy Acquisition Costs

Net realized investment and other gains (losses) related to certain
products have a direct impact on the amortization of deferred policy acquisition
costs as such gains and losses affect the amount and timing of profit emergence.
Accordingly, to the extent that such amortization results from net realized
investment and other gains and (losses), management believes that presenting
realized investment gains and losses net of related amortization of deferred
policy acquisition costs provides information useful in evaluating the operating
performance of the Company. This presentation may not be comparable to
presentations made by other insurers.

Reinsurance

Assets and liabilities related to reinsurance ceded contracts are reported
on a gross basis. The accompanying statements of income reflect premiums,
benefits and settlement expenses net of reinsurance ceded. 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. The
Company remains liable to its policyholders to the extent that counterparties to
reinsurance ceded contracts do not meet their contractual obligations.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Separate Accounts

Future Policy Benefits and Policyholders' Funds

Future policy benefits for participating traditional life insurance
policies are based on the net level premium method. This net level premium
reserve is calculated using the guaranteed mortality and dividend fund interest
rates, which range from 4.5% to 5.0%. The liability for annual dividends
represents the accrual of annual dividends earned. Settlement dividends are
accrued in proportion to gross margins over the life of the contract.

For non-participating traditional life insurance policies, future policy
benefits are estimated using a net level premium method on the basis of
actuarial assumptions as to mortality, persistency, interest and expenses
established at policy issue. Assumptions established at policy issue as to
mortality and persistency are based on the Company's experience, which, together
with interest and expense assumptions, include a margin for adverse deviation.
Benefit liabilities for annuities during the accumulation period are equal
to accumulated contractholders' fund balances and after annuitization are equal
to the present value of expected future payments. Interest rates used in
establishing such liabilities range from 7.5% to 8.0% for life insurance
liabilities, and from 3.5% to 10.3% for individual annuity liabilities.

Policyholders' funds for universal life and investment-type products are
equal to the policyholder account values before surrender charges. Policy
benefits that are charged to expense include benefit claims incurred in the
period in excess of related policy account balances and interest credited to
policyholders' account balances. Interest crediting rates range from 3.0% to
9.0% for universal life products.

Liabilities for unpaid claims and claim expenses include estimates of
payments to be made on reported individual life claims and estimates of incurred
but not reported claims based on historical claims development patterns.

Estimates of future policy benefit reserves, claim reserves and expenses
are reviewed continually and adjusted as necessary; such adjustments are
reflected in current earnings. Although considerable variability is inherent in
such estimates, management believes that future policy benefit reserves and
unpaid claims and claims expense reserves are adequate.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Participating Insurance

Participating business represents approximately 7.6% and 16.3% of the
Company's life insurance in-force at December 31, 2001 and 2000, respectively.

The amount of policyholders' dividends to be paid is approved annually by
the Company's Board of Directors. The determination of the amount of
policyholder dividends is complex and varies by policy type. In general, the
aggregate amount of policyholders' dividends is related to actual interest,
mortality, morbidity, persistency and expense experience for the year and is
also based on management's judgment as to the appropriate level of statutory
surplus to be retained by the Company.

Revenue Recognition

Premiums from participating and non-participating traditional life
insurance and annuity policies with life contingencies are recognized as income
when due.

Federal Income Taxes

The provision for federal income taxes includes amounts currently payable
or recoverable and deferred income taxes, computed under the liability method,
resulting from temporary differences between the tax basis and book basis of
assets and liabilities. A valuation allowance is established for deferred tax
assets when it is more likely than not that an amount will not be realized.

Foreign Currency Translation

Gains or losses on foreign currency transactions are reflected in earnings.

Cumulative Effect of Accounting Changes

On January 1, 2001, the Company adopted SFAS No. 133, as amended by SFAS
No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities". The adoption of SFAS No. 133, as amended, resulted in a charge to
operations accounted for as a cumulative effect of accounting change of $1.6
million (net of tax of $0.4 million) as of January 1, 2001. In addition, as of
January 1, 2001, a $7.2 million (net of tax of $3.9 million) cumulative effect
of accounting change was recorded in other comprehensive income including (1)
the transition adjustment in the adoption of SFAS 133, as amended, an increase
of $0.8 million (net of tax of $0.4 million), and (2) the reclassification of
$603.1 million in securities from the held-to-maturity category to the
available-for-sale category, an increase of $6.4 million (net of tax of $3.4
million).

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements

In September 2001, the FASB's Emerging Issues Task Force reached a
consensus on Issue 01-10, "Accounting for the Impact of the Terrorist Attacks of
September 11, 2001." Issue 01-10 presents guidance relative to accounting for
and financial reporting of the events of September 11, 2001 (the Events),
including both how and when to measure, record and report losses and any
resulting liabilities which are directly attributable to the Events. Based on a
comprehensive review of the Company's operations, the Company believes that the
Events had no material financial impact on the Company's results of operations
or financial position.

In June 2001, the FASB issued SFAS No. 141, "Business Combinations." SFAS
No. 141 requires that all business combinations be accounted for under a single
method, the purchase method. Use of the pooling-of-interests method is no longer
permitted. SFAS No. 141 also clarifies the criteria to recognize intangible
assets separately from goodwill, and prohibits the amortization of goodwill
relating to acquisitions completed after July 1, 2001. SFAS No. 141 is effective
for business combinations initiated after June 30, 2001.The adoption of SFAS No.
141 did not have a material effect on the Company's results of operations or
financial position.

In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities," which
replaces SFAS No. 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities." SFAS No. 140 provides new accounting
and reporting standards which are based on consistent application of a financial
components approach that focuses on control. Under this approach, after a
transfer of financial assets, the Company recognizes the financial and servicing
assets it controls and the liabilities it has incurred, derecognizes financial
assets when control has been surrendered, and derecognizes liabilities when
extinguished. SFAS No. 140 provides consistent standards for distinguishing
transfers of financial assets that are sales from transfers that are secured
borrowings. SFAS No. 140 is effective for transfers and servicing of financial
assets and extinguishments of liabilities occurring after March 31, 2001. The
adoption of SFAS No. 140 did not have a material impact on the Company's results
of operations or financial position.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Codification

NOTE 2. RELATED PARTY TRANSACTIONS

John Hancock provides the Company with personnel, property, and facilities
in carrying out certain of its corporate functions. John Hancock annually
determines a fee (the parent company service fee) for these services and
facilities based on a number of criteria, which are periodically revised to
reflect continuing changes in the Company's operations. The parent company
service fee is included in deferred acquisition costs on the Company's balance
sheets, net investment income and other operating costs and expenses within the
Company's income statements. John Hancock charged the Company a service fee of
$159.9 million, $170.6 million and $199.3 million for the year ended December
31, 2001, 2000 and 1999, respectively. As of December 31, 2001 and 2000,
respectively, the Company owed John Hancock $17.9 million and $56.9 million
related to these services, which is included in other liabilities. John Hancock
has guaranteed that, if necessary, it will make additional capital contributions
to prevent the Company's shareholder's equity from declining below $1.0 million.

In 2001 the Company sold $200 million of corporate owned life insurance
(COLI) to its Parent to provide insurance coverage on key management employees
of the Parent. The death benefit on this COLI product would cover the cost of
replacing these employees, including recruiting, training, and development.

The Company has a modified coinsurance agreement with John Hancock to
reinsure 50% of 1994 through 2001 issues of flexible premium variable life
insurance and scheduled premium variable life insurance policies. In connection
with this agreement, John Hancock transferred to the Company $11.8 million,
$24.2 million, and $44.5 million of cash for tax, commission, and expense
allowances. This agreement decreased the Company's net gain from operations by
$1.7 million and $0.9 million in 2001 and 2000, respectively, and increased the
Company's net gain from operations by $20.6 million in 1999.

The Company has a modified coinsurance agreement with John Hancock to
reinsure 50% of the Company's 1995 in-force block and 50% of 1996 and all future
issue years of certain retail annuity contracts. In connection with this
agreement, the Company is holding a deposit liability of $107.5 million and
$102.2 million as of December 31, 2001 and 2000, respectively. This agreement
had no impact on the Company's net gain from operations.

Effective January 1, 1997, the Company entered into a stop-loss agreement
with John Hancock to reinsure mortality claims in excess of 100% of expected
mortality claims for all policies that are not reinsured under any other
indemnity agreement. In connection with the agreement, John Hancock received
$0.4 million, $1.0 million and $0.8 million from the Company in 2001, 2000 and
1999, respectively. This agreement decreased the Company's net gain from
operations by $0.8 million, $1.1 million and $0.5 million in 2001, 2000 and
1999, respectively.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2. RELATED PARTY TRANSACTIONS (CONTINUED)

At December 31, 2001, the Company had a $250.0 million line of credit with
an affiliate, John Hancock Financial Services, Inc. At December 31, 2000, the
Company had a $250.0 million line of credit with affiliate, John Hancock Capital
Corp. At December 31, 2001 and 2000, the Company had no outstanding borrowings
under these agreements.

NOTE 3. INVESTMENTS

The following information summarizes the components of net investment
income and net realized investment and other gains (losses), net:

YEAR ENDED DECEMBER 31,
2001 2000 1999
-------- -------- --------
(IN MILLIONS)

NET INVESTMENT INCOME
Fixed maturities .................................... $160.1 $138.5 $127.1
Equity securities ................................... 0.3 0.2 --
Mortgage loans on real estate ....................... 42.3 44.3 39.7
Real estate ......................................... 2.3 4.1 3.6
Policy loans ........................................ 21.1 17.1 13.7
Short-term investments .............................. 6.3 19.4 4.5
Other ............................................... 3.3 1.1 (2.0)
------ ------ ------
Gross investment income ............................. 235.7 224.7 186.6
Less investment expenses ........................... 8.7 11.3 12.0
------ ------ ------
Net investment income ............................. $227.0 $213.4 $174.6
====== ====== ======
NET REALIZED INVESTMENT AND OTHER GAINS (LOSSES),
NET OF RELATED AMORTIZATION OF DEFERRED POLICY
ACQUISITION COSTS
Fixed maturities .................................... $(25.1) $(16.0) $ (5.9)
Equity securities ................................... 3.8 0.8 --
Mortgage loans on real estate and real estate ....... (1.2) (2.3) 0.9
Derivatives and other invested assets ............... 12.0 3.1 (0.3)
Amortization adjustment for deferred policy
acquisition costs ................................... 1.5 3.8 0.5
------ ------ ------
Net realized investment and other losses, net of
related amortization of deferred policy
acquisition costs .................................. $ (9.0) $(10.6) $ (4.8)
====== ====== ======

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

The Company's investments in held-to-maturity securities and
available-for-sale securities are summarized below:

GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ------------
(IN MILLIONS)

DECEMBER 31, 2001
HELD-TO-MATURITY:
Corporate securities .............................. $ 65.0 $ -- $ 0.8 $ 64.2
Mortgage-backed securities ........................ 18.7 0.2 1.0 17.9
-------- ----- ----- --------
Total ............................................ $ 83.7 $ 0.2 $ 1.8 $ 82.1
======== ===== ===== ========
AVAILABLE-FOR-SALE:
Corporate securities .............................. $1,867.5 $67.5 $44.2 $1,890.8
Mortgage-backed securities ........................ 296.7 6.3 4.7 298.3
Obligations of states and political subdivisions .. 0.9 -- -- 0.9
Debt securities issued by foreign governments ..... 7.2 0.5 -- 7.7
U.S. Treasury securities and obligations of U.S.
government corporations and agencies ............. 219.6 1.1 5.9 214.8
-------- ----- ----- --------
Total fixed maturities ............................ 2,391.9 75.4 54.8 2,412.5
Equity securities ................................. 12.1 1.5 0.5 13.1
-------- ----- ----- --------
Total ............................................ $2,404.0 $76.9 $55.3 $2,425.6
======== ===== ===== ========

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

The amortized cost and fair value of fixed maturities at December 31, 2001,
by contractual maturity, are shown below:

GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ----------
(IN MILLIONS)

DECEMBER 31, 2000
HELD-TO-MATURITY:
Corporate securities ............................... $ 684.2 $23.4 $51.0 $ 656.6
Mortgage-backed securities ......................... 29.3 0.2 1.2 28.3
Obligations of states and political subdivisions ... 1.9 -- -- 1.9
-------- ----- ----- --------
Total .............................................. $ 715.4 $23.6 $52.2 $ 686.8
======== ===== ===== ========
AVAILABLE-FOR-SALE:
Corporate securities ............................... $ 751.6 $20.6 $27.8 $ 744.4
Mortgage-backed securities ......................... 239.1 3.6 3.7 239.0
Obligations of states and political subdivisions ... 0.9 -- -- 0.9
Debt securities issued by foreign governments ...... 11.1 0.3 0.6 10.8
U.S. Treasury securities and obligations of U.S.
government corporations and agencies .............. 16.1 0.7 0.1 16.7
-------- ----- ----- --------
Total fixed maturities ............................. 1,018.8 25.2 32.2 1,011.8
Equity securities .................................. 7.1 2.8 1.8 8.1
-------- ----- ----- --------
Total ........................................... $1,025.9 $28.0 $34.0 $1,019.9
======== ===== ===== ========

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

The amortized cost and fair value of fixed maturities at December 31, 2001, by
contractual maturity, are shown below:

AMORTIZED FAIR
COST VALUE

(IN MILLIONS)
--------------------

HELD-TO-MATURITY:
Due in one year or less ................................ $ -- $ --
Due after one year through five years .................. 3.0 3.0
Due after five years through ten years ................. 8.6 8.6
Due after ten years .................................... 53.4 52.6
-------- --------
65.0 64.2
Mortgage-backed securities ............................. 18.7 17.9
-------- --------
Total .................................................. $ 83.7 $ 82.1
======== ========
AVAILABLE-FOR-SALE:
Due in one year or less ................................ $ 97.5 $ 99.5
Due after one year through five years .................. 772.0 794.2
Due after five years through ten years ................. 935.2 929.4
Due after ten years .................................... 290.5 291.1
-------- --------
2,095.2 2,114.2
Mortgage-backed securities ............................. 296.7 298.3
-------- --------
Total .................................................. $2,391.9 $2,412.5
======== ========

Expected maturities may differ from contractual maturities because eligible
borrowers may exercise their right to call or prepay obligations with or without
call or prepayment penalties.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

Changes in the allowance for probable losses on mortgage loans on real
estate and real estate to be disposed of are summarized below.

BALANCE AT BALANCE AT
BEGINNING END OF
OF YEAR ADDITIONS DEDUCTIONS YEAR
---------- --------- ---------- ------------
(IN MILLIONS)

Year ended December 31, 2001
Mortgage loans on real estate ... $5.0 $1.7 $1.2 $5.5
Real estate to be disposed of ... 0.7 0.1 -- 0.8
---- ---- ---- ----
Total ........................... $5.7 $1.8 $1.2 $6.3
==== ==== ==== ====
Year ended December 31, 2000
Mortgage loans on real estate ... $3.8 $1.2 $ -- $5.0
Real estate to be disposed of ... -- 0.7 -- 0.7
---- ---- ---- ----
Total ........................... $3.8 $1.9 $ -- $5.7
==== ==== ==== ====
Year ended December 31, 1999
Mortgage loans on real estate ... $3.7 $0.4 $0.3 $3.8
Real estate to be disposed of ... 0.7 -- 0.7 --
---- ---- ---- ----
Total ........................... $4.4 $0.4 $1.0 $3.8
==== ==== ==== ====

DECEMBER 31
2001 2000
------ ------
(IN MILLIONS)

Impaired mortgage loans on real estate with provision for losses ..... $ 2.4 $ 4.2
Provision for losses ................................................. (1.2) (1.2)
----- -----
Net impaired mortgage loans on real estate ........................... $ 1.2 $ 3.0
===== =====

The average investment in impaired loans and the interest income recognized on
impaired loans were as follows:

YEAR ENDED DECEMBER 31
2001 2000 1999
------- ------- -------
(IN MILLIONS)

Average recorded investment in impaired loans ...... $3.3 $2.1 $--
Interest income recognized on impaired loans ....... 0.5 0.3 --

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

At December 31, 2001, the mortgage portfolio was diversified by geographic
region and specific collateral property type as displayed below:

CARRYING GEOGRAPHIC CARRYING
PROPERTY TYPE AMOUNT CONCENTRATION AMOUNT
- ---------------------- ------------- ----------------------- ---------------
(IN MILLIONS) (IN MILLIONS)

Apartments ............ $115.1 East North Central ..... $ 63.6
Hotels ................ 24.8 East South Central ..... 25.8
Industrial ............ 72.1 Middle Atlantic ........ 50.6
Office buildings ...... 146.4 Mountain ............... 35.5
Retail ................ 35.5 New England ............ 55.1
Mixed Use ............. 5.0 Pacific ................ 111.3
Agricultural .......... 168.9 South Atlantic ......... 152.9
Other ................. 18.6 West North Central ..... 20.6
West South Central ..... 67.7
Canada/Other ........... 3.3
Allowance for losses .. (5.5) Allowance for losses ... (5.5)
------ ------
Total ................. $580.9 Total .................. $580.9
====== ======

Bonds with amortized cost of $24.7 million were non-income producing for
year ended December 31, 2001.

NOTE 4. DERIVATIVES AND HEDGING INSTRUMENTS

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. DERIVATIVES AND HEDGING INSTRUMENTS (CONTINUED)

Fair Value Hedges

The Company uses equity collar agreements to reduce its equity market
exposure with respect to certain common stock investments that the Company
holds. A collar consists of a written call option that limits the Company's
potential for gain from appreciation in the stock price as well as a purchased
put option that limits the Company's potential for loss from a decline in the
stock price.

Cash Flow Hedges

The Company used interest rate cap and floor agreements to hedge the
interest rate risk associated with minimum interest rate guarantees in certain
of its life insurance and annuity businesses. Amounts are reclassified from
other comprehensive income if interest rates fall below certain levels.

In 2001, the Company recognized no gains or losses related to the
ineffective portion of its cash flow hedges, and a net gain of $0.2 million
related to the portion of the hedging instruments that was excluded from the
assessment of hedge effectiveness. This amount is recorded in net realized
investment and other gains and losses. All of the Company's hedged forecasted
transactions qualified as cash flow hedges in 2001.

In 2001, none of the Company's cash flow hedges have been discontinued
because of the probability that the original forecasted transaction would not
occur by the end of the originally specified time period documented at inception
of the hedging relationship.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. DERIVATIVES AND HEDGING INSTRUMENTS (CONTINUED)

Derivatives Not Designated as Hedging Instruments

The Company enters into interest rate swap agreements, interest rate
futures contracts, and interest rate cap and floor agreements to manage exposure
to interest rates as described above under Fair Value Hedges without designating
the derivatives as hedging instruments.

NOTE 5. INCOME TAXES

The Company is included in the consolidated federal income tax return of
John Hancock Financial Services, Inc. The federal income taxes of the Company
are allocated on a separate return basis with certain adjustments.

The components of income taxes were as follows:

YEAR ENDED DECEMBER 31
2001 2000 1999
------ ------ ------
(IN MILLIONS)

Current taxes:
Federal ............................................ $30.1 $15.2 $(1.5)
Foreign ............................................ -- 0.6 0.1
----- ----- -----
30.1 15.8 (1.4)
Deferred taxes:
Federal ............................................ 32.1 28.0 36.6
----- ----- -----
Total income taxes ................................. $62.2 $43.8 $35.2
===== ===== =====

A reconciliation of income taxes computed by applying the federal income
tax rate to income before income taxes and the consolidated income tax expense
charged to operations follows:

YEAR ENDED DECEMBER 31
2001 2000 1999
------ ------ ------
(IN MILLIONS)

Tax at 35% ....................................... $73.0 $50.1 $36.3
Add (deduct):
Equity base tax ................................. (9.0) (5.6) --
Prior years taxes ............................... 2.1 -- (0.3)
Tax credits ..................................... (0.4) (0.6) (0.1)
Foreign taxes ................................... -- 0.6 0.1
Tax exempt investment income .................... (5.6) (0.7) (0.7)
Other ........................................... 2.1 -- (0.1)
----- ----- -----
Total income taxes ............................. $62.2 $43.8 $35.2
===== ===== =====

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5. INCOME TAXES (CONTINUED)

The significant components of the Company's deferred tax assets and
liabilities were as follows:

DECEMBER 31
2001 2000
------ -------
(IN MILLIONS)

DEFERRED TAX ASSETS:
Policy reserve adjustments ................................. $238.1 $110.0
Other postretirement benefits .............................. 20.1 23.3
Book over tax basis of investments ......................... 12.0 7.8
Interest ................................................... -- 7.5
Unrealized holding losses .................................. -- 1.4
------ ------
Total deferred tax assets ................................. 270.2 150.0
DEFERRED TAX LIABILITIES:
Deferred policy acquisition costs .......................... 373.7 199.1
Depreciation ............................................... 2.1 1.8
Basis in partnerships ...................................... 0.6 0.4
Market discount on bonds ................................... 1.2 0.6
Lease income ............................................... 47.0 35.4
Unrealized gains ........................................... 6.8 --
Other ...................................................... -- 9.5
------ ------
Total deferred tax liabilities ............................ 431.4 246.8
------ ------
Net deferred tax liabilities .............................. $161.2 $ 96.8
====== ======

The Company received an income tax refund of $32.4 million and made income tax
payments of $62.9 million and $13.2 million in 2001, 2000 and 1999,
respectively.

NOTE 6 - REINSURANCE

The effect of reinsurance on premiums written and earned was as follows:

2001 2000 1999
PREMIUMS PREMIUMS PREMIUMS
WRITTEN EARNED WRITTEN EARNED WRITTEN EARNED
------- ------ ------- ------ ------- ------
(IN MILLIONS)

Life Insurance:
Direct ........................ $ 82.0 $ 82.0 $34.1 $34.1 $12.1 $12.1
Ceded ......................... (21.9) (21.9) (5.5) (5.5) (3.2) (3.2)
------- ------ ----- ----- ----- -----
Net life insurance premiums .. $ 60.1 $ 60.1 $28.6 $28.6 $ 8.9 $ 8.9
====== ====== ===== ===== ===== =====

For the year ended December 31, 2001, 2000 and 1999, benefits to policyholders
under life ceded reinsurance contracts were $3.8 million, $3.0 million and $ --
million, respectively.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6. REINSURANCE (CONTINUED)

Reinsurance ceded contracts do not relieve the Company from its obligations
to policyholders. The Company remains liable to its policyholders for the
portion reinsured to the extent that any reinsurer does not meet its obligations
for reinsurance ceded to it under the reinsurance agreements. Failure of the
reinsurers to honor their obligations could result in losses to the Company;
consequently, estimates are established for amounts deemed or estimated to be
uncollectible. To minimize its exposure to significant losses from reinsurance
insolvencies, the Company evaluates the financial condition of its reinsurers
and monitors concentration of credit risk arising from similar characteristics
of the reinsurer.

NOTE 7. COMMITMENTS AND CONTINGENCIES

The Company has extended commitments to purchase fixed maturity
investments, and other invested assets and issue mortgage loans on real estate
totaling $25.3 million, $14.3 million and $16.2 million, respectively, at
December 31, 2001. If funded, loans related to real estate mortgages would be
fully collateralized by related properties. The Company monitors the
creditworthiness of borrowers under long-term bond commitments and requires
collateral as deemed necessary. The estimated fair values of the commitments
described above aggregate $57.1 million at December 31, 2001. The majority of
these commitments expire in 2002.

In the normal course of its business operations, the Company is involved
with litigation from time to time with claimants, beneficiaries and others, and
a number of litigation matters were pending as of December 31, 2001. 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 or results of operations of the Company.

During 1997, the Company entered into a court-approved settlement relating
to a class action lawsuit involving certain individual life insurance policies
sold from 1979 through 1996. In entering into the settlement, the Company
specifically denied any wrongdoing. The total reserve held in connection with
the settlement to provide for relief to class members and for legal and
administrative costs associated with the settlement amounted to $7.0 million and
$66.3 million at December 31, 2001 and 2000, respectively. Costs incurred
related to the settlement were $14.1 million and $66.0 million in 2001 and 1999,
respectively. No such costs were incurred in 2000. The estimated reserve is
based on a number of factors, including the estimated cost per claim and the
estimated costs to administer the claims.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. SHAREHOLDER'S EQUITY

(a) Common Stock

The Company was established in 1979 as a stock insurance company with
50,000 shares outstanding, wholly owned by its parent, John Hancock Life
Insurance Company. The Company has one class of capital stock, common stock ($50
par value, 50,000 shares authorized).

(b) Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive loss are as follows:

ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSSES)
-----------------
(IN MILLIONS)

Balance at January 1, 1999 .......................................... $ 12.3
Gross unrealized gains (losses) (net of deferred income
tax benefit of $18.0 million) ...................................... (34.2)
Reclassification adjustment for gains (losses), realized in net
income (net of tax expense of $1.7 million) ........................ (3.1)
Adjustment to deferred policy acquisition costs and
present value of future profits (net of deferred income
tax expense of $6.2 million) ....................................... 11.6
------
Net unrealized gains (losses) ....................................... (25.7)
------
Balance at December 31, 1999 ........................................ $(13.4)
======
Balance at January 1, 2000 .......................................... $(13.4)
Gross unrealized gains (losses) (net of deferred income
tax expense of $9.7 million) ....................................... 18.0
Reclassification adjustment for gains (losses), realized in
net income (net of tax expense of $1.6 million) .................... (2.9)
Adjustment to deferred policy acquisition costs and
present value of future profits (net of deferred income
tax benefit of $2.1 million) ....................................... (3.9)
------
Net unrealized gains (losses) ....................................... 11.2
------
Balance at December 31, 2000 ........................................ $ (2.2)
======
Balance at January 1, 2001 .......................................... $ (2.2)
Gross unrealized gains (losses) (net of deferred income
tax expense of $7.2 million) ....................................... 11.8
Reclassification adjustment for gains (losses), realized in
net income (net of tax benefit of $1.1 million) .................... 2.1
Adjustment to deferred policy acquisition costs and
present value of future profits (net of deferred income
tax benefit of $3.2 million) ....................................... (6.0)
------
Net unrealized gains (losses) ....................................... 7.9
Change in accounting principle ...................................... 7.2
------
Balance at December 31, 2001 ........................................ $ 12.9
======

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. SHAREHOLDER'S EQUITY (CONTINUED)

Net unrealized investment gains (losses), included in the consolidated
balance sheet as a component of shareholder's equity, are summarized as follows:

2001 2000 1999
----- ----- -----
(IN MILLIONS)
Balance, end of year comprises:
Unrealized investment gains (losses) on:
Fixed maturities ................................ $20.6 ($7.0) ($28.7)
Equity investments .............................. 1.0 1.0 (1.4)
Derivatives and other ........................... 5.2 0.3 1.3
----- ---- -----
Total ............................................. 26.8 (5.7) (28.8)
Amounts of unrealized investment (gains) losses
attributable to:
Deferred policy acquisition cost and present
value of future profits ........................ (7.1) 2.1 8.1
Deferred federal income taxes ................... (6.8) 1.4 7.3
----- ---- -----
Total ............................................. (13.9) 3.5 15.4
----- ---- -----
Net unrealized investment gains ................... $12.9 ($2.2) ($13.4)
===== ==== =====

Prior to 2001, the Commissioner had provided the Company approval to
recognize as an admitted asset the pension plan prepaid expense in accordance
with the requirements of SFAS No. 87, "Employers' Accounting for Pensions."
Beginning in 2001, the Commissioner has provided the Company with approval to
phase-in over a three-year period the impact of implementing the material
provisions of statutory SSAP No. 8, "Pensions." The Company's pension plan
prepaid expense recorded for statutory purposes amounted to $64.3 million, $55.6
million and $42.3 million at December 31, 2001, 2000 and 1999 respectively.
Statutory net income is not impacted by this permitted practice.

Statutory net income and surplus include the accounts of the Company and
its wholly-owned subsidiary, Investors Partners Life Insurance Company.

2001 2000 1999
---- ---- ----
(IN MILLIONS)
Statutory net income ............................... $ 13.1 $ 26.6 $ 77.5
Statutory surplus .................................. 647.0 527.2 468.8

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. SHAREHOLDER'S EQUITY (CONTINUED)

Massachusetts has enacted laws governing the payment of dividends by
insurers. Under Massachusetts insurance law, no insurer may pay any shareholder
dividends from any source other than statutory unassigned funds without the
prior approval of Massachusetts Commissioner of Insurance. Massachusetts law
also limits the dividends an insurer may pay in any twelve month period, without
the prior permission of the Commonwealth of Massachusetts Insurance
Commissioner, to the greater of (i) 10% of its statutory policyholders' surplus
as of the preceding December 31 or (ii) the individual company's statutory net
gain from operations for the preceding calendar year, if such insurer is a life
company.

NOTE 9. SEGMENT INFORMATION

PROTECTION SEGMENT. Offers a variety of individual life insurance,
including participating whole life, term life, universal life and variable life
insurance. Products are distributed through multiple distribution channels,
including insurance agents and brokers and alternative distribution channels
that include banks, financial planners, direct marketing and the Internet.

ASSET GATHERING SEGMENT. Offers individual variable annuities. This segment
distributes its products through distribution channels including insurance
agents and brokers affiliated with the Company, securities brokerage firms,
financial planners, and banks.

The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. Allocations of net investment
income are based on the amount of assets allocated to each segment. Other costs
and operating expenses are allocated to each segment based on a review of the
nature of such costs, cost allocations utilizing time studies, and other
relevant allocation methodologies.

Amounts reported as segment adjustments in the tables below primarily
relate to: (i) certain net realized investment and other gains (losses), net of
related amortization adjustment for deferred policy acquisition costs; (ii)
benefits to policyholders and expenses incurred relating to the settlement of a
class action lawsuit against the Company involving certain individual life
insurance policies sold from 1979 through 1996; (iii) restructuring costs
related to our distribution systems and retail operations; (iv) the surplus tax
on mutual life insurance companies that was allocated by John Hancock to the
Company; (v) a charge for certain one time costs associated with John Hancock's
demutualization process; and (vi) cumulative effect of an accounting change.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9. SEGMENT INFORMATION (CONTINUED)

The following table summarizes selected financial information by segment
for the year ended or as of December 31 and reconciles segment revenues and
segment after-tax operating income to amounts reported in the consolidated
statements of income:

ASSET
PROTECTION GATHERING CONSOLIDATED
---------- --------- ------------
(IN MILLIONS)

YEAR ENDED DECEMBER 31, 2001
REVENUES:
Segment revenues ...................... $ 614.3 $ 62.2 $ 676.5
Net realized investment and other
gains (losses) ....................... (9.0) -- (9.0)
-------- -------- ---------
Revenues .............................. $ 605.3 $ 62.2 $ 667.5
======== ======== =========
Net investment income ................ $ 229.2 $ (2.2) $ 227.0
NET INCOME:
Segment after-tax operating income .... $ 130.0 $ 22.2 $ 152.2
Net realized investment and other
gains (losses) ....................... (5.6) -- (5.6)
Surplus tax ........................... 9.1 -- 9.1
Class action lawsuit .................. (9.2) -- (9.2)
Cumulative effect of accounting
change, net of tax ................... (1.6) -- (1.6)
-------- -------- ---------
Net income ............................ $ 122.7 $ 22.2 $ 144.9
======== ======== =========
SUPPLEMENTAL INFORMATION:
Equity in net income of investees
accounted for by the equity method ... $ 2.7 $ -- $ 2.7
Amortization of deferred policy
acquisition costs .................... 46.6 20.5 67.1
Income tax expense .................... 54.8 7.4 62.2
Segment assets ........................ $9,995.5 $1,717.7 $11,713.2
NET REALIZED INVESTMENT AND OTHER GAINS
(LOSSES) DATA:
Net realized investment and other
gains (losses) ....................... $ (10.5) -- $ (10.5)
Less amortization of deferred policy
acquisition costs related to net
realized investment and other gains
(losses) ............................. 1.5 -- 1.5
-------- -------- ---------
Net realized investment and other gains
(losses), net of related amortization
of deferred policy acquisition costs -
per consolidated financial
statements ........................... (9.0) -- (9.0)
Less income tax effect ................ 3.4 -- 3.4
-------- -------- ---------
Net realized investment and other gains
(losses), net-after-tax adjustment
made to calculate segment operating
income ............................... $ (5.6) -- $ (5.6)
======== ======== =========

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9. SEGMENT INFORMATION (CONTINUED)

ASSET
PROTECTION GATHERING CONSOLIDATED
---------- --------- ------------
(IN MILLIONS)

YEAR ENDED DECEMBER 31, 2000
REVENUES:
Segment revenues ...................... $ 530.8 $ 48.5 $ 579.3
Net realized investment and other
gains (losses), net .................. (10.6) -- (10.6)
-------- -------- ---------
Revenues ........................ $ 520.2 $ 48.5 $ 568.7
======== ======== =========
Net investment income .......... $ 215.9 $ (2.5) $ 213.4
NET INCOME:
Segment after-tax operating
income ............................... 96.0 6.3 102.3
Net realized investment and other
gains (losses), net .................. (6.8) -- (6.8)
Surplus tax ........................... 5.4 0.2 5.6
Other demutualization related
costs ................................ (0.5) (0.1) (0.6)
Restructuring charges ................. (1.1) -- (1.1)
-------- -------- ---------
Net income ............................ $ 93.0 $ 6.4 $ 99.4
======== ======== =========
SUPPLEMENTAL INFORMATION:
Equity in net income of investees
accounted for by the equity method ... $ 1.3 $ -- $ 1.3
Amortization of deferred policy
acquisition costs .................... 17.6 16.4 34.0
Income tax expense .................... 40.7 3.1 43.8
Segment assets ........................ $9,326.9 $2,867.8 $12,194.7
NET REALIZED INVESTMENT AND OTHER
GAINS (LOSSES) DATA:
Net realized investment and other
losses ............................... $ (14.4) -- $ (14.4)
Less amortization of deferred policy
acquisition costs related to net
realized investment and other gains
(losses) ............................. 3.8 -- 3.8
-------- -------- ---------
Net realized investment and other gains
(losses), net of related amortization
of deferred policy acquisition costs -
per consolidated financial
statements ........................... (10.6) -- (10.6)
Less income tax effect ................ 3.8 -- 3.8
-------- -------- ---------
Net realized investment and other
gains (losses), net-after-tax
adjustment made to calculate
segment operating income ............. $ (6.8) -- $ (6.8)
======== ======== =========

100

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9. SEGMENT INFORMATION (CONTINUED)

ASSET
PROTECTION GATHERING CONSOLIDATED
---------- --------- ------------
(IN MILLIONS)

YEAR ENDED DECEMBER 31, 1999
REVENUES:
Segment revenues ...................... $ 488.0 $ 37.2 $ 525.2
Net realized investment and other
gains (losses), net .................. (4.8) -- (4.8)
-------- -------- ---------
Revenues .............................. $ 483.2 $ 37.2 $ 520.4
======== ======== =========
Net investment income ................ $ 178.1 $ (3.5) $ 174.6
NET INCOME:
Segment after-tax operating income .... 108.0 6.8 114.8
Net realized investment and other
gains (losses), net .................. (3.1) -- (3.1)
Class action lawsuit .................. (42.9) -- (42.9)
Other demutualization related costs ... (0.3) (0.1) (0.4)
-------- -------- ---------
Net income ............................ $ 61.7 $ 6.7 $ 68.4
======== ======== =========
SUPPLEMENTAL INFORMATION:
Equity in net income of investees
accounted for by the equity method ... $ (0.1) $ -- $ (0.1)
Amortization of deferred policy
acquisition costs .................... 4.6 8.5 13.1
Income tax expense .................... 31.8 3.4 35.2
Segment assets ........................ $9,104.6 $2,869.6 $11,974.2
NET REALIZED INVESTMENT AND OTHER GAINS
(LOSSES) DATA:
Net realized investment and other
gains (losses) ....................... $ (5.3) -- $ (5.3)
Less amortization of deferred policy
acquisition costs related to net
realized investment gains (losses) ... 0.5 -- 0.5
-------- -------- ---------
Net realized investment and other gains
(losses), net of related amortization
of deferred policy acquisition costs - per
consolidated financial statements .... (4.8) -- (4.8)
Less income tax effect ................ 1.7 -- 1.7
-------- -------- ---------
Net realized investment and other
gains (losses), net-after-tax
adjustment made to calculate
segment operating income ............. $ (3.1) -- $ (3.1)
======== ======== =========

The Company operates only in the United States. The Company has no
reportable major customers and revenues are attributed to countries based on the
location of customers.

101

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company to determine
the fair values of financial instruments:

The fair value for mortgage loans on real estate 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. Fair values for impaired mortgage loans are measured
based either on the present value of expected future cash flows discounted at
the loan's effective interest rate or the fair value of the underlying
collateral for loans that are collateral dependent.

The carrying amount in the balance sheet for policy loans, short-term
investments and cash and cash equivalents approximates their respective fair
values.

The fair value for fixed-rate deferred annuities is the cash surrender
value, which represents the account value less applicable surrender charges.
Fair values for immediate annuities without life contingencies are estimated
based on discounted cash flow calculations using current market rates.

The Company's derivatives include futures contracts, interest rate swap,
cap and floor agreements, currency rate swap agreements and equity collar
agreements. Fair values for these contracts are based on current settlement
values. These values are based on quoted market prices for the financial futures
contracts and brokerage quotes that utilize pricing models or formulas using
current assumptions for all swaps and other agreements.

The fair value for commitments approximates the amount of the initial
commitment.

102

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

The following table presents the carrying amounts and fair values of the
Company's financial instruments:

DECEMBER 31 DECEMBER 31
2001 2000
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-------- -------- -------- --------
(IN MILLIONS) (IN MILLIONS)

103

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE I - SUMMARY OF INVESTMENTS --
OTHER THAN INVESTMENTS IN RELATED PARTIES
AS OF DECEMBER 31, 2001
(IN MILLIONS OF DOLLARS)

COLUMN A COLUMN B COLUMN C COLUMN D

AMOUNT AT WHICH
SHOWN IN THE
CONSOLIDATED
BALANCE
TYPE OF INVESTMENT COST/(2)/ VALUE SHEET
---------- -------- ------------------

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

104

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE I - SUMMARY OF INVESTMENTS --
OTHER THAN INVESTMENTS IN RELATED PARTIES (CONTINUED)
AS OF DECEMBER 31, 2001
(IN MILLIONS OF DOLLARS)

COLUMN A COLUMN B COLUMN C COLUMN D
AMOUNT AT WHICH
SHOWN IN THE
CONSOLIDATED
BALANCE
TYPE OF INVESTMENT COST /(2)/ VALUE SHEET
---------- -------- -----------------

Equity securities, trading:
Common stocks:
Public utilities -- -- --
Banks, trust and insurance companies -- -- --
Industrial, miscellaneous and all other -- -- --
Non-redeemable preferred stock -- -- --
-------- -------- --------
Total equity securities, trading -- -- --
-------- -------- --------
Mortgage loans on real estate, net /(1)/ $ 586.4 xxxx $ 580.9
Real estate, net:
Investment properties /(1)/ 21.4 xxxx 20.6
Acquired in satisfaction of debt/(1)/ -- xxxx --
Policy loans 352.0 xxxx 352.0
Other long-term investments /(2)/ 39.6 xxxx 39.6
Short-term investments -- xxxx --
-------- -------- --------
Total investments $3,487.1 $2,507.7 $3,502.4
======== ======== ========

(2) Difference from Column B is primarily due to operating gains (losses) of
investments in limited partnerships.

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

105

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION
AS OF DECEMBER 31, 2001, 2000 AND 1999 AND FOR THE YEAR THEN ENDED
(IN MILLIONS OF DOLLARS)

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

106

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION (CONTINUED)
AS OF DECEMBER 31, 2001, 2000 AND 1999 AND FOR THE YEAR THEN ENDED
(IN MILLIONS OF DOLLARS)

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

107

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY AND SUBSIDIARY

SCHEDULE IV - REINSURANCE
AS OF DECEMBER 31, 2001
(IN MILLIONS OF DOLLARS)

ASSUMED PERCENTAGE
CEDED TO FROM OF AMOUNT
GROSS OTHER OTHER NET ASSUMED TO
AMOUNT COMPANIES COMPANIES AMOUNT NET
---------- --------- --------- --------- ------------

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

108

APPENDIX A - DETAILS ABOUT OUR GUARANTEE PERIODS

INVESTMENTS THAT SUPPORT OUR GUARANTEE PERIODS

We invest the non-unitized separate account assets, according to our
detailed investment policies and guidelines, in fixed income obligations,
including:

. corporate bonds,

. mortgages,

. mortgage-backed and asset-backed securities, and

. government and agency issues.

We invest primarily in domestic investment-grade securities. In addition,
we use derivative contracts only for hedging purposes, to reduce ordinary
business risks associated with changes in interest rates, and not for
speculating on future changes in the financial markets. Notwithstanding the
foregoing, we are not obligated to invest according to any particular strategy.

GUARANTEED INTEREST RATES

We declare the guaranteed rates from time to time as market conditions and
other factors dictate. We advise you of the guaranteed rate for a selected
guarantee period at the time we:

. receive your premium payment,

. effectuate your transfer, or

. renew your guarantee period

109

COMPUTATION OF MARKET VALUE ADJUSTMENT

( 1 + g ) /n/
(-------------) -- -1
(1 + c + 0.005) /12/

where,

. G is the guaranteed rate in effect for the current guarantee period.

. C is the current guaranteed rate in effect for new guarantee periods
with duration equal to the number of years remaining in the current
guarantee period (rounded to the nearest whole number of years). If we
are not currently offering such a guarantee period, we will declare a
guarantee rate, solely for this purpose, consistent with interest
rates currently available.

. N is the number of complete months from the date of withdrawal to the
end of the current guarantee period. (If less than one complete month
remains, N equals one unless the withdrawal is made on the last day of
the guarantee period, in which case no adjustment applies.)

SAMPLE CALCULATION 1: POSITIVE ADJUSTMENT

- ------------------------------------------------------------------------------------------

Amount withdrawn or transferred $10,000
- ------------------------------------------------------------------------------------------
Guarantee period 7 years
- ------------------------------------------------------------------------------------------
Time of withdrawal or transfer beginning of 3rd year of guaranteed period
- ------------------------------------------------------------------------------------------
Guaranteed rate (g) 8%
- ------------------------------------------------------------------------------------------
Guaranteed rate for new 5 year guarantee (c) 7%
- ------------------------------------------------------------------------------------------
Remaining guarantee period (n) 60 months
- ------------------------------------------------------------------------------------------

Market value adjustment:

[( 1+0.08 )] /60/ ]
10,000 x [(------------)] -- -1] = 234.73
[(1+0.07+0.005)] /12/ ]

Amount withdrawn or transferred (adjusted for market value adjustment):
$10,000 + $234.73 = $10,234.73

110

SAMPLE CALCULATION 2: NEGATIVE ADJUSTMENT

- -------------------------------------------------------------------------------------

Amount withdrawn or transferred $10,000
- -------------------------------------------------------------------------------------
Guarantee period 7 years
- -------------------------------------------------------------------------------------
Time of withdrawal or transfer beginning of 3rd year of guaranteed period
- -------------------------------------------------------------------------------------
Guaranteed rate (g) 8%
- -------------------------------------------------------------------------------------
Guaranteed rate for new 5 year 9%
guarantee (c)
- -------------------------------------------------------------------------------------
Remaining guarantee period(n) 60 months
- -------------------------------------------------------------------------------------

Market value adjustment:
[( 1 + 0.08 ) /60/ ]
10,000 x [(----------------) -- - 1] = 666.42
[(1 + 0.09 + 0.005) /12/ ]

Amount withdrawn or transferred (adjusted for market value adjustment): $10,000
- - 666.42 = $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 guaranteed period
- -------------------------------------------------------------------------------------
Guaranteed rate (g) 8%
- -------------------------------------------------------------------------------------
Guaranteed rate for new 5 year 7.75%
guarantee (c)
- -------------------------------------------------------------------------------------
Remaining guarantee period(n) 60 months
- -------------------------------------------------------------------------------------

Market value adjustment:

[( 1 + 0.08 ) /60/ ]
10,000 x [(------------------) -- - 1] = 114.94
[(1 + 0.0775 + 0.005) /12/ ]

Amount withdrawn or transferred (adjusted for market value adjustment): $10,000
- - 114.94 = $9,885.06

-----------------------------------------------------------------------------

*All interest rates shown have been arbitrarily chosen for purposes of these
examples. In most cases they will bear little or no relation to the rates we are
actually guaranteeing at any time.

111

APPENDIX B - EXAMPLE OF WITHDRAWAL CHARGE CALCULATION

ASSUME THE FOLLOWING FACTS:
On January 1, 2001, you make a $5,000 initial premium payment and we issue
you a contract.
On January 1, 2002, you make a $1,000 premium payment
On January 1, 2003, you make a $1,000 premium payment.
On January 1, 2004, the total value of your contract is $7,500 because of
favorable investment earnings.

Now assume you make a partial withdrawal of $7,000 (no tax withholding) on
January 2, 2004. In this case, assuming no prior withdrawals, we would
deduct a CDSL of $289.36. We withdraw a total of $7,289.36 from your
contract.

$7,000.00 -- withdrawal request payable to you
+ 289.36 -- withdrawal charge payable to us
----------
$7,289.36 -- total amount withdrawn from your contract

HERE IS HOW WE DETERMINE THE WITHDRAWAL CHARGE:
1. We FIRST distribute to you the $500 profit you have in your contract
($7,500 total contract value less $7,000 of premiums you have paid) under
the free withdrawal provision.

2. Next we repay to you the $5,000 premium you paid in 2001 Under the free
withdrawal provision, $200 of that premium is charge free ($7,000 total
premiums paid x 10%; less the $500 free withdrawal in the same contract
year described in paragraph 1 above). We assess a withdrawal charge on the
remaining balance of $4,800 from your 2001 premium. Because you made that
premium payment 3 years ago, the withdrawal charge percentage is 4%. We
deduct the resulting $192 from your contract to cover the withdrawal charge
on your 2001 premium payment. We pay the remainder of $4,608 to you as a
part of your withdrawal request.

$5,000
- 200 -- free withdrawal amount (payable to you)
------
$4,800
x .04
------
$ 192 -- withdrawal charge on 2001 premium payment (payable to us)

$4,800
- 192
------
$4,608 -- part of withdrawal request payable to you

3. We NEXT deem the entire amount of your 2002 PREMIUM PAYMENT to be withdrawn
and we assess a withdrawal charge on that $1,000 amount. Because you made
this premium payment 2 years ago, the withdrawal charge percentage is 5%.
We deduct the resulting $50 from your contract to cover the withdrawal
charge on your 2002 premium payment. We pay the remainder of $950 to you as
a part of your withdrawal request.

$1,000
x .05
------
$50 -- withdrawal charge on 2002 premium payment (payable to us)

$1,000
- 50
------
$950 -- part of withdrawal request payable to you

4. We NEXT determine what additional amount we need to withdraw to provide you
with the total $7,000 you requested, after the deduction of the withdrawal
charge on that additional amount. We have already allocated $500 from
profits under paragraph 1 above, $200 of additional free withdrawal amount
under

112

paragraph 2, $4,608 from your 2001 premium payment under paragraph 2, and
$950 from your 2003 premium payment under paragraph 3. Therefore, $742 is
needed to reach $7,000.

$7,000 -- total withdrawal amount requested
- 500 -- profit
- 200 -- free withdrawal amount
-4,608 -- payment deemed from initial premium payment
- 950 -- payment deemed from 2002 premium payment
-----
$ 742 -- additional payment to you needed to reach $7,000

We know that the withdrawal charge percentage for this remaining amount is 6%,
because you are already deemed to have withdrawn all premiums you paid
prior to 2003. We use the following formula to determine how much more we
need to withdraw:

Remainder due to you = Withdrawal needed - [applicable withdrawal charge
percentage times withdrawal needed]

$742 = x - [.06x]
$742 = .94x
$742/.94 = x
$789.36 = x

$789.36 -- deemed withdrawn from 2003 premium payment
- -$742.00 -- part of withdrawal request payable to you
- --------
$ 47.36 -- withdrawal charge on 2003 premium deemed withdrawn (payable
to us)

113

APPENDIX C - EXAMPLES OF EARNINGS ENHANCEMENT DEATH BENEFIT
CALCULATION

EXAMPLE 1 - EARNINGS ENHANCEMENT DEATH BENEFIT WITH STANDARD DEATH BENEFIT, NO
ADJUSTMENTS FOR WITHDRAWALS OR ADDITIONAL PREMIUM PAYMENTS

Assume:

. You elect the earnings enhancement death benefit rider (but not the enhanced
death benefit rider) when you purchase your contract,

. At the time of purchase, you and the annuitant are each under age 70 and you
pay an initial premium of $100,000,

. You allocate the premium to a variable investment option, and make no
transfers of contract value to other investment options,

. We determine the death benefit before the Maturity Date, in the fourth year
of your contract on a day when the total value of your contract is $180,000.

Calculation of Standard Death Benefit

Calculation of Earnings Enhancement Amount

Calculation of Net Premiums and Adjusted Net Premiums - To determine "Net
Premiums," we reduce the premiums you paid ($100,000) by the amount of any
withdrawals in excess of earnings ($0, with no adjustment for withdrawal
charges). In this example, the Net Premiums is $100,000. To determine "Adjusted
Net Premiums," we reduce the Net Premiums ($100,000) by any premiums you made,
other than the initial premium, during the 12 months before we calculated the
death benefit ($0). In this example, the "Adjusted Net Premiums" is $100,000.

Calculation of Maximum Benefit Amount - The maximum benefit amount under
the earnings enhancement death benefit rider in this example is 80% of the
Adjusted Net Premiums ($100,000), or $80,000.

The earnings enhancement amount is 40% of the difference between the
standard death benefit ($180,000) and your Net Premiums ($100,000), up to the
maximum benefit amount. In this example, 40% of the difference is $32,000, which
is less than the maximum benefit amount ($80,000). The earnings enhancement
amount is therefor $32,000.

The total Death Benefit in this example is the standard death benefit
($180,000) plus the earnings enhancement amount ($32,000), or $212,000.

EXAMPLE 2 - EARNINGS ENHANCEMENT DEATH BENEFIT WITH ENHANCED DEATH BENEFIT,
ADJUSTED FOR WITHDRAWAL AND ADDITIONAL PREMIUM

Assume:

. You elect the earnings enhancement death benefit rider and the enhanced
death benefit rider when you purchase your contract,

114

. At the time of purchase, you are over age 70 and you pay an initial premium
of $100,000,

. You allocate the premium to a variable investment option, and make no
transfers of contract value to other investment options,

. On the seventh anniversary of your contract, your total value in the
contract is $175,000, which is the highest value on any anniversary date

. On the day after the seventh anniversary of your contract, you make a
withdrawal of $80,000,

. On the eighth anniversary of your contract, the total value of your contract
is $110,000, and you make an additional premium payment of $10,000 at the end
of the eighth year of your contract

. We determine the death benefit before the Maturity Date in the middle of the
ninth year of your contract, on a day when the total value of your contract
is $120,000.

Calculation of Enhanced Death Benefit

In this example, the enhanced death benefit is the highest of an
accumulated premium "roll-up" amount, a "highest anniversary value" amount and
the value of your contract on the date the death benefit is determined.

Calculation of Earnings Enhancement Amount

Calculation of Net Premiums and Adjusted Net Premiums - To determine "Net
Premiums," we reduce the premiums you paid by the amount of any withdrawals in
excess of earnings (including withdrawal charges). In this example, you withdrew
$80,000 at a time when your earnings were $75,000 and no withdrawal charges were
imposed. The amount withdrawn in excess of earnings is therefore $5,000. Net
Premiums is the amount of premiums paid ($110,000) less amounts withdrawn in
excess of earnings ($5,000), or $105,000. To determine "Adjusted Net Premiums,"
we reduce the Net Premiums ($105,000) by any premiums you made during the 12
months before we calculated the death benefit ($10,000). In this example, the
"Adjusted Net Premiums" is $95,000.

Calculation of Maximum Benefit Amount - The maximum benefit amount under the
earnings enhancement death benefit rider in this example is 50% of your Adjusted
Net Premiums ($95,000), or $47,500.

The total Death Benefit in this example is the enhanced death benefit
($120,000) plus the earnings enhancement amount ($3,750), or $123,750.

115

PROSPECTUS DATED MAY 1, 2002
- --------------------------------------------------------------------------------
PATRIOT VARIABLE ANNUITY
- --------------------------------------------------------------------------------

a deferred combination fixed and variable annuity contract issued by
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY ("JHVLICO")
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT JF

The contract enables you to earn fixed rates of interest that we guarantee
for stated periods of time ("guaranteed periods") and investment-based
returns in the following variable investment options:

- -------------------------------------------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTION MANAGED BY
- -------------------------- ----------

Equity Index ....................................... SSgA Funds Management, Inc.
Large Cap Value .................................... T. Rowe Price Associates, Inc.
Large Cap Growth ................................... Independence Investment LLC
Growth & Income..................................... Independence Investment LLC and Putnam Investment
Management LLC
Fundamental Value .................................. Wellington Management Company, LLP
Multi Cap Growth ................................... Janus Capital Management LLC
Fundamental Growth ................................. Putnam Investment Management LLC
Small/Mid Cap CORE/SM/ ............................. Goldman Sachs Asset Management
Small Cap Equity ................................... Capital Guardian Trust Company
Small Cap Growth ................................... John Hancock Advisers, LLC
V.A. Relative Value ................................ John Hancock Advisers, LLC
V.A. Sovereign Investors ........................... John Hancock Advisers, LLC
International Equity Index ......................... Independence Investment LLC
International Opportunities ........................ T. Rowe Price International, Inc.
Emerging Markets Equity ............................ Morgan Stanley Investment Management Inc.
Real Estate Equity ................................. Independence Investment LLC and Morgan Stanley Investment
Management Inc.
V.A. Financial Industries .......................... John Hancock Advisers, LLC
Managed ............................................ Independence Investment LLC and Capital Guardian Trust Company
Global Balanced .................................... Capital Guardian Trust Company
Short-Term Bond .................................... Independence Investment LLC
Bond Index ......................................... Mellon Bond Associates, LLP
Active Bond ........................................ John Hancock Advisers, LLC
V.A. Strategic Income .............................. John Hancock Advisers, LLC
High Yield Bond .................................... Wellington Management Company, LLP
Global Bond ........................................ Capital Guardian Trust Company
Money Market ....................................... Wellington Management Company, LLP
- -------------------------------------------------------------------------------------------------------------------

The variable investment options shown on page 1 are those available as of
the date of this prospectus. We may add, modify or delete variable investment
options in the future.

When you select one or more of these variable investment options, we invest
your money in the corresponding investment option(s) of one or more of the
following: the John Hancock Variable Series Trust I and the John Hancock
Declaration Trust (together, the " Series Funds"). In this prospectus, the
investment options of the Series Funds are referred to as funds. In the
prospectuses for the Series Funds, the investment options may also be referred
to as "funds," "portfolios" or "series."

Each Series Fund is a so-called "series" type mutual fund registered with
the Securities and Exchange Commission ("SEC"). The investment results of each
variable investment option you select will depend on those of the corresponding
fund of one of the Series Funds. Each of the funds is separately managed and has
its own investment objective and strategies. Attached at the end of this
prospectus is a prospectus for each Series Fund. The Series Fund prospectuses
contain detailed information about each available fund. Be sure to read those
prospectuses before selecting any of the variable investment options shown on
page 1.

For amounts you don't wish to invest in a variable investment option, you
can choose among several guarantee periods, each of which has its own guaranteed
interest rate and expiration date. If you remove money from a guarantee period
prior to its expiration, however, we may increase or decrease your contract's
value to compensate for changes in interest rates that may have occurred
subsequent to the beginning of that guarantee period. This is known as a "market
value adjustment."

JOHN HANCOCK ANNUITY SERVICING OFFICE
-------------------------------------

Mail Delivery Phone:
------------- ------
1-800-824-0335
529 Main Street (X-4)
Charlestown, MA 02129 Fax:
----
1-617-886-3070

********************************************************************************

Please note that the SEC has not approved or disapproved these securities,
or determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.

GUIDE TO THIS PROSPECTUS

This prospectus contains information that you should know before you buy a
contract or exercise any of your rights under the contract. We have arranged the
prospectus in the following way:

. The first section contains an "INDEX OF KEY WORDS."

. Behind the index is the "FEE TABLE." This section highlights the
various fees and expenses you will pay directly or indirectly, if
you purchase a contract.

. The next section is called "BASIC INFORMATION." It contains basic

information about the contract presented in a question and answer
format. You should read the Basic Information before reading any
other section of the prospectus.

. Behind the Basic Information is "ADDITIONAL INFORMATION." This
section gives more details about the contract. It generally does not
repeat information contained in the Basic Information.

. "CONDENSED FINANCIAL INFORMATION" follows the "Additional
Information." This gives some basic information about the size and
past performance of the variable investment options.

The Series Funds' prospectuses are attached at the end of this prospectus. You
should save these prospectuses for future reference.

- --------------------------------------------------------------------------------
IMPORTANT NOTICES

We've also filed with the SEC a "Statement of Additional Information,"
dated May 1, 2002. This Statement contains detailed information not included in
the prospectus. Although a separate document from this prospectus, the Statement
of Additional Information has the same legal effect as if it were a part of this
prospectus. We will provide you with a free copy of the Statement upon your
request. To give you an idea what's in the Statement, we have included a copy of
the Statement's table of contents on page 60.

INDEX OF KEY WORDS

We define or explain each of the following key words used in this prospectus on
the pages shown below:

KEY WORD PAGE

Accumulation units............................................................27
Annuitant.....................................................................13
Annuity payments..............................................................15
Annuity period................................................................15
Contract year.................................................................13
Date of issue.................................................................13
Date of maturity..............................................................27
Free withdrawal amount........................................................19
Funds..........................................................................2
Guarantee periods..............................................................2
Investment options............................................................17
Market value adjustment.......................................................26
Premium payments..............................................................13
Surrender.....................................................................19
Surrender value...............................................................21
Variable investment options................................................cover
Withdrawal....................................................................20
Withdrawal charge.............................................................20

FEE TABLE

The following fee table shows the various fees and expenses that you will
pay, either directly or indirectly, if you purchase a contract. The table does
not include charges for premium taxes (which may vary by state) or fees for any
optional benefit riders that you select.

CONTRACTOWNER TRANSACTION EXPENSES AND ANNUAL CONTRACT FEE

. Maximum Withdrawal Charge (as % of amount withdrawn) 6%

. Annual Contract Fee (applies only to contracts of less than
$10,000) $30

SEPARATE ACCOUNT ANNUAL EXPENSES (AS A % OF THE AVERAGE TOTAL VALUE OF THE
CONTRACT)

Initial Premium Payment less
than $250,000
--------------------------------

. Mortality and Expense Risk Charge 0.90%
. Administrative Services Charge 0.35%
-----
. Total Annual Contract Charge 1.25%

Initial Premium Payment
$250,000 or more
--------------------------------

. Mortality and Expense Risk Charge 0.90%
. Administrative Services Charge 0.10%
-----
. Total Annual Contract Charge 1.00%

These annual contract expenses don't apply to amounts held in the guarantee
periods.

ANNUAL FUND EXPENSES (BASED ON % OF AVERAGE NET ASSETS)

---------------
Total Fund
Investment Distribution and Other Operating Operating
Management Service Expenses With Expenses With
Fund Name Fee (12b-1) Fees Reimbursement Reimbursement
- --------- ---------- ---------------- --------------- ---------------

JOHN HANCOCK VARIABLE SERIES TRUST I (NOTE 1):
Equity Index .............................................. 0.13% N/A 0.07% 0.20%
Large Cap Value ........................................... 0.75% N/A 0.08% 0.83%
Large Cap Growth .......................................... 0.38% N/A 0.03% 0.41%
Growth & Income ........................................... 0.67% N/A 0.05% 0.72%
Fundamental Value * ....................................... 0.89% N/A 0.10% 0.99%
Multi Cap Growth* ......................................... 0.93% N/A 0.10% 1.03%
Fundamental Growth ........................................ 0.90% N/A 0.10% 1.00%
Small/Mid Cap CORE/SM/ .................................... 0.80% N/A 0.10% 0.90%
---------------

Total Fund
Operating
Expenses Absent
Fund Name Reimbursement
- --------- ---------------
JOHN HANCOCK VARIABLE SERIES TRUST I (NOTE 1):
Equity Index .............................................. 0.20%
Large Cap Value ........................................... 0.83%
Large Cap Growth .......................................... 0.41%
Growth & Income ........................................... 0.72%
Fundamental Value * ....................................... 1.20%
Multi Cap Growth* ......................................... 1.03%
Fundamental Growth ........................................ 1.19%
Small/Mid Cap CORE/SM/ .................................... 1.15%

-------------
Total Fund
Investment Distribution and Other Operating Operating
Management Service Expenses With Expenses With
Fund Name Fee (12b-1) Fees Reimbursement Reimbursement
- --------- ---------- ---------------- --------------- -------------

JOHN HANCOCK VARIABLE SERIES TRUST I - CONTINUED
(NOTE 1):
Small Cap Equity .......................................... 0.90% N/A 0.10% 1.00%
Small Cap Growth .......................................... 1.05% N/A 0.10% 1.15%
International Equity Index ................................ 0.17% N/A 0.10% 0.27%
International Opportunities ............................... 1.14% N/A 0.10% 1.24%
Emerging Markets Equity ................................... 1.52% N/A 0.10% 1.62%
Real Estate Equity ........................................ 1.00% N/A 0.07% 1.07%
Managed ................................................... 0.67% N/A 0.06% 0.73%
Global Balanced ........................................... 1.05% N/A 0.10% 1.15%
Short-Term Bond ........................................... 0.60% N/A 0.08% 0.68%
Bond Index ................................................ 0.15% N/A 0.09% 0.24%
Active Bond ............................................... 0.62% N/A 0.05% 0.67%
High Yield Bond ........................................... 0.80% N/A 0.10% 0.90%
Global Bond ............................................... 0.85% N/A 0.10% 0.95%
Money Market .............................................. 0.25% N/A 0.07% 0.32%

JOHN HANCOCK DECLARATION TRUST (NOTE 2):
V.A. Relative Value ....................................... 0.60% N/A 0.14% 0.74%
V.A. Sovereign Investors .................................. 0.60% N/A 0.10% 0.70%
V.A. Financial Industries ................................. 0.80% N/A 0.09% 0.89%
V.A. Strategic Income ..................................... 0.60% N/A 0.10% 0.70%
-------------

Total Fund
Operating
Expenses Absent
Fund Name Reimbursement
- --------- ---------------
JOHN HANCOCK VARIABLE SERIES TRUST I - CONTINUED
(NOTE 1):
Small Cap Equity .......................................... 1.02%
Small Cap Growth .......................................... 1.17%
International Equity Index ................................ 0.40%
International Opportunities ............................... 1.39%
Emerging Markets Equity ................................... 4.24%
Real Estate Equity ........................................ 1.07%
Managed ................................................... 0.73%
Global Balanced ........................................... 1.36%
Short-Term Bond ........................................... 0.68%
Bond Index ................................................ 0.24%
Active Bond ............................................... 0.67%
High Yield Bond ........................................... 1.00%
Global Bond ............................................... 0.95%
Money Market .............................................. 0.32%

JOHN HANCOCK DECLARATION TRUST (NOTE 2):
V.A. Relative Value ....................................... 0.74%
V.A. Sovereign Investors .................................. 0.70%
V.A. Financial Industries ................................. 0.89%
V.A. Strategic Income ..................................... 0.70%

NOTES TO ANNUAL FUND EXPENSES

(1) Under its current investment management agreements with the John Hancock
Variable Series Trust I, John Hancock Life Insurance Company reimburses a
fund when the fund's "other fund expenses" exceed 0.10% of the fund's
average daily net assets (0.00% for Equity Index). Percentages shown for
the Large Cap Value Fund are calculated as if the current management fee
schedule, which applies to this fund effective May 1, 2001, was in effect
for all of 2001. Percentages shown for the Multi Cap Growth, Small Cap
Growth, International Opportunities, Emerging Markets, Short-Term Bond and
High Yield Bond funds are calculated as if the current management fee
schedules, which apply to these funds effective October 1, 2001, were in
effect for all of 2001. "CORE/SM/" is a service mark of Goldman, Sachs &
Co.

* Fundamental Value was formerly "Large/Mid Cap Value" and Multi Cap Growth
was formerly "Mid Cap Growth."

EXAMPLES

The four examples on the following pages illustrate the current expenses
you would pay, directly or indirectly, on a $1,000 investment allocated to one
of the variable investment options, assuming a 5% annual return on assets.

Examples I and II assume you have purchased a contract with the optional
"stepped-up" death benefit rider, the optional accidental death benefit rider
and the optional nursing home waiver of withdrawal charge rider. We refer to
this contract as the "All Rider Contract."

Examples III and IV assume you have purchased a contract with no optional
benefit riders. We refer to this contract as the "No Rider Contract."

Example I If you "surrender" (turn in) your All Rider Contract at the end of the
- ---------
applicable time period, you would pay:

- -----------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS

- -----------------------------------------------------------------------------------------
Equity Index $74 $107 $142 $230
- -----------------------------------------------------------------------------------------
Large Cap Value $80 $126 $174 $293
- -----------------------------------------------------------------------------------------
Large Cap Growth $76 $113 $152 $251
- -----------------------------------------------------------------------------------------
Growth and Income $79 $122 $168 $283
- -----------------------------------------------------------------------------------------
Fundamental Value $82 $130 $182 $309
- -----------------------------------------------------------------------------------------
Multi Cap Growth $82 $132 $184 $313
- -----------------------------------------------------------------------------------------
Fundamental Growth $82 $131 $182 $310
- -----------------------------------------------------------------------------------------
Small/Mid Cap CORE/SM/ $81 $128 $177 $300
- -----------------------------------------------------------------------------------------
Small Cap Equity $82 $131 $182 $310
- -----------------------------------------------------------------------------------------
Small Cap Growth $84 $135 $189 $324
- -----------------------------------------------------------------------------------------
V.A. Sovereign Investors $79 $122 $167 $281
- -----------------------------------------------------------------------------------------
V.A. Relative Value $79 $123 $169 $285
- -----------------------------------------------------------------------------------------
International Equity Index $75 $109 $145 $237
- -----------------------------------------------------------------------------------------
International Opportunities $84 $138 $194 $333
- -----------------------------------------------------------------------------------------
Emerging Markets Equity $88 $149 $212 $368
- -----------------------------------------------------------------------------------------
Real Estate Equity $83 $133 $186 $317
- -----------------------------------------------------------------------------------------
V.A. Financial Industries $81 $127 $177 $299
- -----------------------------------------------------------------------------------------
Managed $79 $123 $169 $284
- -----------------------------------------------------------------------------------------
Global Balanced $84 $135 $189 $324
- -----------------------------------------------------------------------------------------
Short-Term Bond $79 $121 $166 $279
- -----------------------------------------------------------------------------------------
Bond Index $74 $108 $144 $234
- -----------------------------------------------------------------------------------------
Active Bond $79 $121 $166 $278
- -----------------------------------------------------------------------------------------
V.A. Strategic Income $79 $122 $167 $281
- -----------------------------------------------------------------------------------------
High Yield Bond $81 $128 $177 $300
- -----------------------------------------------------------------------------------------
Global Bond $82 $129 $180 $305
- -----------------------------------------------------------------------------------------
Money Market $75 $110 $148 $242
- -----------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS

- ----------------------------------------------------------------------------------------------------
Equity Index $20 $ 62 $106 $230
- ----------------------------------------------------------------------------------------------------
Large Cap Value $26 $ 81 $138 $293
- ----------------------------------------------------------------------------------------------------
Large Cap Growth $22 $ 68 $117 $251
- ----------------------------------------------------------------------------------------------------
Growth and Income $25 $ 78 $133 $283
- ----------------------------------------------------------------------------------------------------
Fundamental Value $28 $ 86 $146 $309
- ----------------------------------------------------------------------------------------------------
Multi Cap Growth $28 $ 87 $148 $313
- ----------------------------------------------------------------------------------------------------
Fundamental Growth $28 $ 86 $146 $310
- ----------------------------------------------------------------------------------------------------
Small/Mid Cap CORE/SM/ $27 $ 83 $141 $300
- ----------------------------------------------------------------------------------------------------
Small Cap Equity $28 $ 86 $146 $310
- ----------------------------------------------------------------------------------------------------
Small Cap Growth $30 $ 90 $154 $324
- ----------------------------------------------------------------------------------------------------
V.A. Sovereign Investors $25 $ 77 $132 $281
- ----------------------------------------------------------------------------------------------------
V.A. Relative Value $25 $ 78 $134 $285
- ----------------------------------------------------------------------------------------------------
International Equity Index $21 $ 64 $110 $237
- ----------------------------------------------------------------------------------------------------
International Opportunities $30 $ 93 $158 $333
- ----------------------------------------------------------------------------------------------------
Emerging Markets Equity $34 $104 $176 $368
- ----------------------------------------------------------------------------------------------------
Real Estate Equity $29 $ 88 $150 $317
- ----------------------------------------------------------------------------------------------------
V.A. Financial Industries $27 $ 83 $141 $299
- ----------------------------------------------------------------------------------------------------
Managed $25 $ 78 $133 $284
- ----------------------------------------------------------------------------------------------------
Global Balanced $30 $ 90 $154 $324
- ----------------------------------------------------------------------------------------------------
Short-Term Bond $25 $ 76 $131 $279
- ----------------------------------------------------------------------------------------------------
Bond Index $20 $ 63 $108 $234
- ----------------------------------------------------------------------------------------------------
Active Bond $25 $ 76 $130 $278
- ----------------------------------------------------------------------------------------------------
V.A. Strategic Income $25 $ 77 $132 $281
- ----------------------------------------------------------------------------------------------------
High Yield Bond $27 $ 83 $141 $300
- ----------------------------------------------------------------------------------------------------
Global Bond $28 $ 84 $144 $305
- ----------------------------------------------------------------------------------------------------
Money Market $21 $ 65 $112 $242
- ----------------------------------------------------------------------------------------------------

Example III If you "surrender" (turn in) your No Rider Contract at the end of
the applicable time period, you would pay:

- --------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Equity Index $69 $ 91 $116 $176
- --------------------------------------------------------------------------------
Large Cap Value $75 $110 $148 $243
- --------------------------------------------------------------------------------
Large Cap Growth $71 $ 98 $127 $199
- --------------------------------------------------------------------------------
Growth and Income $74 $107 $143 $232
- --------------------------------------------------------------------------------
Fundamental Value $77 $115 $157 $260
- --------------------------------------------------------------------------------
Multi Cap Growth $77 $117 $159 $264
- --------------------------------------------------------------------------------
Fundamental Growth $77 $116 $157 $261
- --------------------------------------------------------------------------------
Small/Mid Cap CORE/SM/ $76 $113 $152 $250
- --------------------------------------------------------------------------------
Small Cap Equity $77 $116 $157 $261
- --------------------------------------------------------------------------------
Small Cap Growth $79 $120 $165 $276
- --------------------------------------------------------------------------------
V.A. Sovereign Investors $74 $107 $142 $230
- --------------------------------------------------------------------------------
V.A. Relative Value $74 $108 $144 $234
- --------------------------------------------------------------------------------
International Equity Index $70 $ 93 $119 $183
- --------------------------------------------------------------------------------
International Opportunities $79 $123 $169 $285
- --------------------------------------------------------------------------------
Emerging Markets Equity $83 $134 $188 $321
- --------------------------------------------------------------------------------
Real Estate Equity $78 $118 $161 $268
- --------------------------------------------------------------------------------
V.A. Financial Industries $76 $112 $151 $249
- --------------------------------------------------------------------------------
Managed $74 $107 $143 $233
- --------------------------------------------------------------------------------
Global Balanced $79 $120 $165 $276
- --------------------------------------------------------------------------------
Short-Term Bond $74 $106 $141 $227
- --------------------------------------------------------------------------------
Bond Index $69 $ 92 $118 $180
- --------------------------------------------------------------------------------
Active Bond $74 $106 $140 $226
- --------------------------------------------------------------------------------
V.A. Strategic Income $74 $107 $142 $230
- --------------------------------------------------------------------------------
High Yield Bond $76 $113 $152 $250
- --------------------------------------------------------------------------------
Global Bond $77 $114 $155 $255
- --------------------------------------------------------------------------------
Money Market $70 $ 95 $122 $189
- --------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS

- ----------------------------------------------------------------------------------------------------
Equity Index $15 $46 $ 80 $176
- ----------------------------------------------------------------------------------------------------
Large Cap Value $21 $66 $113 $243
- ----------------------------------------------------------------------------------------------------
Large Cap Growth $17 $53 $ 91 $199
- ----------------------------------------------------------------------------------------------------
Growth and Income $20 $62 $107 $232
- ----------------------------------------------------------------------------------------------------
Fundamental Value $23 $71 $121 $260
- ----------------------------------------------------------------------------------------------------
Multi Cap Growth $23 $72 $123 $264
- ----------------------------------------------------------------------------------------------------
Fundamental Growth $23 $71 $122 $261
- ----------------------------------------------------------------------------------------------------
Small/Mid Cap CORE/SM/ $22 $68 $116 $250
- ----------------------------------------------------------------------------------------------------
Small Cap Equity $23 $71 $122 $261
- ----------------------------------------------------------------------------------------------------
Small Cap Growth $25 $75 $129 $276
- ----------------------------------------------------------------------------------------------------
V.A. Sovereign Investors $20 $62 $106 $230
- ----------------------------------------------------------------------------------------------------
V.A. Relative Value $20 $63 $108 $234
- ----------------------------------------------------------------------------------------------------
International Equity Index $16 $49 $ 84 $183
- ----------------------------------------------------------------------------------------------------
International Opportunities $25 $78 $134 $285
- ----------------------------------------------------------------------------------------------------
Emerging Markets Equity $29 $89 $152 $321
- ----------------------------------------------------------------------------------------------------
Real Estate Equity $24 $73 $125 $268
- ----------------------------------------------------------------------------------------------------
V.A. Financial Industries $22 $68 $116 $249
- ----------------------------------------------------------------------------------------------------
Managed $20 $63 $108 $233
- ----------------------------------------------------------------------------------------------------
Global Balanced $25 $75 $129 $276
- ----------------------------------------------------------------------------------------------------
Short-Term Bond $20 $61 $105 $227
- ----------------------------------------------------------------------------------------------------
Bond Index $15 $48 $ 82 $180
- ----------------------------------------------------------------------------------------------------
Active Bond $20 $61 $105 $226
- ----------------------------------------------------------------------------------------------------
V.A. Strategic Income $20 $62 $106 $230
- ----------------------------------------------------------------------------------------------------
High Yield Bond $22 $68 $116 $250
- ----------------------------------------------------------------------------------------------------
Global Bond $23 $69 $119 $255
- ----------------------------------------------------------------------------------------------------
Money Market $16 $50 $ 87 $189
- ----------------------------------------------------------------------------------------------------

BASIC INFORMATION

This "Basic Information" section provides answers to commonly asked
questions about the contract. Here are the page numbers where the questions and
answers appear:

QUESTION STARTING ON PAGE
-------- ----------------

What is the contract? ....................................................... 13

Who owns the contract? ...................................................... 13

Is the owner also the annuitant? ............................................ 13

How can I invest money in a contract? ....................................... 13

How will the value of my investment in the contract change over time? ....... 15

What annuity benefits does the contract provide? ............................ 15

To what extent can JHVLICO vary the terms and conditions of the contracts? .. 16

What are the tax consequences of owning a contract? ......................... 16

How can I change my contract's investment allocations? ...................... 17

What fees and charges will be deducted from my contract? .................... 19

How can I withdraw money from my contract? .................................. 21

What happens if the annuitant dies before my contract's date of maturity? ... 22

WHAT IS THE CONTRACT?

The contract is a deferred payment variable annuity contract. An "annuity
contract" provides a person (known as the "annuitant" or "payee") with a series
of periodic payments. Because this contract is also a "deferred payment"
contract, the annuity payments will begin on a future date, called the
contract's "date of maturity." Under a "variable annuity" contract, the amount
you have invested can increase or decrease in value daily based upon the value
of the variable investment options chosen. If your annuity is provided under a
master group contract, the term "contract" as used in this prospectus refers to
the certificate you will be issued and not to the master group contract.

WHO OWNS THE CONTRACT?

IS THE OWNER ALSO THE ANNUITANT?

HOW CAN I INVEST MONEY IN A CONTRACT?

Premium payments

We call the investments you make in your contract premiums or premium
payments. In general, you need at least a $1,000 initial premium payment to
purchase a contract. If you choose to contribute more money into your contract,
each subsequent premium payment must also be at least $500. If you deposit money
directly from your bank account, your subsequent premium payments can be as
small as $100.

Applying for a contract

Once we receive your initial premium payment and all necessary information,
we will issue your contract and invest your initial premium payment within two
business days. If the information is not in good order, we will contact you to
get the necessary information. If for some reason, we are unable to complete
this process within 5 business days, we will either send back your money or get
your permission to keep it until we get all of the necessary information.

In certain situations, we will issue a contract upon receiving the order
from your broker-dealer or financial institution but delay the effectiveness of
the contract until we receive your signed application. In those situations, if
we do not receive your signed application within our required time period, we
will deem the contract void from the beginning and return your premium payment.

We measure the years and anniversaries of your contract from its date of
issue. We use the term contract year to refer to each period of time between
anniversaries of your contract's date of issue.

Limits on premium payments

You can make premium payments of up to $1,000,000 in any one contract year.
The total of all new premium payments and transfers that you allocate to any one
variable investment option in any one contract year may not exceed $1,000,000.
While the annuitant is alive and the contract is in force, you can make premium
payments at any time until the annuitant reaches age 84 1/2. However,

-------------------------------------------------------------------------
YOU MAY NOT MAKE ANY PREMIUM
PAYMENTS AFTER THE ANNUITANT
IF YOUR CONTRACT IS USED TO FUND REACHES AGE
-------------------------------------------------------------------------
a "tax qualified plan"* 70 1/2**
-------------------------------------------------------------------------
a non-tax qualified plan 84 1/2
-------------------------------------------------------------------------

* as that term is used in "Tax Information," beginning on page 30.
** except for a Roth IRA, which has no age limit.

We will not issue a contract if the proposed annuitant is older than age
84. We may waive any of these limits, however.

Ways to make premium payments

Premium payments made by check or money order should be:

. drawn on a U.S. bank,

. drawn in U.S. dollars, and

. made payable to "John Hancock."

We will not accept credit card checks. Nor will we accept starter or third
party checks that fail to meet our administrative requirements.

Premium payments after the initial premium payment should be sent to the
John Hancock Annuity Servicing Office at the address shown on page 2 of this
prospectus. We will also accept premium payments by wire. We will accept your
initial premium payment by exchange from another insurance company. You can find
information about wire payments under "Premium payments by wire," below. You can
find information about other methods of premium payment by contacting your
broker-dealer or by contacting the John Hancock Annuity Servicing Office.

Once we have issued your contract and it becomes effective, we credit you
with any additional premiums you pay as of the day we receive them at the John
Hancock Annuity Servicing Office.

Premium payments by wire

. issue a contract;

. accept premium payments; or

. allow other transactions.

After we issue your contract, subsequent premium payments may be
transmitted by wire through your bank. Information about our bank, our account
number, and the ABA routing number may be obtained from the John Hancock Annuity
Servicing Office. Banks may charge a fee for wire services.

HOW WILL THE VALUE OF MY INVESTMENT IN THE CONTRACT CHANGE OVER TIME?

Like a regular mutual fund, each fund deducts investment management fees
and other operating expenses. These expenses are shown in the fee table on
page 5. However, unlike a mutual fund, we will also deduct charges relating to
the annuity guarantees and other features provided by the contract. These
charges reduce your investment performance and the amount we credit to your
contract in any variable investment option. We describe these charges under
"What fees and charges will be deducted from my contract?" beginning on page 19.

However, if you prematurely transfer, "surrender" or otherwise withdraw
money from a guarantee period we will increase or reduce the remaining value in
your contract by an amount that approximates the impact that any changes in
interest rates would have had on the market value of a debt instrument with
terms comparable to that guarantee period. This "market value adjustment" (or
"MVA") imposes investment risks on you. We describe how the market value
adjustments work in "Calculation of market value adjustment ("MVA")" beginning
on page 26.

At any time before the date of maturity, the total value of your contract
equals

. the total amount you invested,

. minus all charges we deduct,

. minus all withdrawals you have made,

. plus or minus any positive or negative MVAs that we have made at the time
of any premature withdrawals or transfers you have made from a guarantee
period,

. plus or minus each variable investment option's positive or negative
investment return that we credit daily to any of your contract's value
daily while it is in that option, and

. plus the interest we credit to any of your contract's value while it is in
a guarantee period.

WHAT ANNUITY BENEFITS DOES A CONTRACT PROVIDE?

If your contract is still in effect on its date of maturity, it enters what
is called the annuity period. During the annuity period, we make a series of
fixed or variable payments to you as provided under one of our several annuity
options. The form in which we will make the annuity payments, and the proportion
of such payments that will be on a fixed basis and on a variable basis, depend
on the elections that you have in effect on the date of maturity. Therefore you
should exercise care in selecting your date of maturity and your choices that
are in effect on that date.

You should carefully review the discussion under "The annuity period,"
beginning on page 27, for information about all of these choices you can make.

TO WHAT EXTENT CAN JHVLICO VARY THE TERMS AND CONDITIONS OF THE CONTRACTS?

State law insurance requirements

Variations in charges or rates

We may vary the charges, guarantee periods, and other terms of our
contracts where special circumstances result in sales or administrative
expenses, mortality risks or other risks that are different from those normally
associated with the contracts. These include the types of variations discussed
under "Certain changes" in the Additional Information section of this
prospectus.

WHAT ARE THE TAX CONSEQUENCES OF OWNING A CONTRACT?

In most cases, no income tax will have to be paid on amounts you earn under
a contract until these earnings are paid out. All or part of the following
distributions from a contract may constitute a taxable payout of earnings:

. partial withdrawal (including systematic withdrawals),

. full withdrawal ("surrender"),

. payment of any death benefit proceeds, and

. periodic payments under one of our annuity payment options.

How much you will be taxed on distribution is based upon complex tax rules and
depends on matters such as:

. the type of the distribution,

. when the distribution is made,

. the nature of any tax qualified retirement plan for which the contract is
being used, if any, and

. the circumstances under which the payments are made.

If your contract is issued in connection with a tax-qualified retirement
plan, all or part of your premium payments may be tax-deductible.

HOW CAN I CHANGE MY CONTRACT'S INVESTMENT ALLOCATIONS?

Allocation of premium payments

When you apply for your contract, you specify the variable investment
options or guarantee periods (together, your investment options) in which your
premium payments will be allocated. You may change this investment allocation
for future premium payments at any time. Any change in allocation will be
effective as of receipt of your request at the John Hancock Annuity Servicing
Office.

Currently, you may use a maximum of 18 investment options over the life of
your contract. For purposes of this limit, each contribution or transfer of
assets into a variable investment option or guarantee period that you are not
then using counts as one "use" of an investment option, even if you had used
that option at an earlier time. Renewing a guarantee period upon its expiration
does not count as a new use, however, if the new guarantee period has the same
number of years as the expiring one.

Transferring your assets

Up to 12 times during each year of your contract, you may transfer

. all or part of the assets held in one variable investment option to any
other available variable investment option or guarantee period, or

. all or part of the assets held in one guarantee period to any other
available guarantee period or variable investment option (these transfers
may, however, incur a market value adjustment - either positive or
negative).

Transfers under our dollar cost averaging program do not count toward the 12 you
are allowed each year. However, you may not:

. transfer assets within 30 days prior to the contract's date of maturity,

. transfer more than $1,000,000 in a contract year from any one variable
investment option or guarantee period, without our prior approval,

. make any transfer that would cause you to exceed the above-mentioned
maximum of 18 investment options,

. make any transfers, during the annuity period, to or from a fixed
investment option, or

. make any transfer during the annuity period that would result in more than
four investment options being used at once.

The contract you are purchasing was not designed for professional market
timing organizations or other persons or entities that use programmed or
frequent transfers. The use of such transfers may be disruptive to a Fund. We
reserve the right to reject any premium payment or transfer request from any
person, if in our judgment, a Fund would be unable to invest effectively in
accordance with its investment objectives and policies, or would otherwise be
potentially adversely affected.

Procedure for transferring your assets

. your name,

. daytime telephone number,

. contract number,

. the names of the investment options being transferred to and from each, and

. the amount of each transfer.

The request becomes effective on the day we receive your request, in proper
form, at the John Hancock Annuity Servicing Office.

Telephone transfers

Once you have completed a written authorization, you may request a transfer
by telephone or by fax. If the fax request option becomes unavailable, another
means of telecommunication will be substituted.

Dollar cost averaging program

You may elect, at no cost, to automatically transfer assets from any
variable investment option to one or more other variable investment options on a
monthly, quarterly, semiannual, or annual basis. The following conditions apply
to the dollar cost averaging program:

. you may elect the program only if the total value of your contract equals
$15,000 or more,

. the amount of each transfer must equal at least $250,

. you may change your variable investment allocation instructions at any time
in writing or, if you have authorized telephone transfers, by telephone,

. you may discontinue the program at any time,

. the program automatically terminates when the variable investment option
from which we are taking the transfers has been exhausted,

. automatic transfers to or from guarantee periods are not permitted.

We reserve the right to suspend or terminate the program at any time.

WHAT FEES AND CHARGES WILL BE DEDUCTED FROM MY CONTRACT?

Mortality and expense risk charge

We deduct a daily charge that compensates us primarily for mortality and
expense risks that we assume under the contracts. On an annual basis, this
charge equals 0.90% of the value of the assets you have allocated to the
variable investment options. (This charge does not apply to assets you have in
our guarantee periods.)

In return for mortality risk charge, we assume the risk that annuitants as
a class will live longer than expected, requiring us to a pay greater number of
annuity payments. In return for the expense risk charge, we assume the risk that
our expenses relating to the contracts may be higher than we expected when we
set the level of the contracts' other fees and charges, or that our revenues
from such other sources will be less.

Administrative services charge

We deduct a daily charge for administrative and clerical services that the
contracts require us to provide.

On an annual basis, this charge equals 0.35% of the value of the assets you
have allocated to the variable investment options. (This charge does not apply
to assets you have in our guarantee periods.) However, if your initial premium
payment was more than $250,000, we reduce the charge to 0.10%.

Annual contract fee

Prior to the date of maturity of your contract, we will deduct $30 each
year from your contract if it has a total value of less than $10,000. We deduct
this annual contract fee at the beginning of each contract year after the first
contract year. We also deduct it if you surrender your contract. We take the
deduction proportionally from each variable investment option and each guarantee
period you are then using. We reserve the right to increase the annual contract
fee to $50.

Premium taxes

We make deductions for any applicable premium or similar taxes based on the
amount of a premium payment. Currently, certain local jurisdictions assess a tax
of up to 5% of each premium payment.

Withdrawal charge

If you withdraw some money from your contract prior to the date of maturity
(a partial withdrawal) or if you surrender (turn in) your contract, in its
entirety, for cash prior to the date of maturity (a total withdrawal or
surrender), we may assess a withdrawal charge. Some people refer to this charge
as a "contingent deferred withdrawal load." We use this charge to help defray
expenses relating to the sales of the contracts, including commissions paid and
other distribution costs.

Here's how we determine the charge: In any contract year, you may withdraw
up to 10% of the total value of your contract (computed as of the beginning of
the contract year) without the assessment of any withdrawal charge. We refer to
this amount as the free withdrawal amount. However, if the amount you withdraw
or surrender totals more than the free withdrawal amount during the contract
year, we will assess a withdrawal charge on any amount of the excess that we
attribute to premium payments you made within seven years of the date of the
withdrawal or surrender.

The withdrawal charge percentage depends upon the number of years that have
elapsed from the date you paid the premium to the date of its withdrawal, as
follows:

------------------------------------------------------------
YEARS FROM DATE OF PREMIUM PAYMENT TO
DATE OF SURRENDER OR WITHDRAWAL 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%
------------------------------------------------------------
* AS A PERCENTAGE OF THE AMOUNT OF SUCH PREMIUM THAT WE CONSIDER TO HAVE
BEEN WITHDRAWN (INCLUDING THE WITHDRAWAL CHARGE), AS EXPLAINED IN THE
TEXT IMMEDIATELY BELOW.

Solely for purposes of determining the amount of the withdrawal charge, we
assume that each withdrawal (together with any associated withdrawal charge) is
a withdrawal first from the earliest premium payment, and then from the next
----- ----
earliest premium payment, and so forth until all payments have been exhausted.
Once a premium payment has been considered to have been "withdrawn" under these
procedures, that premium payment will not enter into any future withdrawal
charge calculations. For this purpose, we also consider any amounts that we
deduct for the annual contract charge to have been withdrawals of premium
payments (which means that no withdrawal charge will ever be paid on those
amounts).

The amount of any withdrawal that exceeds any remaining premium payments
that have not already been considered as withdrawn will not be subject to any
withdrawal charge. This means that no withdrawal charge will apply to any
favorable investment experience that you have earned.

Here's how we deduct the withdrawal charge: We deduct the withdrawal charge
proportionally from each variable investment option and each guarantee period
- --------------
being reduced by the surrender or withdrawal. For example, if 60% of the
withdrawal amount comes from a "Growth" option and 40% from the Money Market
option, then we will deduct 60% of the withdrawal charge from the Growth option
and 40% from the Money Market option. If any such option has insufficient
remaining value to cover the charge, we will deduct any shortfall from all of
your other investment options, pro-rata based on the value in each. If your
contract as a whole has insufficient surrender value to pay the entire charge,
we will pay you no more than the surrender value.

You will find examples of how we compute the withdrawal charge in Appendix
B to this prospectus.

When withdrawal charges don't apply: We don't assess a withdrawal charge in
the following situations:

. on amounts applied to an annuity option at the contract's date of maturity
or to pay a death benefit;

. on certain withdrawals if you have elected the nursing home rider that
waives the withdrawal charge; and

. on amounts withdrawn to satisfy the minimum distribution requirements for
tax qualified plans. (Amounts above the minimum distribution requirements
are subject to any applicable withdrawal charge, however.)

How an MVA affects the withdrawal charge: If you make a withdrawal from a
guarantee period at a time when the related MVA results in an upward adjustment
in your remaining value, we will calculate the withdrawal charge as if you had
withdrawn that much less. Similarly, if the MVA results in a downward
adjustment, we will compute any withdrawal charge as if you had withdrawn that
much more.

Other charges

We offer, subject to state availability, three optional benefit riders. We
charge a separate monthly charge for each rider selected. At the beginning of
each month, we charge an amount equal to 1/12/th/ of the following annual
percentages:

- --------------------------------------------------------------------------------
Stepped up death benefit* 0.15% of total value of your contract
- --------------------------------------------------------------------------------
Accidental death benefit 0.10% of total value of your contract
- --------------------------------------------------------------------------------
Nursing home waiver 0.05% of that portion of your contract's total value
attributable to premiums that are still subject to
surrender charges
- --------------------------------------------------------------------------------
*Some people refer to this benefit as the "enhanced stepped-up death benefit"

We deduct the charge proportionally from each of your investment options,
based on your value in each.

HOW CAN I WITHDRAW MONEY FROM MY CONTRACT?

Surrenders and partial withdrawals

Prior to your contract's date of maturity, if the annuitant is living, you
may:

. surrender your contract for a cash payment of its "surrender value," or

. make a partial withdrawal of the surrender value.

The surrender value of a contract is the total value of a contract, after
any market value adjustment, minus the annual contract fee and any applicable
-----
premium tax and withdrawal charges. We will determine the amount surrendered or
withdrawn as of the date we receive your request at the John Hancock Annuity
Servicing Office.

Certain surrenders and withdrawals may result in taxable income to you or
other tax consequences as described under "Tax information," beginning on page
30. Among other things, if you make a full surrender or partial withdrawal from
your contract before you reach age 59 1/2, an additional federal penalty of 10%
generally applies to any taxable portion of the withdrawal.

We will deduct any partial withdrawal proportionally from each of your
--------------
investment options based on the value in each, unless you direct otherwise.

Without our prior approval, you may not make a partial withdrawal

. for an amount less than $100, or

. if the remaining total value of your contract would be less than $1,000.

If your "free withdrawal value" at any time is less than $100, you must withdraw
that amount in full, in a single sum, before you make any other partial
withdrawals. We reserve the right to terminate your contract if the value of
your contract becomes zero.

You generally may not make any surrenders or partial withdrawals once we
begin making payments under an annuity option.

Nursing home waiver of withdrawal charge

If your state permits, you may purchase an optional nursing home waiver of
withdrawal charge rider when you apply for a contract. Under this rider, we will
waive withdrawal charge on any withdrawals, provided all the following
conditions apply:

. you become confined to a nursing home beginning at least 90 days after we
issue your contract.

. you remain in the nursing home for at least 90 consecutive days and receive
skilled nursing care.

. we receive your request for a withdrawal and adequate proof of confinement
no later than 90 days after discharge from the facility.

. your confinement is prescribed by a doctor and medically necessary.

You may not purchase this rider if (1) you are older than 75 years at
application or (2) if you were confined to a nursing home within the past two
years.

You should carefully review the tax considerations for optional benefit
riders on page 30 before selecting this optional benefit rider. For a more
complete description of the terms and conditions of this benefit, you should
refer directly to the rider. We will provide you with a copy on request.

Systematic withdrawal plan

Our optional systematic withdrawal plan enables you to preauthorize
periodic withdrawals. If you elect this plan, we will withdraw a percentage or
dollar amount from your contract on a monthly, quarterly, semiannual, or annual
basis, based upon your instructions. Unless otherwise directed, we will deduct
the requested amount from each applicable investment option in the ratio that
the value of each bears to the total value of your contract. Each systematic
withdrawal is subject to any withdrawal charge or market value adjustment that
would apply to an otherwise comparable non-systematic withdrawal. See "How will
the value of my investment in the contract change over time?" beginning on page
15, and "What fees and charges will be deducted from my contract?" beginning on
page 19. The same tax consequences also generally will apply.

The following conditions apply to systematic withdrawal plans:

. you may elect the plan only if the total value of your contract equals
$15,000 or more,

. the amount of each systematic withdrawal must equal at least $100,

. if the amount of each withdrawal drops below $100 or the total value of
your contract becomes less than $5,000, we will suspend the plan and notify
you,

. you may cancel the plan at any time.

We reserve the right to modify the terms or conditions of the plan at any time
without prior notice.

WHAT HAPPENS IF THE ANNUITANT DIES BEFORE MY CONTRACT'S DATE OF MATURITY?

Standard death benefit

If the annuitant dies before your contract's date of maturity, we will pay
a standard death benefit, unless you have elected an enhanced death benefit
rider. The standard death benefit is the greater of:

. the total value of your contract, adjusted by any then-applicable market
value adjustment, or

. the total amount of premium payments made, minus any partial withdrawals
and related withdrawal charges.

We calculate the death benefit value as of the day we receive, in proper order
at the John Hancock Annuity Servicing Office:

. proof of the annuitant's death, and

. any required instructions as to method of settlement.

Unless you have elected an optional method of settlement, we will pay the
death benefit in a single sum to the beneficiary you chose prior to the
annuitant's death. If you have not elected an optional method of settlement, the
beneficiary may do so. However, if the death benefit is less than $5,000, we
will pay it in a lump sum, regardless

of any election. You can find more information about optional methods of
settlement under "Annuity options," beginning on page 29.

Enhanced death benefit riders

"Stepped-up" death benefit rider

If you are under age 80 when you apply for your contract, you may elect to
enhance the standard death benefit by purchasing a stepped-up death benefit
rider. Under this rider, if the annuitant dies before the contract's date of
maturity, we will pay the beneficiary the greater of:

. the standard death benefit (described above) or

. the highest total value of your contract (adjusted by any market value
adjustment) as of any anniversary of your contract to date, PLUS any
premium payments you have made since that anniversary, MINUS any
withdrawals you have taken (and any related withdrawal charges) since that
anniversary.

For these purposes, however, we count only those contract anniversaries
that occur (1) BEFORE we receive proof of death and any required settlement
instructions and (2) BEFORE the annuitant attains age 80 1/2.

You may elect this rider ONLY when you apply for the contract and ONLY if
this rider is available in your state. As long as the rider is in effect, you
will pay a monthly charge for this benefit. For a description of this charge,
refer to page 19 under "What fees and charges will be deducted from my
contract?"

Accidental death benefit rider

If you are under age 80 when you apply for your contract, you may elect to
purchase an accidental death benefit rider. In addition to any other death
benefit, this rider provides a benefit upon the accidental death of the
annuitant prior to the earlier of:

. the contract's date of maturity, and

. the annuitant's 80th birthday.

Under this rider, the beneficiary will receive an amount equal to the total
value of the contract as of the date of the accident, up to a maximum of
$200,000. We will pay the benefit after we receive, at the John Hancock Annuity
Servicing Office:

. proof of the annuitant's death, and

. any required instructions as to method of settlement.

You may elect this rider ONLY when you apply for the contract. As long as
the rider is in effect, you will pay a monthly charge for this benefit. For a
description of this charge, refer to page 19 under "What fees and charges will
be deducted from my contract?"

You should carefully review the tax considerations for optional benefit
riders on page 30 before selecting this optional benefit rider. For a complete
description of the terms and conditions of this benefit, you should refer
directly to the rider. We will provide you with a copy upon request. Not all
states allow this benefit.

ADDITIONAL INFORMATION

CONTENTS OF THIS SECTION STARTING ON PAGE

Description of JHVLICO ............................................... 25

Who should purchase a contract ....................................... 25

How we support the variable investment options ....................... 25

How we support the guarantee periods ................................. 26

How the guarantee periods work ....................................... 26

The accumulation period .............................................. 27

The annuity period ................................................... 27

Variable investment option valuation procedures ...................... 29

Distribution requirements following death of owner ................... 29

Miscellaneous provisions ............................................. 30

Tax information ...................................................... 30

Further information about JHVLICO .................................... 36

Management's discussion and analysis ................................. 38

Performance information .............................................. 58

Reports .............................................................. 59

Voting privileges .................................................... 59

Certain changes ...................................................... 59

Distribution of contracts ............................................ 60

Experts .............................................................. 60

Registration statement ............................................... 60

Condensed financial information ...................................... 61

JHVLICO financial statements ......................................... 68

Appendix A - Details About Our Guarantee Periods .....................105

Appendix B - Examples of Withdrawal Charge Calculation ...............108

DESCRIPTION OF JHVLICO

We are JHVLICO, a stock life insurance company organized, in 1979, under
the laws of the Commonwealth of Massachusetts. We have authority to transact
business in all states, except New York. We are a wholly-owned subsidiary of
John Hancock Life Insurance Company ("John Hancock"), a Massachusetts stock life
insurance company. On February 1, 2000, John Hancock Mutual Life Insurance
Company (which was chartered in Massachusetts in 1862) converted to a stock
company by "demutualizing" and changed its name to John Hancock Life Insurance
Company. As part of the demutualization process, John Hancock became a
subsidiary of John Hancock Financial Services, Inc., a newly formed
publicly-traded corporation. John Hancock's home office is at John Hancock
Place, Boston, Massachusetts 02117. At year end 2001, John Hancock's assets were
approximately $81 billion and it had invested approximately $575 million in
JHVLICO in connection with JHVLICO's organization and operation.

WHO SHOULD PURCHASE A CONTRACT?

. traditional individual retirement annuity plans ("traditional IRAs")
satisfying the requirements of Section 408 of the Code;

. non-deductible IRA plans ("Roth IRAs") satisfying the requirements of
Section 408A of the Code;

. SIMPLE IRA plans adopted under Section 408(p) of the Code;

. Simplified Employee Pension plans ("SEPs") adopted under Section 408(k) of
the Code; and

. annuity purchase plans adopted under Section 403(b) of the Code by public
school systems and certain other tax-exempt organizations.

We do not currently offer the contracts to every type of tax-qualified
plan, and we may not offer the contracts for all types of tax-qualified plans in
the future. In certain circumstances, we may make the contracts available for
purchase under deferred compensation plans maintained by a state or political
subdivision or tax exempt organization under Section 457 of the Code or by
pension or profit-sharing plans qualified under section 401(a) of the Code. We
provide general federal income tax information for contracts purchased in
connection with tax qualified retirement plans beginning on page 32.

We may include certain requirements from the above sources in endorsements
or riders to the affected contracts. In other cases, we do not. In no event,
however, do we undertake to assure a contract's compliance with all plan, tax
law, and ERISA requirements applicable to a tax-qualified or non tax-qualified
retirement plan. Therefore, if you use or plan to use a contract in connection
with such a plan, you must consult with competent legal and tax advisers to
ensure that you know of (and comply with) all such requirements that apply in
your circumstances.

To accommodate "employer-related" pension and profit-sharing plans, we
provide "unisex" purchase rates. That means the annuity purchase rates are the
same for males and females. Any questions you have as to whether you are
participating in an "employer-related" pension or profit-sharing plan should be
directed to your employer. Any question you or your employer have about unisex
rates may be directed to the John Hancock Annuity Servicing Office.

HOW WE SUPPORT THE VARIABLE INVESTMENT OPTIONS

We hold the fund shares that support our variable investment options in
John Hancock Variable Annuity Account JF (the "Account"), a separate account
established by JHVLICO under Massachusetts law. The Account is registered as a
unit investment trust under the Investment Company Act of 1940 ("1940 Act").

The Account's assets, including the Series Funds' shares, belong to
JHVLICO. Each contract provides that amounts we hold in the Account pursuant to
the policies cannot be reached by any other persons who may have claims against
us.

separate account) under variable annuity or variable life insurance contracts
that give their owners a preferred claim on those assets.

HOW WE SUPPORT THE GUARANTEE PERIODS

HOW THE GUARANTEE PERIODS WORK

Amounts you allocate to the guarantee periods earn interest at a guaranteed
rate commencing with the date of allocation. At the expiration of the guarantee
period, we will automatically transfer its accumulated value to the Money Market
option under your contract, unless you elect to:

. withdraw all or a portion of any such amount from the contract,

. allocate all or a portion of such amount to a new guarantee period or
periods of the same or different duration as the expiring guarantee period,
or

. allocate all or a portion of such amount to one or more of the variable
investment options.

We currently make available guarantee periods with durations up to ten
years. You may not select a guarantee period if it extends beyond your
contract's date of maturity. We reserve the right to add or delete guarantee
periods from those that are available at any time for new allocations.

Guaranteed interest rates

Each guarantee period has its own guaranteed rate. 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 time you allocate or transfer money to a
guarantee period, a new guarantee period, with a new interest rate, begins to
run with respect to that amount. The amount allocated or transferred earns a
guaranteed rate that will continue unchanged until the end of that period. We
will not make available any guarantee period offering a guaranteed rate below
3%.

You may obtain information concerning the guaranteed rates applicable to
the various guarantee periods, and the durations of the guarantee periods
offered at any time by calling the John Hancock Annuity Servicing Office at the
telephone number on page 2.

Calculation of market value adjustment ("MVA")

. death benefits pursuant to your contract,

. amounts you apply to an annuity option, and

. amounts paid in a single sum in lieu of an annuity.

The market value adjustment increases or decreases your remaining value in
the guarantee period. If the value in that guarantee period is insufficient to
pay any negative MVA, we will deduct any excess from the value in your other
investment options pro-rata based on the value in each. If there is insufficient
value in your other investment options, we will in no event pay out more than
the surrender value of the contract.

Here is how the MVA works:
- --------------------------------------------------------------------------------
We compare

. the guaranteed rate of the guarantee period from which the assets are being
taken WITH

. the guaranteed rate we are currently offering for guarantee periods of the
same duration as remains on the guarantee period from which the assets are
being taken.

If the first rate exceeds the second by more than 1/2 %, the market value
adjustment produces an increase in your contract's value.

For this purpose, we consider that the amount withdrawn from the guarantee
period includes the amount of any negative MVA and is reduced by the amount of
any positive MVA.

The mathematical formula and sample calculations for the market value
adjustment appear in Appendix A.

THE ACCUMULATION PERIOD

Your value in our variable investment options

Each premium payment or transfer that you allocate to a variable investment
option purchases accumulation units of that variable investment option.
Similarly, each withdrawal or transfer that you take from a variable investment
option (as well as certain charges that may be allocated to that option) result
in a cancellation of such accumulation units.

Valuation of accumulation units

To determine the number of accumulation units that a specific transaction
will purchase or cancel, we use the following formula:

---------------------------------------------
dollar amount of transaction
DIVIDED BY
value of one accumulation unit for the
applicable variable investment option at the
time of such transaction
---------------------------------------------

Therefore, at any time prior to the date of maturity, the total value of
your contract in a variable investment option can be computed according to the
following formula:

---------------------------------------------
number of accumulation units in the
variable investment options
TIMES
value of one accumulation unit for the
applicable variable investment option at that
time
---------------------------------------------

Your value in the guarantee periods

On any date, the total value of your contract in a guarantee period equals:

. the amount of premium payments or transferred amounts allocated to the
guarantee period, MINUS

. the amount of any withdrawals or transfers paid out of the guarantee
period, MINUS

. the amount of any negative market value adjustments resulting from such
withdrawals or transfers, PLUS

. the amount of any positive market value adjustments resulting from such
withdrawals and transfers, MINUS

. the amount of any charges and fees deducted from that guarantee period,
PLUS

. interest compounded daily on any amounts in the guarantee period from time
to time at the effective annual rate of interest we have declared for that
guarantee period.

THE ANNUITY PERIOD

Date of maturity

. at least 6 months after the date the first premium payment is applied to
your contract and

. no later than the maximum age specified in your contract (normally age 95).

Subject always to these requirements, you may subsequently select an
earlier date of maturity. The John Hancock Annuity Servicing Office must receive
your new selection at least 31 days prior to the new date of maturity, however.
Also, if you are selecting or changing your date of maturity for a contract
issued under a tax qualified plan, special limits apply. (See "Contracts
purchased for a tax-qualified plan," beginning on page 32.)

Choosing fixed or variable annuity payments

During the annuity period, the total value of your contract must be
allocated to no more than four investment options. During the annuity period, we
do not offer the guarantee periods. Instead, we offer annuity payments on a
fixed basis as one investment option, and annuity payments on a variable basis
for EACH variable investment option.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The following table presents selected consolidated financial data of
the Company in accordance with GAAP. The GAAP selected consolidated financial
data of the Company as of and for the years ended December 31, 2001, 2000, 1999,
1998, and 1997 are derived from the consolidated financial statements of the
Company and the notes to the consolidated financial statements, which were
audited by Ernst & Young. You should read the following financial data in
conjunction with "Management's Discussion and Analysis" and the Company's
audited consolidated financial statements and the accompanying notes, which are
included in this annual report and which qualify the selected financial data in
its entirety. The income statement presentation has been amended for periods
prior to 2001 to reflect the Company's new business model, in which the Company
is taking on more underwriting risk and shifting its primary focus from its
Program Business segment to its Specialty Insurance business segment.

Year ended December 31,
------------------------------------------------------------------------
2001 2000 1999 1998 1997
------------------------------------------------------------------------
(In thousands, except share and per share amounts)

INCOME STATEMENT DATA:

Revenues $ 487,481 $ 390,163 $ 298,714 $ 210,425 $ 177,831
========================================================================
(Loss) income before income taxes,
minority interest and extraordinary
loss ................................... (63,422) (18,397) 50,307 72,970 60,109
------------------------------------------------------------------------
Income before minority interest and
extraordinary loss ..................... (96,276) 736 50,672 64,434 49,477
------------------------------------------------------------------------
Net (loss) income ......................... (99,190) (5,582) 50,438 64,527 49,477
------------------------------------------------------------------------
(Loss) earnings per common share
--Basic ................................. $ (2.38) $ (0.14) $ 1.18 $ 1.56 $ 1.25
--Diluted ............................... $ (2.38) $ (0.14) $ 1.14 $ 1.42 $ 1.15
------------------------------------------------------------------------
Diluted weighted average number of
common shares outstanding(1)
--Basic ................................. 41,694,366 41,244,621 42,797,133 41,275,156 39,379,122
--Diluted ............................... 41,694,366 41,244,621 49,606,913 50,233,147 48,785,252
------------------------------------------------------------------------
Dividends per common share ................ $ 0.10 $ 0.28 $ 0.25 $ 0.21 $ 0.19

As at December 31,
-------------------------------------------------------------------------
2001 2000 1999 1998 1997
-------------------------------------------------------------------------
(In thousands)

BALANCE SHEET DATA:

Total assets ......................... $ 5,363,648 $ 4,859,649 $4,033,174 $3,074,257 $2,206,050
========================================================================
Reserve for losses and loss
expenses .......................... 2,934,384 2,529,183 1,860,120 1,190,426 716,461
------------------------------------------------------------------------
Loans payable(2) ..................... 336,900 233,673 227,898 125,485 128,711
------------------------------------------------------------------------
Redeemable preferred and common
shares ............................ -- -- -- -- 1,929
------------------------------------------------------------------------
Shareholders' equity ................. $ 259,816 $ 351,533 $ 358,144 $ 343,166 $ 263,575
========================================================================

(1) See Note 13 to the Consolidated Financial Statements for an explanation of
the method used to determine the number of shares used to compute per share
amounts.

(2) See Notes 6, 7 and 8 to the Consolidated Financial Statements.

-28-

Annuity options

Here are some of the annuity options that are available, subject to the
terms and conditions described above. We reserve the right to make available
optional methods of payment in addition to those annuity options listed here and
in your contract.

OPTION B: LIFE ANNUITY WITHOUT FURTHER PAYMENT ON DEATH OF PAYEE: - We will
make monthly payments to the payee as long as he or she lives. We guarantee no
minimum number of payments.

OPTION D: JOINT AND 1/2 SURVIVOR; OR JOINT AND 2/3 SURVIVOR - We will
provide payments monthly, quarterly, semiannually, and annually for the payee's
life and the life of the payee's spouse/joint payee. Upon the death of one
payee, we will continue payments (reduced to 1/2 or 2/3 the full payment amount)
to the surviving payee. All payments stop at the death of the surviving payee.

If the payee is more than 85 years old on the date of maturity, the
following two options are not available:

. Option A: "life annuity with 5 years guaranteed" and

. Option B: "life annuity without further payment on the death of payee."

VARIABLE INVESTMENT OPTION VALUATION PROCEDURES

DISTRIBUTION REQUIREMENTS FOLLOWING DEATH OF OWNER

In most cases, these provisions do not cause a problem if you are also the
annuitant under your policy. If you have designated someone other than yourself
as the annuitant, however, your heirs will have less discretion than you would
have had in determining when and how the contract's value would be paid out.

- --------------------------------------------------------------------------------
IF YOU DIE BEFORE ANNUITY PAYMENTS HAVE BEGUN:

. if the contract's designated beneficiary is your surviving spouse, your
spouse may continue the contract in force as the owner.

(1) paid out in full within five years of your death or

(2) applied in full towards the purchase of a life annuity on the
beneficiary with payments commencing within one year of your death.

If you are the last surviving annuitant, as well as the owner, the entire
interest in the contract on the date of your death equals the death benefit that
then becomes payable. If you are the owner but not the last surviving annuitant,
the entire interest equals:

. the surrender value if paid out in full within five years of your death, or

. the total value of your contract applied in full towards the purchase of a
life annuity on the beneficiary with payments commencing within one year of
your death.

IF YOU DIE ON OR AFTER ANNUITY PAYMENTS HAVE BEGUN:

. any remaining amount that we owe must be paid out at least as rapidly as
under the method of making annuity payments that is then in use.
- ----------------------------------------------------------------------------

The Code imposes very similar distribution requirements on contracts used
to fund tax qualified plans. We provide the required provisions for tax
qualified plans in separate disclosures and endorsements.

Notice of the death of an owner or annuitant should be furnished promptly
to the John Hancock Annuity Servicing Office.

MISCELLANEOUS PROVISIONS

Assignment; change of owner or beneficiary

. the rights of any assignees of record and

. certain other conditions referenced in the contract.

An assignment, pledge, or other transfer may be a taxable event. See "Tax
information" below. Therefore, you should consult a competent tax adviser before
taking any such action.

TAX INFORMATION

Our income taxes

We are taxed as a life insurance company under the Internal Revenue Code
(the "Code"). The Account is taxed as part of our operations and is not taxed
separately.

Special Considerations for Optional Benefit Riders

If you have elected an optional death benefit rider, it is our
understanding that the charges relating to these riders are not subject to
current taxation. The Internal Revenue Service ("IRS") might take the position,
however, that each charge associated with the rider is deemed a partial
withdrawal from the contract subject to current income tax to the extent of any
gains and, if applicable, the 10% penalty tax for premature distributions from
annuities. We understand that you are not prevented from adding any of our
optional death benefit riders to your contract if it is issued as an IRA.
However, the law is unclear because IRAs generally may not invest in "life
insurance contracts." Therefore, it is possible that a Contract may be
disqualified as an IRA if it has an optional death benefit rider added to it. If
so, you may be subject to increased taxes.

At present, the IRS has not provided guidance as to the tax effect of
adding an optional nursing home waiver of withdrawal charge rider to an annuity
contract. The IRS might take the position that each charge associated with these
riders is deemed a withdrawal from the contract subject to current income tax to
the extent of any gains and, if applicable, the 10% penalty tax for premature
withdrawals.

We do not currently report rider charges as partial withdrawals, but we may
do so in the future if we believe that the IRS would require us to report them
as such. You should

consult a competent tax adviser before electing any of these optional benefit
riders.

Contracts not purchased to fund a tax qualified plan

Undistributed gains

However, a contract owned other than by a natural person (e.g.,
corporations, partnerships, limited liability companies and other such entities)
does not generally qualify as an annuity for tax purposes. Any increase in value
therefore would constitute ordinary taxable income to such an owner in the year
earned.

Annuity payments

When we make payments under a contract in the form of an annuity, each
payment will result in taxable ordinary income to you, to the extent that each
such payment exceeds an allocable portion of your "investment in the contract"
(as defined in the Code). In general, your "investment in the contract" equals
the aggregate amount of premium payments you have made over the life of the
contract, reduced by any amounts previously distributed from the contract that
were not subject to tax.

The Code prescribes the allocable portion of each such annuity payment to
be excluded from income according to one formula if the payments are variable
and a somewhat different formula if the payments are fixed. In each case,
speaking generally, the formula seeks to allocate an appropriate amount of the
investment in the contract to each payment. After the entire "investment in the
contract" has been distributed, any remaining payment is fully taxable.

Surrenders, withdrawals and death benefits

When we make a single sum payment from a contract, you have ordinary
taxable income, to the extent the payment exceeds your "investment in the
contract" (discussed above). Such a single sum payment can occur, for example,
if you surrender your contract before the date of maturity or if no annuity
payment option is selected for a death benefit payment.

For purposes of determining the amount of taxable income resulting from a
single sum payment or a partial withdrawal, all annuity contracts issued by
JHVLICO or its affiliates to the owner within the same calendar year will be
treated as if they were a single contract.

All or part of any death benefit proceeds may constitute a taxable payout
of earnings. A death benefit payment generally results in taxable ordinary
income to the extent such payment exceeds your "investment in the contract."

Penalty for premature withdrawals

Puerto Rico annuity contracts not purchased to fund a tax qualified plan

Under the Puerto Rico tax laws, distributions from a contract not purchased
to fund a tax qualified plan ("Non-Qualified Contract") before annuitization are
treated as non-taxable return of principal until the principal is fully
recovered. Thereafter, all distributions are fully taxable. Distributions after
annuitization are treated as part taxable income and part non-taxable return of
principal. The amount excluded from gross income after annuitization is equal to
the amount of the distribution in excess of 3% of the total purchase payments
paid, until an amount equal to the total purchase payments paid has been
excluded. Thereafter, the entire distribution from a Non-Qualified Contract is
included in gross income. Puerto Rico does not currently impose an early
withdrawal penalty tax.

Generally, Puerto Rico does not require income tax to be withheld from
distributions of income.

Diversification requirements

Contracts purchased for a tax qualified plan

We have no responsibility for determining whether a particular retirement
plan or a particular contribution to the plan satisfies the applicable
requirements of the Code, or whether a particular employee is eligible for
inclusion under a plan. In general, the Code imposes limitations on the amount
of annual compensation that can be contributed into a tax-qualified plan, and
contains rules to limit the amount you can contribute to all of your
tax-qualified plans. Trustees and administrators of tax qualified plans may,
however, generally invest and reinvest existing plan assets without regard to
such Code imposed limitations on contributions. Certain distributions from tax
qualified plans may be transferred directly to another plan, unless funds are
added from other sources, without regard to such limitations.

Tax-free rollovers

For tax years beginning in 2002, if permitted under your plans, you may
make a tax-free rollover from:

. a traditional IRA to another traditional IRA,

. a traditional IRA to another tax-qualified plan, including a Section 403(b)
plan

. any tax-qualified plan (other than a Section 457 deferred compensation plan
maintained by a tax-exempt organization) to a traditional IRA,

. a Section 457 deferred compensation plan maintained by a tax-exempt
organization to another Section 457 deferred compensation plan maintained
by a tax-exempt organization and

. a traditional IRA to a Roth IRA, subject to special restrictions discussed
below.

In addition, if your spouse survives you, he or she is permitted to
rollover your tax-qualified retirement account to another tax-qualified
retirement account in which your surviving spouse participates, to the extent
permitted by your surviving spouse' plan.

Traditional IRAs

. 100% of compensation includable in your gross income, or

. the IRA annual limit for that tax year. For tax years beginning in 2002,
2003 and 2004, the annual limit is $3,000 per year. For tax years beginning
in 2005, 2006 and 2007, the annual limit is $4,000 per year and, for the
tax year beginning in 2008, the annual limit is $5,000. After that, the
annual limit is indexed for inflation in $500 increments as provided in the
Code.

The amount of your deduction is based on the following factors:

. whether you or your spouse is an active participant in an employer
sponsored retirement plan,

. your federal income tax filing status, and

. your "Modified Adjusted Gross Income."

Your traditional IRA deduction is subject to phase out limits, based on
your Modified Adjusted Gross Income, which are applicable according to your
filing status and whether you or your spouse are active participants in an
employer sponsored retirement plan. You can still contribute to a traditional
IRA even if your contributions are not deductible.

The tax law requires that annuity payments under a traditional IRA contract
begin no later than April 1 of the year following the year in which the owner
attains age 70 1/2.

Roth IRAs

Distributions. If you hold your Roth IRA for at least five years the payee
-------------
will not owe any federal income taxes or early withdrawal penalties on amounts
paid out from the contract:

. after you reach age 59 1/2,

. on your death or disability, or

. to qualified first-time home buyers (not to exceed a lifetime limitation of
$10,000) as specified in the Code.

Conversion to a Roth IRA. You can convert a traditional IRA to a Roth IRA,
------------------------
unless

. you have adjusted gross income over $100,000, or

. you are a married taxpayer filing a separate return.

The Roth IRA annual contribution limit does not apply to converted amounts.

You must, however, pay tax on any portion of the converted amount that
would have been taxed if you had not converted to a Roth IRA. No similar
limitations apply to rollovers from one Roth IRA to another Roth IRA.

SIMPLE IRA plans

pre-tax contributions to the SIMPLE IRA plan. You may specify the percentage of
compensation that you want to contribute under a qualified salary reduction
arrangement, provided the amount does not exceed the SIMPLE IRA annual
contribution limit. The SIMPLE IRA annual limit is $7,000 for tax years
beginning in 2002, $8,000 for 2003, $9,000 for 2004, and $10,000 for 2005. After
that, the annual limit is indexed for inflation in $500 increments as provided
in the Code. Your employer must elect to make a matching contribution of up to
3% of your compensation or a non-elective contribution equal to 2% of your
compensation.

Distributions. The requirements for minimum distributions from a SIMPLE
-------------
IRA retirement plan, and rules on taxation of distributions from a SIMPLE
retirement plan, are generally the same as those discussed above for
distributions from a traditional IRA.

Simplified Employee Pension plans (SEPs)

Section 403(b) plans

Distributions. When we make payments from a 403(b) contract on surrender
-------------
of the contract, partial withdrawal, death of the annuitant, or commencement of
an annuity option, the payee ordinarily must treat the entire payment as
ordinary taxable income. Moreover, the Code prohibits distributions from a
403(b) contract before the employee reaches age 59 1/2, except:

. on the employee's separation from service, death, or disability,

. with respect to distributions of assets held under a 403(b) contract as of
December 31, 1988, and

. transfers and exchanges to other products that qualify under Section
403(b).

Minimum distributions under a 403(b) contract must begin no later than
April 1 of the year following the year in which the employee reaches age 70 1/2
or, if later, retires

Pension and profit sharing plans qualified under Section 401(a)

In general, an employer may deduct from its taxable income premium payments
it makes under a qualified pension or profit-sharing plan described in Section
401(a) of the Code. Employees participating in the plan generally do not have to
pay tax on such contributions when made. Special requirements apply if a 401(a)
plan covers an employee classified under the Code as a "self-employed
individual" or as an "owner-employee."

The non-taxable portion of each annuity payment is determined, under the
Code, according to one formula if the

payments are variable and a somewhat different formula if the payments are
fixed. In each case, speaking generally, the formula seeks to allocate an
appropriate amount of the investment in the contract to each payment. Favorable
procedures may also be available to taxpayers who had attained age 50 prior to
January 1, 1986.

Minimum distributions to the employee under an employer's pension and
profit sharing plan qualified under Section 401(a) of the Code must begin no
later than April 1 of the year following the year in which the employee (except
an employee who is a "5-percent owner" as defined in Code section 416) reaches
age 70 1/2 or, if later, retires.

"Top-heavy" plans

Section 457 deferred compensation plans

Under the provisions of Section 457 of the Code, you can exclude a portion
of your compensation from gross income if you participate in a deferred
compensation plan maintained by:

. a state,

. a political subdivision of a state,

. an agency or instrumentality or a state or political subdivision of a
state, or

. a tax-exempt organization.

The deferred compensation plan must satisfy several conditions, including
the following:

. the plan must not permit distributions prior to your separation from
service (except in the case of an unforeseen emergency), and

. all compensation deferred under the plan shall remain solely the employer's
property and may be subject to the claims of its creditors.

Elective Deferral Limits

A participant in a Section 403(b) plan, a Section 457 Plan or in certain
other types of tax-qualified pension and profit sharing plans that are commonly
referred to as "401(k)" plans and "SARSEPS" may elect annually to defer current
compensation so that it can be contributed to the applicable plan or plans. The
annual elective deferral limit is $11,000 for tax years beginning in 2002,
$12,000 for 2003, $13,000 for 2004, $14,000 for 2005 and $15,000 for 2006. After
that, for the tax years beginning in 2007, 2008 and 2009, the annual elective
deferral limit is indexed for inflation in $500 increments as provided in the
Code.

Elective Catch-up Limits

A participant in a Section 403(b) plan, a Section 457 Plan or in certain
other types of tax-qualified pension and profit sharing plans that are commonly
referred to as "401(k)" plans and "SARSEPS" who is age 50 or older may increase
contributions by an amount up to $1,000 for tax years beginning in 2002, $2,000
for 2003, $3,000 for 2004, $4,000 for 2005 and $5,000 for 2006. After that, for
the tax years beginning in 2007, the elective catch-up contribution limit is
indexed for inflation in $500 increments as provided in the Code.

Withholding on rollover distributions

Puerto Rico annuity contracts purchased to fund a tax-qualified plan

The provisions of the tax laws of Puerto Rico vary significantly from those
under the Internal Revenue Code of the United States with respect to the various
"tax qualified" plans described above. Although we may offer variable annuity
contracts in Puerto Rico in connection with "tax qualified" plans, the text of
the prospectus under the subsection "Contracts purchased for a tax qualified
plan" is inapplicable in Puerto Rico and should be disregarded.

See your own tax adviser

The above description of Federal (and Puerto Rico) income tax consequences
to owners of and payees under contracts, 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 under the Code governing tax
qualified plans are extremely complex and often difficult to understand. Changes
to the tax laws may be enforced retroactively. 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. 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 you should consult a qualified tax
adviser.

FURTHER INFORMATION ABOUT JHVLICO

JHVLICO markets its policies through

. John Hancock's sales organization, which includes a career agency
system composed of company-supported independent general agencies
and,

. various unaffiliated broker-dealers and certain financial
institutions with which John Hancock and JHVLICO have sales
agreements.

Selected financial data

- --------------------------------------------------------------------------------
The following table sets forth certain selected historical financial data. The
selected income statement data for each of the years in the three year period
ended December 31, 2001 and balance sheet data as of December 31, 2001 and 2000
are presented in accordance with accounting principles generally accepted in the
United States (referred to as "GAAP") and have been derived from the audited
financial statements included elsewhere in this prospectus. The selected balance
sheet data as of December 31, 1999 is presented on a GAAP basis. These balances
have been determined by adjusting the previously audited statements that were
prepared on a basis prescribed or permitted by the Commonwealth of Massachusetts
Division of Insurance ("statutory" or "Stat" basis) to a GAAP basis, and are
unaudited. The financial statements from which this data has been derived are
not included in this prospectus. The income statement data for each of the years
in the two year period ended December 31, 1998 and 1997 and balance sheet data
as of December 31, 1998 and 1997 is presented on a statutory basis. The audited
statutory basis financial statements from which the selected data has been
derived are not included in this prospectus.

Certain prior year amounts have been reclassified to conform to the current year
presentation.

Past results are not necessarily indicative of future results.
- --------------------------------------------------------------------------------

INCOME STATEMENT DATA:
Premiums ............................. $ 60.1 $ 28.6 $ 8.9 $1,272.3 $ 872.7
Universal life and investment-type
product charges .................... 365.4 337.1 341.5 -- --
Net investment income ................ 227.0 213.4 174.6 122.8 89.7
Net realized investment and other
gains (losses) ..................... (9.0) (10.6) (4.8) -- --
Other revenue ........................ 24.0 0.2 0.2 618.1 449.1
--------- --------- --------- -------- --------
TOTAL REVENUES ....................... 667.5 568.7 520.4 2,013.2 1,411.5
Total benefits and expenses .......... 458.8 425.5 416.8 1,963.9 1,342.5
Federal income tax expense (credit) .. 62.2 43.8 35.2 33.1 38.5
Net realized capital gains (losses) .. -- -- -- (0.6) (3.0)
Cumulative effect of accounting
change, net of tax ................. (1.6) -- -- -- --
--------- --------- --------- -------- --------
NET INCOME/NET GAIN .................. $ 144.9 $ 99.4 $ 68.4 $ 15.6 $ 27.5
========= ========= ========= ======== ========
BALANCE SHEET DATA:
Total assets ......................... $11,713.2 $12,194.7 $11,974.2 $8,599.0 $6,521.5
Total liabilities/obligations ........ 10,747.6 11,389.1 11,279.2 8,268.2 6,199.8
Total stockholder's
equity/policyholders' contingency
reserve ............................ $ 965.6 $ 805.6 $ 695.0 $ 330.8 $ 321.7

MANAGEMENT'S DISCUSSION AND ANALYSIS

Forward-Looking Information

The statements, analyses, and other information contained herein relating
to trends in the John Hancock Variable Life Insurance Company's operations and
financial results, the markets for JHVLICO's products, the future development of
JHVLICO's business, and the contingencies and uncertainties to which JHVLICO may
be subject, as well as other statements including words such as "anticipate,"
"believe," "plan," "estimate," "expect," "intend," "will," "should," "may," and
other similar expressions, are "forward-looking statements" under the Private
Securities Litigation Reform Act of 1995. Such statements are made based upon
management's current expectations and beliefs concerning future events and their
effects on JHVLICO. Future events and their effects on JHVLICO may not be those
anticipated by management. JHVLICO's actual results may differ materially from
the results anticipated in these forward-looking statements.

Readers are also directed to other risks and uncertainties discussed, as
well as to further discussion of the risks described above, in other documents
that may be filed by JHVLICO with the United States Securities and Exchange
Commission from time to time. JHVLICO specifically disclaims any obligation to
update or revise any forward-looking information, whether as a result of new
information, future developments, or otherwise.

Overview

Our revenues are derived principally from:

. premiums on individual life insurance and annuities with life
contingencies;

. product charges from variable and universal life insurance products and
annuities;

. net investment income and net realized investment and other gains (losses)
on general account assets.

Our profitability depends in large part upon: (1) the adequacy of our
product pricing, which is primarily a function of competitive conditions, our
ability to assess and manage trends in mortality and morbidity experience, our
ability to generate investment earnings and our ability to maintain

Premiums and deposits of our individual annuity products were $113.0
million, $94.3 million and $231.3 million in 2001, 2000 and 1999. Our total life
insurance product deposits were $1,540.7 million, $1,188.2 million and $1,000.8
million in 2001, 2000 and 1999, respectively.

Critical Accounting Policies

General

We have identified the policies below as critical to our business
operations and understanding of our results of operation. For a detailed
discussion of the application of these and other accounting policies, see Note 1
in the Notes to Consolidated Financial Statements. Note that the application of
these accounting policies in the preparation of this report requires management
to use judgments involving assumptions and estimates concerning future results
or other developments including the likelihood, timing or amount of one or more
future transactions or events. There can be no assurance that actual results
will not differ from those estimates. These judgments are reviewed frequently by
senior management, and an understanding of them may enhance the reader's
understanding of JHVLICO's financial statements and Management's Discussion and
Analysis.

Amortization of Deferred Policy Acquisition Costs

We amortize deferred policy acquisition costs on term life insurance
ratably with premiums. We amortize our deferred policy acquisition costs on our
annuity products and retail life insurance, other than term, based on a
percentage of the estimated gross profits over the life of the policies, which
are generally twenty years for annuities and thirty years for life policies. Our
estimated gross profits are computed based on assumptions related to the
underlying policies including mortality, lapse, expenses, and asset growth
rates. We amortize deferred policy acquisition costs such that the percentage of
gross profits to the amount of deferred policy acquisition costs amortized is
constant over the life of the policies.

Estimated gross profits are adjusted periodically to take into
consideration the actual experience to date and changes in the remaining gross
profits. When estimated gross profits are adjusted, we also adjust the
amortization of deferred policy acquisition costs to maintain a constant
amortization percentage over the life of the policies. Our current estimated
gross profits include certain judgments concerning mortality, lapse and asset
growth that are based on a combination of actual company experience and
historical market experience of equity and fixed income returns. Short-term
variances of actual results from the judgments made by management can cause
quarter to quarter earnings impact.

Investment in Debt and Equity Securities

Impairments on our investment portfolio are recorded as a charge to income
in the period when the impairment is judged by management to occur. See the
discussion of Credit Risk in the Quantitative and Qualitative Information About
Market Risk section of this document for a more detailed discussion of the
judgments involved in determining impairments.

Income Taxes

Results of Operations

The table below presents our consolidated results of operations for the
years indicated.

- ------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31
------------------------------
2001 2000 1999
---- ---- ----
(IN MILLIONS)

REVENUES

Premiums ......................... $ 60.1 $ 28.6 $ 8.9
Universal life and
investment-type product
charges ......................... 365.4 337.1 341.5
Net investment income ............ 227.0 213.4 174.6
Net realized investment and
other gains (losses), net of
related amortization of
deferred policy acquisition
costs /(1)/ ..................... (9.0) (10.6) (4.8)
Other revenues ................... 24.0 0.2 0.2
------ ------ ------
Total revenues ................... 667.5 568.7 520.4
------ ------ ------

BENEFITS AND EXPENSES
Benefits to policyholders ........ 294.1 248.6 260.5
Other operating costs and
expenses ........................ 76.2 116.8 117.5
Amortization of deferred
policy acquisition costs,
excluding amounts related to
net realized investment and
other gains (losses) /(2)/ ..... 67.1 34.0 13.1
Dividends to policyholders ....... 21.4 26.1 25.7
------ ------ ------
Total benefits and expenses ..... 458.8 425.5 416.8
------ ------ ------
Income before income taxes and
cumulative effect of
accounting change ................ 208.7 143.2 103.6
Income taxes ...................... 62.2 43.8 35.2
------ ------ ------
Income before cumulative effect
of accounting change ............. 146.5 99.4 68.4
Cumulative effect of accounting
change, net of tax ............... (1.6) -- --
------ ------ ------
Net income ........................ $144.9 $ 99.4 $ 68.4
====== ====== ======

- ------------------------------------------------------------------

(1) Net of related amortization of deferred policy acquisition costs of $(1.5)
million, $(3.8) million, and $(0.5) million for the years ended 2001, 2000, and
1999, respectively.

(2) Excluding amounts related to net realized investment and other gains
(losses) of $(1.5) million, $(3.8) million, and $(0.5) million for the years
ended 2001, 2000 and 1999, respectively.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Benefits and expenses of $458.8 million increased $33.3 million, or 7.8%,
from $425.5 million from the comparable prior year period. The increase in
benefits and expenses was primarily driven by growth in benefits to
policyholders of $45.5 million due to growth in the in-force in the traditional
and non-traditional life insurance businesses. In addition, amortization of
deferred policy acquisition costs increased $33.1 million driven by the
non-traditional life insurance business due to an increase in universal life
product charges. These increases in benefits and expenses were partially offset
by a $40.6 million decrease in other operating costs and expenses driven by cost
reduction programs.

Income taxes were $62.2 million in 2001, compared to $43.8 million for
2000. Our effective tax rate was 29.8% in 2001, as compared to 30.6% in 2000.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Consolidated income before income taxes of $143.2 million for the year
ended December 31, 2000 increased by $39.6 million, or 38.2%, as compared to
consolidated income before income taxes of $103.6 million for the year ended
December 31, 1999. The increase was primarily attributable to increases in
income before income taxes of $40.2 million in the Protection Segment partially
offset by decreased income before income taxes in the Asset Gathering Segment of
$0.6 million. The increase in the Protection Segment was primarily due to growth
in net investment income and a decrease in benefits to policyholders. The Asset
Gathering Segment remained stable compared to the prior year primarily due to
growth in investment-type product charges partially offset by increased
amortization of deferred policy acquisition costs.

Benefits and expenses of $425.5 million increased $8.7 million, or 2.1%,
from $416.8 million in the comparable prior year period. The increase in
benefits and expenses was driven by an increase in amortization of deferred
policy acquisition costs of $20.9 million primarily in the non-traditional life
insurance business. Amortization of deferred policy acquisition costs increased
in the non-traditional life insurance business by $13.2 million on revised
projections of estimated gross profit based on changes in estimated future
interest margins. In addition, amortization of deferred policy acquisition costs
increased $7.9 million primarily due to poor separate account performance and
increased surrenders in the variable annuities business which accelerated
current amortization. Partially offsetting the increase in amortization of
deferred policy acquisition costs was a decrease in benefits to policyholders of
$11.9 million, or 4.6%, primarily due to costs incurred related to the
settlement of the class action lawsuit in the prior year period.

Income taxes were $43.8 million in 2000, compared to $35.2 million for
1999. Our effective tax rate was 30.6% in 2000, as compared to 34.0% in 1999.

Results of Operations by Segment

We operate our business in two business segments, the Protection Segment
and the Asset Gathering Segment. Both of our business segments primarily serve
retail customers. JHVLICO's reportable segments are strategic business units
offering different products and services, and are managed separately, as they
focus on different products, markets or distribution channels.

PROTECTION SEGMENT. Offers a variety of individual life insurance,
including participating whole life, term life, universal life and variable life
insurance. Products are distributed through multiple distribution channels,
including insurance agents and brokers and alternative distribution channels
that include banks, financial planners, direct marketing and the Internet.

We evaluate segment performance on segment after-tax operating income,
which excludes the effect of net realized investment and other gains and losses
and other unusual or non-recurring events and transactions presented below as
after-tax adjustments. Segment after-tax operating income is determined by
adjusting generally accepted accounting principles (GAAP) net income for net
realized investment and other gains and losses and certain other items which we
believe are not indicative of overall operating trends. While these items may be
significant components in understanding and assessing our consolidated financial
performance, we believe that the presentation of segment after-tax operating
income enhances the understanding of our results of operations by highlighting
net income attributable to the normal, recurring operations of the business.
However, segment after-tax operating income is not a substitute for net income
determined in accordance with GAAP.

A discussion of the adjustments to GAAP reported income, many of which
affect each operating segment, follows the table below. A reconciliation of
segment after-tax operating income, as adjusted, to GAAP reported net income
precedes each segment discussion.

- -------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31
---------------------------------
2001 2000 1999
---- ---- ----
(IN MILLIONS)
SEGMENT DATA:/(1)/
SEGMENT AFTER-TAX OPERATING INCOME:
Protection Segment ......................... $130.0 $ 96.0 $108.0
Asset Gathering Segment .................... 22.2 6.3 6.8
------ ------ ------
Total segment after-tax operating
income ................................... 152.2 102.3 114.8

AFTER-TAX ADJUSTMENTS:
Net realized investment and other gains
(losses), net ............................. (5.6) (6.8) (3.1)
Surplus tax ................................ 9.1 5.6 --
Class action lawsuit ....................... (9.2) -- (42.9)
Other demutualization related costs ........ -- (0.6) (0.4)
Restructuring charges ...................... -- (1.1) --
------ ------ ------
Total after-tax adjustments ............... (5.7) (2.9) (46.4)
------ ------ ------

GAAP REPORTED:
Income before cumulative effect of change
in accounting principle .................... 146.5 99.4 68.4
Cumulative effect of change in
accounting principle, net of tax .......... (1.6) -- --
------ ------ ------
Net income ................................. $144.9 $ 99.4 $ 68.4
====== ====== ======
- -------------------------------------------------------------------------------

(1) See "Adjustments to GAAP Reported Net Income" set forth below.

Adjustments to GAAP Reported Net Income

- ------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31
--------------------------------
2001 2000 1999
-------- -------- --------
(IN MILLIONS)
Net realized investment and
other gains (losses) ............ $(10.5) $(14.4) $(5.3)
Less amortization of deferred
policy acquisition costs
related to net realized
investment and other gains
(losses) ........................ 1.5 3.8 0.5
------ ------ -----
Net realized investment and
other gains, net of related
amortization of deferred
policy acquisition costs per
audited consolidated
financial statements ............ (9.0) (10.6) (4.8)
Less income tax effect ........... 3.4 3.8 1.7
------ ------ -----
Net realized investment and
other gains (losses), net -
after-tax adjustment to
calculate segment after-tax
operating income ................ $ (5.6) $ (6.8) $(3.1)
====== ====== =====
- -------------------------------------------------------------------

Protection Segment

The following table presents certain summary financial data relating to the
Protection Segment for the periods indicated.

- --------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31
-------------------------------
2001 2000 1999
---- ---- ----
(IN MILLIONS)
OPERATING RESULTS:
Revenues
Premiums ..................................... $ 60.1 $ 28.6 $ 8.9
Universal life and investment-type product
charges ..................................... 324.7 286.0 300.8
Net investment income ........................ 229.2 215.9 178.1
Other revenue ................................ 0.3 0.3 0.2
------ ------ ------
Total revenues .............................. 614.3 530.8 488.0
Benefits and expenses
Benefits to policyholders .................... 271.3 242.2 192.3
Other operating costs and expenses ........... 72.8 98.1 100.6
Amortization of deferred policy acquisition
costs, excluding amounts related to net
realized investment and other gains
(losses) ................................... 46.6 17.6 4.6
Dividends to policyholders ................... 21.4 26.1 25.7
------ ------ ------
Total benefits and expenses ................. 412.1 384.0 323.2
Segment pre-tax operating income .............. 202.2 146.8 164.8
Income taxes .................................. 72.2 50.8 56.8
------ ------ ------
Segment after-tax operating income /(1)/ ...... 130.0 96.0 108.0
After-tax adjustments: /(1)/
Net realized investment and other gains
(losses), net ............................... (5.6) (6.8) (3.1)
Surplus tax .................................. 9.1 5.4 --
Class action lawsuit, net .................... (9.2) -- (42.9)
Other demutualization related costs .......... -- (0.5) (0.3)
Restructuring charges ........................ -- (1.1) --
------ ------ ------
Total after-tax adjustments ................. (5.7) (3.0) (46.3)
------ ------ ------

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Asset Gathering Segment

The following table presents certain summary financial data relating to the
Asset Gathering Segment for the periods indicated.

- ------------------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
2001 2000 1999
---- ---- ----
(IN MILLIONS)

OPERATING RESULTS:
Revenues
Universal life and investment-type product charges ... $40.7 $51.1 $40.7
Net investment income ................................ (2.2) (2.5) (3.5)
Other revenue ........................................ 23.7 (0.1) --
----- ----- -----
Total revenues ...................................... 62.2 48.5 37.2
Benefits and expenses
Benefits to policyholders ............................ 8.7 6.4 2.2
Other operating costs and expenses ................... 3.4 16.1 16.3
Amortization of deferred policy acquisition costs,
excluding amounts related to net realized investment
and other gains (losses) ........................... 20.5 16.4 8.5
----- ----- -----
Total benefits and expenses ......................... 32.6 38.9 27.0
Segment pre-tax operating income ...................... 29.6 9.6 10.2
Income taxes .......................................... 7.4 3.3 3.4
----- ----- -----
Segment after-tax operating income /(1)/ .............. 22.2 6.3 6.8
After-tax adjustments: /(1)/
Surplus tax .......................................... -- 0.2 --
Other demutualization related costs .................. -- (0.1) (0.1)
----- ----- -----
Total after-tax adjustments ......................... -- 0.1 (0.1)
----- ----- -----
Net income ............................................ $22.2 $ 6.4 $ 6.7
===== ===== =====
- ------------------------------------------------------------------------------------------

(1) See "Adjustments to GAAP Reported Net Income" included in this MD&A section
of the prospects.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

General Account Investments

Overall Composition of the General Account

Fixed maturity securities /(1)/ ................. $2,496.2 69.0% $1,727.2 57.9%
Mortgage loans /(2)/ ............................ 580.9 16.0 554.8 18.6
Real estate ..................................... 20.6 0.6 23.9 0.8
Policy loans /(3)/ .............................. 352.0 9.7 334.2 11.2
Equity securities ............................... 13.1 0.4 8.1 0.3
Other invested assets ........................... 39.6 1.1 34.8 1.2
Short-term investments .......................... 0.0 0.0 21.7 0.7
Cash and cash equivalents /(4)/ ................. 115.4 3.2 277.3 9.3
-------- ----- -------- -----
Total invested assets .......................... $3,617.8 100.0% $2,982.0 100.0%
======== ===== ======== =====
- -----------------------------------------------------------------------------------------------

(2) The fair value of the mortgage loan portfolio was $604.3 million and $467.3
million as of December 31, 2001 and December 31, 2000, respectively.

(3) Policy loans are secured by the cash value of the underlying life insurance
policies and do not mature in a conventional sense, but expire in conjunction
with the related policy liabilities.

(4) Cash and cash equivalents are included in total invested assets for the
purposes of calculating yields on the income producing assets for JHVLICO.

The following table shows the composition by issuer of the fixed maturity
securities portfolio.

FIXED MATURITY SECURITIES -- BY ISSUER

- ---------------------------------------------------------------------------------------
AS OF DECEMBER 31, AS OF DECEMBER 31,
2001 2000
-------------------- --------------------
CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL
------------- ------ ------------- --------
(IN MILLIONS) (IN MILLIONS)

Corporate securities .................... $1,955.8 78.3% $1,428.6 82.7%
MBS/ABS ................................. 317.1 12.7 268.2 15.5
U.S. Treasury securities and obligations
of U.S. government agencies ............ 214.8 8.6 16.7 1.0
Debt securities issued by foreign
governments ............................ 7.6 0.3 10.9 0.6
Obligations of states and political
subdivisions ........................... 0.9 0.1 2.8 0.2
--- --- --- ---
Total ................................... $2,496.2 100.0% $1,727.2 100.0%
======== ====== ======== ======
- ---------------------------------------------------------------------------------------

FIXED MATURITY SECURITIES -- BY CREDIT QUALITY

- ---------------------------------------------------------------------------------------------------
AS OF AS OF
DEC. 31, DEC. 31,
2001 2000
---------------------- ----------------------
S&P
SVO EQUIVALENT CARRYING % OF CARRYING % OF
RATING /(1)/ DESIGNATION/(2)/ VALUE/(3)/ TOTAL VALUE /(3)/ TOTAL
------ ------------------- ------------- ------- ------------- -------
(IN MILLIONS) (IN MILLIONS)

1 AAA/AA/A ................... $ 910.4 37.2% $ 634.2 37.6%
2 BBB ........................ 1,237.9 50.5 774.5 46.0
3 BB ......................... 190.2 7.8 187.2 11.1
4 B .......................... 59.7 2.4 61.4 3.7
5 CCC and lower .............. 27.7 1.1 9.2 0.5
6 In or near default ......... 24.7 1.0 18.3 1.1
-------- ----- -------- -----
Total ...................... $2,450.6 100.0% $1,684.8 100.0%
======== ===== ======== =====
- ---------------------------------------------------------------------------------------------------

(1)For securities that are awaiting an SVO rating, JHVLICO has assigned a rating
based on an analysis that it believes is equivalent to that used by the SVO.

(2)Comparisons between SVO and S&P ratings are published by the National
Association of Insurance Commissioners.

(3)Does not include redeemable preferred stock with a carrying value of $45.6
million and $42.4 million as of December 31, 2001 and December 31, 2000,
respectively.

MORTGAGE LOANS. As of December 31, 2001 and 2000, we held mortgage loans with
carrying values of $0.6 billion, which included $0.2 billion of agricultural
loans.

- -----------------------------------------------------------------------------------------------------------
AS OF AS OF
DEC. 31 DEC. 31,
2001, 2000
--------------------- ----------------------
CARRYING % OF CARRYING % OF
VALUES TOTAL VALUES TOTAL
------------ ------- ------------- -------
(IN MILLIONS) (IN MILLIONS)

Apartments ................................................. $114.4 19.7% $128.3 23.1%
Office Buildings ........................................... 145.3 25.0 98.0 17.8
Retail ..................................................... 35.3 6.1 45.4 8.2
Agricultural ............................................... 166.3 28.6 163.9 29.5
Industrial ................................................. 71.6 12.3 76.8 13.8
Hotels ..................................................... 24.6 4.2 15.0 2.7
Mixed Use .................................................. 4.9 0.9 13.4 2.4
Other ...................................................... 18.5 3.2 14.0 2.5
------ ----- ------ -----
Total ..................................................... $580.9 100.0% $554.8 100.0%
====== ===== ====== =====
- -----------------------------------------------------------------------------------------------------------

The following table shows the distribution of JHVLICO's mortgage loan
portfolio by geographical region.

MORTGAGE LOANS -- BY ACLI REGION

- ---------------------------------------------------------------------------------------------------------------
AS OF DEC. 31, 2001 AS OF DEC. 31,2000
----------------------------------------------- ------------------------
NUMBER CARRYING % OF CARRYING % OF
OF LOANS VALUES TOTAL VALUES TOTAL
------------ ------------------- ----------- ------------- ---------
(IN MILLIONS) (IN MILLIONS)

East North Central ............... 18 $ 63.1 10.9% $ 67.6 12.2%
East South Central ............... 17 24.3 4.2 27.5 5.0
Middle Atlantic .................. 12 50.3 8.6 26.8 4.8
Mountain ......................... 13 35.3 6.1 35.4 6.4
New England ...................... 13 54.7 9.4 44.2 8.0
Pacific .......................... 48 110.5 19.0 119.3 21.5
South Atlantic ................... 41 151.7 26.1 155.2 28.0
West North Central ............... 6 20.5 3.5 16.8 3.0
West South Central ............... 21 67.3 11.6 58.8 10.5
Canada ........................... 1 3.2 0.6 3.2 0.6
--- ------ ----- ------ -----
Total ........................... 190 $580.9 100.0% $554.8 100.0%
=== ====== ===== ====== =====
- ---------------------------------------------------------------------------------------------------------------

Investment Results

the 10-year U.S. Treasury rate of 34 basis points from December 31, 1999 to
December 31, 2000.

- -----------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED
DECEMBER 31,
----------------------------------------------------------------------------
2001 2000 1999
---- ---- ----
YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT
----- ------------- ----- ------------- ----- -------------
(IN MILLIONS) (IN MILLIONS) (IN MILLIONS)

GENERAL ACCOUNT
ASSETS-EXCLUDING
POLICY LOANS
Gross income .......... 7.26% $ 214.6 8.23% $ 207.5 7.56% $ 172.8
Ending assets-excluding
policy loans ......... 3,265.8 2,647.8 2,397.2
POLICY LOANS
Gross income .......... 6.15 21.1 5.50 17.1 5.08 13.7
Ending assets 352.0 334.2 287.4
Total gross income ... 7.14 235.7 7.93 224.6 7.29 186.5
Less: investment
expenses ............. (8.7) (11.2) (11.9)
----- ------ ------
Net investment
income ............... 6.88% $ 227.0 7.53% $ 213.4 6.83% $ 174.6
======== ======== ========
- -----------------------------------------------------------------------------------------------------

Liquidity and Capital Resources

- ---------------------------------------------------------------------------
AS OF AS OF
DEC. 31,2001 DEC. 31,2000
------------ ------------
AMOUNT % AMOUNT %
------ - ------ -
(IN MILLIONS) (IN MILLIONS)

Subject to discretionary
withdrawal at contract
value less surrender
charge ....................... $45.4 75.0% $54.7 75.1%
Not subject to
discretionary withdrawal
provisions ................... 7.6 12.6 7.1 9.8
Subject to discretionary
withdrawal adjustment:
At contract value ............ 7.5 12.4 11.0 15.1
----- ----- ----- -----
Total annuity reserves and
deposit funds liability ...... $60.5 100.0% $72.8 100.0%
===== ===== ===== =====
- ---------------------------------------------------------------------------

Quantitative and Qualitative Disclosures About Market Risk

Capital Markets Risk Management

JHVLICO maintains a disciplined, comprehensive approach to managing capital
market risks inherent in its business operations. To mitigate these risks, and
effectively

Credit Risk

Interest Rate Risk

We manage interest rate sensitive segments of our business, and their
supporting investments, under one of two broadly defined risk management methods
designed to provide an appropriate matching of assets and liabilities. For
guaranteed rate products, where contractual liability cash flows are highly
predictable we apply sophisticated duration-matching techniques to manage the
segment's exposure to both parallel and non-parallel yield curve movements.
Typically this approach involves a duration mismatch tolerance of less than +/ -
.05 years, with other techniques used for limiting exposure to non-parallel
risk. Duration measures the sensitivity of the fair value of assets and
liabilities to changes in interest rates. For example, should interest rates
increase by 100 basis points, the fair value of an asset with a 5-year duration
is expected to decrease in value by approximately 5.0%. For non-guaranteed rate
products we apply scenario-modeling techniques to develop

investment policies with what we believe to be the optimal risk/ return tradeoff
given our risk constraints. Each scenario is based on near term reasonably
possible hypothetical changes in interest rates that illustrate the potential
impact of such events.

Derivative Instruments

- -------------------------------------------------------------------------------------
AS OF DECEMBER 31, 2001
---------------------------------------------------------
FAIR VALUE
-------------------------------------
WEIGHTED- -100 +100
AVERAGE BASIS BASIS
NOTIONAL TERM POINT AS OF POINT
AMOUNT (YEARS) CHANGE/(2)/ 12/31/01 CHANGE/(2)/
-------- -------- ------------ -------- -----------
(IN MILLIONS, EXCEPT FOR WEIGHTED-AVERAGE TERM)

Interest rate swaps ....... $1,341.8 3.9 $(24.0) $(4.2) $14.0
Futures contracts /(1)/ ... 33.8 8.1 (1.4) (0.2) 1.0
Interest rate floors ...... 239.4 5.8 1.8 3.5 6.4
Interest rate caps ........ 361.4 8.4 1.9 1.2 0.2
-------- ------ ----- -----
Totals .................... $1,976.4 5.0 $(21.7) $ 0.3 $21.6
======== ====== ===== =====
- -------------------------------------------------------------------------------------

(1)Represents the notional value on open contracts as of December 31, 2001.

(2)The selection of a 100 basis point immediate change in interest rates should
not be construed as a prediction by us of future market events but rather as an
illustration of the potential impact of such an event.

As of December 31, 2001, JHVLICO had no outstanding fixed income obligations.

Separate Accounts

Competition

The life insurance business is highly competitive. There are numerous stock
and other types of insurers in the life/health insurance business in the United
States.

Employees and Facilities

Transactions with John Hancock

See Note 2 to our audited consolidated GAAP financial statements included
elsewhere in this prospectus for additional information on related party
transactions.

Legal Proceedings

Sales Practice Class Action Settlement

In conjunction with this settlement, we had a total reserve that stood at $7.0
million and $66.3 million at December 31, 2001 and 2000, respectively. We
incurred settlement related costs of $14.1 million and $66.0 million in 2001 and
1999, respectively. No such costs were incurred in 2000. In 1999, JHVLICO
updated its estimate of the cost of claims subject to alternative dispute
resolution (ADR) relief and revised its reserve estimate accordingly. The
reserve estimate was further evaluated quarterly, and was adjusted as noted
above in 2001. The adjustment to the reserve in 2001 was the result of JHVLICO
being able to better estimate the cost of settling the remaining claims, which
on average tend to be the larger more complicated claims. The better estimate is
from experience with actual settlement of similar claims.

Regulation

Our business is subject to extensive regulation at both the state and Federal
level, including regulation under state insurance and Federal and state
securities laws.

State Insurance Regulation

Regulation Governing Potential Acquisitions of Control

Surplus and Capital Requirements

Risk-Based Capital

Statutory Investment Valuation Reserves

IRIS Ratios

Regulation of Investments

Valuation of Life Insurance Policies Model Regulation

Federal Insurance Initiatives and Legislation

Tax Legislation

In the past, legislation has been proposed that would have curtailed the
tax-favored treatment of some of our insurance and annuity products. If any such
proposals were enacted, market demand for such products would be adversely
affected. In addition, the Economic Growth and Tax Relief Reconciliation Act of
2001 (EGTRRA), enacted by Congress in 2001, provides for the gradual reduction
and eventual elimination of Federal estate taxes by the year 2010. But EGTRRA
also contains a sunset provision which would reinstate Federal estate taxes in
the year 2011, based on the Internal Revenue Code in effect prior to the
enactment of EGTRRA. Many insurance products are designed and sold to help
policyholders reduce the effect of Federal estate taxation on their estates. The
enactment of EGTRRA has adversely affected sales of certain of our insurance and
investment advisory products, but this effect is mitigated somewhat by the
sunset provision. If the sunset provision of EGTRRA is eliminated in the future,
the adverse affect on the sales of these products could increase. In addition,
sales of split dollar life insurance products have been adversely affected by
proposed changes being considered by the Internal Revenue Service.

Securities Laws

Directors and Executive Officers

The directors and executive officers of JHVLICO and their principal
occupations during the past five years are as follows:

- ---------------------------------------------------------------------------------------------------------
Directors and Executive Officers Principal Occupations
- -------------------------------- ---------------------

David F. D'Alessandro ................................. Chairman of the Board of JHVLICO; Chairman,
President and Chief Executive Officer, John
Hancock Life Insurance Company.
Michele G. Van Leer ................................... Vice Chairman of the Board and President of
JHVLICO; Senior Vice President, John Hancock
Life Insurance Company.
Ronald J. Bocage ...................................... Director, Vice President and Counsel of
JHVLICO; Vice President and Counsel, John
Hancock Life Insurance Company.
Todd G. Engelsen ...................................... Director and Vice President of JHVLICO; Vice
President, John Hancock Life Insurance Company.
Bruce M. Jones ........................................ Director and Vice President of JHVLICO; Senior
Vice President, John Hancock Life Insurance
Company.
Daniel L. Ouellette ................................... Director and Vice President of JHVLICO; Senior
Vice President, John Hancock Life Insurance
Company.
Barbara L. Luddy ...................................... Director, Vice President and Actuary of JHVLICO;
Senior Vice President, John Hancock Life
Insurance Company.
Robert R. Reitano ..................................... Director, Vice President and Chief Investment
Officer of JHVLICO; Senior Vice President and
Chief Investment Strategist, John Hancock Life
Insurance Company.
Paul Strong ........................................... Director and Vice President of JHVLICO; Vice
President, John Hancock Life Insurance Company.
Roger G. Nastou ....................................... Vice President, Investments, of JHVLICO; Vice
President, John Hancock Life Insurance Company.
Julie H. Indge ........................................ Treasurer of JHVLICO; Assistant Treasurer, John
Hancock Life Insurance Company.
Earl W. Baucom ........................................ Controller of JHVLICO; Senior Vice President and
Controller, John Hancock Life Insurance Company.
Peter Scavongelli ..................................... Secretary of JHVLICO; State Compliance Officer,
John Hancock Life Insurance Company.
- ---------------------------------------------------------------------------------------------------------

The business address of all directors and executive officers of JHVLICO is
John Hancock Place, Boston, Massachusetts 02117.

Executive Compensation

Directors of JHVLICO receive no compensation in addition to their compensation
as employees of JHLICO.

D. F. D'Alessandro Chairman $37,632 $61,555 $3,041 $49,428 $0
- -------------------------------------------------------------------------------------------------

PERFORMANCE INFORMATION

Total return at the Account level is the percentage change between:

. the value of a hypothetical investment in a variable investment option at
the beginning of the relevant period, and

. the value at the end of such period.

At the Account level, total return reflects adjustments for:

. the mortality and expense risk charges,

. the administrative charge,

. the annual contract fee, and

. any withdrawal payable if the owner surrenders his contract at the end of
the relevant period.

We may advertise "current yield" and "effective yield" for investments in a
money market variable investment option. Current yield refers to the income
earned on your investment in the money market investment option over a 7-day
period and then annualized. In other words, the income earned in the period is
assumed to be earned every 7 days over a 52-week period and stated as a
percentage of the investment.

Current yield and effective yield reflect all the recurring charges at the
Account level, but will not reflect any premium tax, any withdrawal charge, or
any charge for optional benefit riders.

REPORTS

At least annually, we will send you (1) a report showing the number and value
of the accumulation units in your contract and (2) the financial statements of
the Series Funds.

VOTING PRIVILEGES

CERTAIN CHANGES

Changes to the Account

We reserve the right, subject to applicable law, including any required
shareholder approval,

. to add or delete variable investment options,

. to change the underlying investment vehicles,

. to operate the Account in any form permitted by law, and

. to terminate the Account's registration under the 1940 Act, if such
registration should no longer be legally required.

Unless otherwise required under applicable laws and regulations, notice to or
approval of owners will not be necessary for us to make such changes.

Variations in charges or rates for eligible classes

The entitlement to such variation in charges or rates will be determined by us
based upon such factors as the following:

. the size of the initial premium payment,

. the size of the group or class,

. the total amount of premium payments expected to be received from the group
or class and the manner in which the premium payments are remitted,

. the purpose for which the contracts are being purchased and whether that
purpose makes it likely that the costs and expenses will be reduced, or

. the level of commissions paid to selling broker-dealers or certain financial
institutions with respect to contracts within the same group or class.

We will make any reduction in charges or increase in initial guarantee rates
according to our rules in effect at the time an application for a contract is
approved. We reserve the right to change these rules from time to time. Any
variation in charges or rates 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.
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.

DISTRIBUTION OF CONTRACTS

Signator Investors, Inc. ("Signator") acts as principal distributor of the
contracts sold through this prospectus. Signator is registered as a
broker-dealer under the Securities Exchange Act of 1934, and a member of the
National Association of Securities Dealers, Inc. Signator's address is 200
Clarendon Street, John Hancock Place, Boston, Massachusetts 02117. Signator is a
subsidiary of John Hancock Life Insurance Company.

You can purchase a contract through registered representatives of
broker-dealers and certain financial institutions who have entered into selling
agreements with JHVLICO and Signator. We pay broker-dealers compensation for
promoting, marketing and selling our variable insurance and variable annuity
products. In turn, the broker-dealers pay a portion of the compensation to their
registered representatives, under their own arrangements. Signator will also pay
its own registered representatives for sales of the contracts to their
customers. We do not expect the compensation we pay to such broker-dealers
(including Signator) and financial institutions to exceed 7.0% of premium
payments (on a present value basis) for sales of the contracts described in this
prospectus. For limited periods of time, we may pay additional compensation to
broker-dealers as part of special sales promotions. We offer these contracts on
a continuous basis, but neither JHVLICO nor Signator is obligated to sell any
particular amount of contracts. We also reimburse Signator for direct and
indirect expenses actually incurred in connection with the marketing of these
contracts.

EXPERTS

Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements and schedules of John Hancock Variable Life Insurance
Company at December 31, 2001 and 2000, and for each of the three years in the
period ended December 31, 2001, and the financial statements of John Hancock
Variable Account JF at December 31, 2001 and for each of the periods indicated
therein, as set forth in their reports. We've included the financial statements
and schedules of JHVLICO in this prospectus, and the financial statements of the
Account in the Statement of Additional Information, which also is a part of the
registration statement that contains this prospectus. These financial statements
are included in the registration statement in reliance on Ernst & Young LLP's
reports, given on their authority as experts in accounting and auditing.

REGISTRATION STATEMENT

This prospectus omits certain information contained in the registration
statement filed with the SEC. Among other things, the registration statement
contains a "Statement of Additional Information" that we will send you without
charge upon request. The Table of Contents of the Statement of Additional
Information lists the following subjects that it covers:

page of SAI

DISTRIBUTION .............................................................. 2
CALCULATION OF PERFORMANCE DATA ........................................... 2
OTHER PERFORMANCE INFORMATION ............................................. 8
CALCULATION OF ANNUITY PAYMENTS ........................................... 10
ADDITIONAL INFORMATION ABOUT DETERMINING UNIT VALUES ...................... 12
PURCHASES AND REDEMPTIONS OF FUND SHARES .................................. 13
THE ACCOUNT ............................................................... 13
DELAY OF CERTAIN PAYMENTS ................................................. 13
LIABILITY FOR TELEPHONE TRANSFERS ......................................... 13
VOTING PRIVILEGES ......................................................... 14
FINANCIAL STATEMENTS ...................................................... 15

CONDENSED FINANCIAL INFORMATION

JOHN HANCOCK VARIABLE ANNUITY ACCOUNT JF

The following table provides selected data for Patriot accumulation shares for
contracts with initial premium payments of less than $250,000. Each period
begins on January 1, except that the first year of operation of an investment
option begins on the date shown in the Notes at the end of this table.

Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2001 2000 1999 1998
------------ ------------ ------------ ------------

EQUITY INDEX
Accumulation share value:
Beginning of period (Note 4) ......................................... $10.74 $11.97 $10.00 --
End of period ....................................................... $9.33 $10.74 $11.97 --
Number of Accumulation Shares outstanding at end of period ............ 84,207 115,506 110,398 --

GROWTH & INCOME
Accumulation share value:
Beginning of period (Note 5) ......................................... $10.00 -- -- --
End of period ....................................................... $7.36 -- -- --
Number of Accumulation Shares outstanding at end of period ............ 225,112 -- -- --

LARGE CAP VALUE
Accumulation share value:
Beginning of period (Note 4) ......................................... $11.38 $10.20 $10.00 --
End of period ....................................................... $11.38 $11.38 $10.20 --
Number of Accumulation Shares outstanding at end of period ............ 69,954 80,984 101,992 --

LARGE CAP GROWTH
Accumulation share value:
Beginning of period (Note 4) ......................................... $9.98 $12.31 $10.00 --
End of period ....................................................... $8.13 $9.98 $12.31 --
Number of Accumulation Shares outstanding at end of period ............ 74,845 86,341 72,822 --

FUNDAMENTAL VALUE
Accumulation share value:
Beginning of period (Note 5) ......................................... $10.00 -- -- --
End of period ....................................................... $10.73 -- -- --
Number of Accumulation Shares outstanding at end of period ............ 30,710 -- -- --

MULTI CAP GROWTH
Accumulation share value:
Beginning of period (Note 4) ......................................... $13.85 $21.87 $10.00 --
End of period ....................................................... $8.63 $13.85 $21.87 --
Number of Accumulation Shares outstanding at end of period ............ 112,159 154,934 143,380

FUNDAMENTAL GROWTH
Accumulation share value:
Beginning of period (Note 5) ......................................... $10.00 -- -- --
End of period ....................................................... $9.86 -- -- --
Number of Accumulation Shares outstanding at end of period ............ 24,747 -- -- --

SMALL/MID CAP CORE
Accumulation share value:
Beginning of period (Note 4) ......................................... $12.36 $11.96 $10.00 --
End of period ....................................................... $12.27 $12.36 $11.96 --
Number of Accumulation Shares outstanding at end of period ............ 19,421 16,718 12,272 --

Year Ended Year Ended
December 31, December 31,
1997 1996
------------ ------------

EQUITY INDEX
Accumulation share value:
Beginning of period (Note 4) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

GROWTH & INCOME
Accumulation share value:
Beginning of period (Note 5) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

LARGE CAP VALUE
Accumulation share value:
Beginning of period (Note 4) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

LARGE CAP GROWTH
Accumulation share value:
Beginning of period (Note 4) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

FUNDAMENTAL VALUE
Accumulation share value:
Beginning of period (Note 5) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

MULTI CAP GROWTH
Accumulation share value:
Beginning of period (Note 4) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period .............

FUNDAMENTAL GROWTH
Accumulation share value:
Beginning of period (Note 5) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

SMALL/MID CAP CORE
Accumulation share value:
Beginning of period (Note 4) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2001 2000 1999 1998
------------ ------------ ------------ ------------

SMALL CAP EQUITY
Accumulation share value:
Beginning of period (Note 4) .......................................... $8.60 $9.56 $10.00 --
End of period ........................................................ $8.17 $8.60 $9.56 --
Number of Accumulation Shares outstanding at end of period ............. 12,245 16,236 14,326 --

SMALL CAP GROWTH
Accumulation share value:
Beginning of period (Note 5) .......................................... $10.00 -- -- --
End of period ........................................................ $14.19 -- -- --
Number of Accumulation Shares outstanding at end of period ............. 35,009 -- -- --

V.A. RELATIVE VALUE
Accumulation share value:
Beginning of period (Note 3) .......................................... $17.44 $18.55 $12.99 $10.00
End of period ........................................................ $16.74 $17.44 $18.55 $12.99
Number of Accumulation Shares outstanding at end of period ............. 82,075 103,522 97,821 281,068

V.A. SOVEREIGN INVESTORS
Accumulation share value:
Beginning of period (Note 1) .......................................... $15.93 $16.19 $15.79 $13.68
End of period ........................................................ $14.86 $15.93 $16.19 $15.79
Number of Accumulation Shares outstanding at end of period ............. 57,079 83,507 84,581 1,123,202

INTERNATIONAL EQUITY INDEX
Accumulation share value:
Beginning of period (Note 4) .......................................... $10.27 $12.59 $10.00 --
End of period ........................................................ $8.08 $10.27 $12.59 --
Number of Accumulation Shares outstanding at end of period ............. 14,510 19,558 18,759 --

INTERNATIONAL OPPORTUNITIES Accumulation share value:
Beginning of period (Note 4) .......................................... $10.66 $12.91 $10.00 --
End of period ........................................................ $8.33 $10.66 $12.91 --
Number of Accumulation Shares outstanding at end of period ............. 48,242 50,459 21,856 --

EMERGING MARKETS EQUITY
Accumulation share value:
Beginning of period (Note 4) .......................................... $10.35 $17.48 $10.00 --
End of period ........................................................ $9.85 $10.35 $17.48 --
Number of Accumulation Shares outstanding at end of period ............. 7,313 7,636 8,609 --

REAL ESTATE EQUITY
Accumulation share value:
Beginning of period (Note 4) .......................................... $12.54 $9.60 $10.00 --
End of period ........................................................ $13.10 $12.54 $9.60 --
Number of Accumulation Shares outstanding at end of period ............. 2,869 2,599 2,363 --

V.A. FINANCIAL INDUSTRIES
Accumulation share value:
Beginning of period (Note 2) .......................................... $17.90 $14.25 $14.36 $13.39
End of period ........................................................ $14.58 $17.90 $14.25 $14.36
Number of Accumulation Shares outstanding at end of period ............. 44,296 59,272 59,300 1,826,652

Year Ended Year Ended
December 31, December 31,
1997 1996
------------ ------------

SMALL CAP EQUITY
Accumulation share value:
Beginning of period (Note 4) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

SMALL CAP GROWTH
Accumulation share value:
Beginning of period (Note 5) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

V.A. RELATIVE VALUE
Accumulation share value:
Beginning of period (Note 3) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

V.A. SOVEREIGN INVESTORS
Accumulation share value:
Beginning of period (Note 1) .......................................... $10.78 $10.00
End of period ........................................................ $13.68 $10.78
Number of Accumulation Shares outstanding at end of period ............. 457,510 2,637

INTERNATIONAL EQUITY INDEX
Accumulation share value:
Beginning of period (Note 4) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

INTERNATIONAL OPPORTUNITIES
Accumulation share value:
Beginning of period (Note 4) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

EMERGING MARKETS EQUITY
Accumulation share value:
Beginning of period (Note 4) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

REAL ESTATE EQUITY
Accumulation share value:
Beginning of period (Note 4) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

V.A. FINANCIAL INDUSTRIES
Accumulation share value:
Beginning of period (Note 2) .......................................... $10.00 --
End of period ........................................................ $13.39 --
Number of Accumulation Shares outstanding at end of period ............. 645,730 --

Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2001 2000 1999 1998
------------ ------------ ------------ ------------

MANAGED
Accumulation share value:
Beginning of period (Note 4) .......................................... $10.67 $10.80 $10.00 --
End of period ........................................................ $10.24 $10.67 $10.80 --
Number of Accumulation Shares outstanding at end of period ............. 20,975 26,890 25,357 --

GLOBAL BALANCED
Accumulation share value:
Beginning of period (Note 4) .......................................... $9.12 $10.16 $10.00 --
End of period ........................................................ $8.42 $9.12 $10.16 --
Number of Accumulation Shares outstanding at end of period ............. 4,508 5,357 6,608 --

SHORT-TERM BOND
Accumulation share value:
Beginning of period (Note 4) .......................................... $10.84 $10.17 $10.00 --
End of period ........................................................ $11.57 $10.84 $10.17 --
Number of Accumulation Shares outstanding at end of period ............. 6,019 6,207 5,058 --

ACTIVE BOND
Accumulation share value:
Beginning of period (Note 5) .......................................... $10.00 -- -- --
End of period ........................................................ $10.39 -- -- --
Number of Accumulation Shares outstanding at end of period ............. 22,387 -- -- --

BOND INDEX
Accumulation share value:
Beginning of period (Note 4) .......................................... $10.64 $9.63 $10.00 --
End of period ........................................................ $11.32 $10.64 $9.63 --
Number of Accumulation Shares outstanding at end of period ............. 14,281 19,106 22,733 --

V.A.STRATEGIC INCOME
Accumulation share value:
Beginning of period (Note 1) .......................................... $12.64 $12.62 $12.19 $11.78
End of period ........................................................ $13.05 $12.64 $12.62 $12.19
Number of Accumulation Shares outstanding at end of period ............. 47,119 55,045 73,588 522,909

HIGH YIELD BOND
Accumulation share value:
Beginning of period (Note 4) .......................................... $9.11 $10.35 $10.00 --
End of period ........................................................ $9.19 $9.11 $10.35 --
Number of Accumulation Shares outstanding at end of period ............. 9,657 10,644 11,541 --

GLOBAL BOND
Accumulation share value:
Beginning of period (Note 4) .......................................... $10.68 $9.65 $10.00 --
End of period ........................................................ $10.39 $10.68 $9.65 --
Number of Accumulation Shares outstanding at end of period ............. 5,140 8,203 8,837 --

MONEY MARKET
Accumulation share value:
Beginning of period (Note 5) .......................................... $10.00 -- -- --
End of period ........................................................ $10.12 -- -- --
Number of Accumulation Shares outstanding at end of period ............. 53,661 -- -- --

Year Ended Year Ended
December 31, December 31,
1997 1996
------------ ------------

MANAGED
Accumulation share value:
Beginning of period (Note 4) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

GLOBAL BALANCED
Accumulation share value:
Beginning of period (Note 4) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

SHORT-TERM BOND
Accumulation share value:
Beginning of period (Note 4) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

ACTIVE BOND
Accumulation share value:
Beginning of period (Note 5) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

BOND INDEX
Accumulation share value:
Beginning of period (Note 4) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

V.A.STRATEGIC INCOME
Accumulation share value:
Beginning of period (Note 1) .......................................... $10.70 $10.00
End of period ........................................................ $11.78 $10.70
Number of Accumulation Shares outstanding at end of period ............. 144,638 188

HIGH YIELD BOND Accumulation share value:
Beginning of period (Note 4) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

GLOBAL BOND
Accumulation share value:
Beginning of period (Note 4) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

MONEY MARKET
Accumulation share value:
Beginning of period (Note 5) .......................................... -- --
End of period ........................................................ -- --
Number of Accumulation Shares outstanding at end of period ............. -- --

(1) Values shown for 1996 begin on August 29, 1996.
(2) Values shown for 1997 begin on April 30, 1997.
(3) Values shown for 1998 begin on the commencement of operations.
(4) Values shown for 1999 begin on May 3, 1999.
(5) Values shown for 2001 begin on November 15, 2001.

The following table provides selected data for accumulation shares for
contracts with initial premium payments of $250,000 or more. Each period begins
on January 1, except that the first year of operation of an investment option
begins on the date shown in the Notes at the end of this table.

Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
2001 2000 1999 1998 1997
------------ ------------ ------------ ------------ ------------

EQUITY INDEX
Accumulation share value:
Beginning of period (Note 3) .................................... $10.79 $12.00 $10.00 -- --
End of period .................................................. $9.41 $10.79 $12.00 -- --
Number of Accumulation Shares outstanding at end of period ....... 79,909 79,917 61,962 -- --

GROWTH & INCOME
Accumulation share value:
Beginning of period (Note 4) .................................... $10.00 -- -- -- --
End of period .................................................. $12.97 -- -- -- --
Number of Accumulation Shares outstanding at end of period ....... 17,169 -- -- -- --

LARGE CAP VALUE
Accumulation share value:
Beginning of period (Note 3) .................................... $11.44 $10.22 $10.00 -- --
End of period .................................................. $11.46 $11.44 $10.22 -- --
Number of Accumulation Shares outstanding at end of period ....... 47,784 47,784 36,375 -- --

LARGE CAP GROWTH
Accumulation share value:
Beginning of period (Note 3) .................................... $10.03 $12.34 $10.00 -- --
End of period .................................................. $8.19 $10.03 $12.34 -- --
Number of Accumulation Shares outstanding at end of period ....... 48,418 49,959 38,907 -- --

FUNDAMENTAL VALUE
Accumulation share value:
Beginning of period (Note 4) .................................... $10.00 -- -- -- --
End of period .................................................. $9.37 -- -- -- --
Number of Accumulation Shares outstanding at end of period ....... 50,632 -- -- -- --

MULTI CAP GROWTH
Accumulation share value:
Beginning of period (Note 3) .................................... $13.92 $21.92 $10.00 -- --
End of period .................................................. $8.69 $13.92 $21.92 -- --
Number of Accumulation Shares outstanding at end of period ....... 14,866 20,511 27,163 -- --

FUNDAMENTAL GROWTH
Accumulation share value:
Beginning of period (Note 4) .................................... $10.00 -- -- -- --
End of period .................................................. $10.43 -- -- -- --
Number of Accumulation Shares outstanding at end of period ....... 8,119 -- -- -- --

SMALL/MID CAP CORE
Accumulation share value:
Beginning of period (Note 3) .................................... $12.42 $11.99 $10.00 -- --
End of period .................................................. $12.36 $12.42 $11.99 -- --
Number of Accumulation Shares outstanding at end of period ....... 6,506 6,516 5,870 -- --

SMALL CAP EQUITY
Accumulation share value:
Beginning of period (Note 3) .................................... $8.64 $9.58 $10.00 -- --
End of period .................................................. $8.23 $8.64 $9.58 -- --
Number of Accumulation Shares outstanding at end of period ....... -- -- 1,452 -- --

SMALL CAP GROWTH
Accumulation share value:
Beginning of period (Note 4) .................................... $10.00 -- -- -- --
End of period .................................................. $16.57 -- -- -- --
Number of Accumulation Shares outstanding at end of period ....... 2,702 -- -- -- --

V.A. RELATIVE VALUE
Accumulation share value:
Beginning of period (Note 2) .................................... $17.57 $18.64 $13.06 $10.00 --
End of period .................................................. $16.91 $17.57 $18.64 $13.06 --
Number of Accumulation Shares outstanding at end of period ....... 14,378 17,719 17,022 60,054 --

V.A. SOVEREIGN INVESTORS
Accumulation share value:
Beginning of period ........................................... $16.11 $16.33 $15.88 $13.72 $10.00
End of period ................................................. $15.06 $16.11 $16.33 $15.88 $13.72
Number of Accumulation Shares outstanding at end of period ..... 11,147 12,125 12,092 202,960 80,430

INTERNATIONAL EQUITY INDEX
Accumulation share value:
Beginning of period (Note 3) .................................. $10.32 $12.62 $10.00 -- --
End of period ................................................. $ 8.14 $10.32 $12.62 -- --
Number of Accumulation Shares outstanding at end of period ..... 8,123 8,148 -- -- --

INTERNATIONAL OPPORTUNITIES
Accumulation share value:
Beginning of period (Note 3) .................................. $10.72 $12.94 $10.00 -- --
End of period ................................................. $ 8.39 $10.72 $12.94 -- --
Number of Accumulation Shares outstanding at end of period ..... 7,494 7,506 5,408 -- --

EMERGING MARKETS EQUITY
Accumulation share value:
Beginning of period (Note 3) .................................. $10.40 $17.52 $10.00 -- --
End of period ................................................. $ 9.93 $10.40 $17.52 -- --
Number of Accumulation Shares outstanding at end of period ..... -- -- -- -- --

REAL ESTATE EQUITY
Accumulation share value:
Beginning of period (Note 3) .................................. $12.61 $ 9.63 $10.00 -- --
End of period ................................................. $13.20 12.61 $ 9.63 -- --
Number of Accumulation Shares outstanding at end of period ..... 11,726 11,730 11,845 -- --

V.A. FINANCIAL INDUSTRIES
Accumulation share value:
Beginning of period (Note 1) .................................. $18.06 $14.35 $14.42 $13.41 $10.00
End of period ................................................. $14.75 $18.06 $14.35 $14.42 $13.41
Number of Accumulation Shares outstanding at end of period ..... 15,026 13,558 17,470 149,851 73,106

MANAGED
Accumulation share value:
Beginning of period (Note 3) .................................. $10.72 $10.83 $10.00 -- --
End of period ................................................. $10.32 $10.72 $10.83 -- --
Number of Accumulation Shares outstanding at end of period ..... -- -- -- -- --

GLOBAL BALANCED
Accumulation share value:
Beginning of period (Note 3) .................................. $ 9.16 $10.18 $10.00 -- --
End of period ................................................. $ 8.49 $ 9.16 $10.18 -- --
Number of Accumulation Shares outstanding at end of period ..... -- -- -- -- --

HORT-TERM BOND
Accumulation share value:
Beginning of period (Note 3) .................................. $10.89 $10.19 $10.00 -- --
End of period ................................................. $11.66 $10.89 $10.19 -- --
Number of Accumulation Shares outstanding at end of period ..... -- -- 4,987 -- --

ACTIVE BOND
Accumulation share value:
Beginning of period (Note 4) ................................. $10.00 -- -- -- --
End of period ................................................. $13.20 -- -- -- --
Number of Accumulation Shares outstanding at end of period ..... 12,777 -- -- -- --

BOND INDEX
Accumulation share value:
Beginning of period (Note 3) .................................. $10.66 $ 9.66 $10.00 -- --
End of period ................................................. $11.41 $10.66 $ 9.66 -- --
Number of Accumulation Shares outstanding at end of period ..... 9,826 9,826 9,826 -- --

V.A. STRATEGIC INCOME
Accumulation share value:
Beginning of period ........................................... $12.78 $12.73 $12.26 $11.82 $10.00
End of period ................................................ $13.23 $12.78 $12.73 $12.26 $11.82
Number of Accumulation Shares outstanding at end of period ..... 1,847 -- -- 51,125 17,907

HIGH YIELD BOND
Accumulation share value:
Beginning of period (Note 3) .................................. $ 9.16 $10.38 $10.00 -- --
End of period ................................................ $ 9.26 $ 9.16 $10.38 -- --
Number of Accumulation Shares outstanding at end of period .... 2,470 2,473 2,423 -- --

GLOBAL BOND
Accumulation share value:
Beginning of period (Note 3) .................................. $10.73 $ 9.68 $10.00 -- --
End of period ................................................ $10.47 $10.73 $ 9.68 -- --
Number of Accumulation Shares outstanding at end of period .... -- -- -- -- --

MONEY MARKET
Accumulation share value:
Beginning of period (Note 4) ................................. $10.00 -- -- -- --
End of period ................................................ $12.11 -- -- -- --
Number of Accumulation Shares outstanding at end of period ..... 92,991 -- -- -- --

(1) Values shown for 1997 begin on April 30, 1997.
(2) Values shown for 1998 begin on the commencement of operations.
(3) Values shown for 1999 begin on May 3, 1999.
(4) Values shown for 2001 begin on November 15, 2001.

REPORT OF INDEPENDENT AUDITORS

The Board of Directors

John Hancock Variable Life Insurance Company

We have audited the accompanying consolidated balance sheets of John
Hancock Variable Life Insurance Company as of December 31, 2001 and 2000, and
the related consolidated statements of income, changes in shareholder's equity
and comprehensive income, and cash flows for each of the three years in the
period ended December 31, 2001. Our audits also included the financial statement
schedules. These financial statements and schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of John Hancock
Variable Life Insurance Company at December 31, 2001 and 2000, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.

As discussed in Note 1 to the consolidated financial statements, in 2001
the Company changed its method of accounting for derivatives.

/s/ ERNST & YOUNG LLP

Boston, Massachusetts
March 21, 2002

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS

DECEMBER 31
2001 2000
------------ -----------
(IN MILLIONS)
ASSETS Investments--Notes 3 and 4
Fixed maturities:
Held-to-maturity--at amortized cost
(fair value: 2001--$82.1; 2000--$686.8) .......... $ 83.7 $ 715.4
Available-for-sale--at fair value
(cost: 2001--$2,391.9; 2000--$1,018.8) ........... 2,412.5 1,011.8
Equity securities:
Available-for-sale--at fair value
(cost: 2001--$12.1; 2000--$7.1) .................. 13.1 8.1
Mortgage loans on real estate ...................... 580.9 554.8
Real estate ........................................ 20.6 23.9
Policy loans ....................................... 352.0 334.2
Short-term investments ............................. -- 21.7
Other invested assets .............................. 39.6 34.8
--------- ---------
Total Investments ................................ 3,502.4 2,704.7

Cash and cash equivalent ........................... 115.4 277.3
Accrued investment income .......................... 60.8 52.1
Premiums and accounts receivable ................... 12.5 7.0
Deferred policy acquisition costs .................. 1,060.8 994.1
Reinsurance recoverable--Note 6 .................... 110.4 48.4
Other assets ....................................... 121.8 28.2
Separate accounts assets ........................... 6,729.1 8,082.9
--------- ---------
Total Assets ..................................... $11,713.2 $12,194.7
========= =========

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS (CONTINUED)

DECEMBER 31
2001 2000
--------- ---------
(IN MILLIONS)
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities
Future policy benefits ........................... $ 3,335.4 $ 2,754.2
Policyholders' funds ............................. 3.0 14.2
Unearned revenue ................................. 221.0 212.0
Unpaid claims and claim expense reserves ......... 25.0 11.1
Dividends payable to policyholders ............... 0.3 0.1
Income taxes--Note 5 ............................. 191.1 64.2
Other liabilities ................................ 242.7 250.4
Separate accounts liabilities .................... 6,729.1 8,082.9
--------- ---------
Total Liabilities .............................. 10,747.6 11,389.1
Shareholder's Equity--Note 8
Common stock, $50 par value; 50,000 shares
authorized; 50,000 shares issued and
outstanding ..................................... 2.5 2.5
Additional paid in capital ....................... 572.4 572.4
Retained earnings ................................ 377.8 232.9
Accumulated other comprehensive loss ............. 12.9 (2.2)
--------- ---------
Total Shareholder's Equity ..................... 965.6 805.6
--------- ---------
Total Liabilities and Shareholder's Equity ..... $11,713.2 $12,194.7
========= =========

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31
2001 2000 1999
------- ------- ---------
(IN MILLIONS)
REVENUES
Premiums ............................................ $ 60.1 $ 28.6 $ 8.9
Universal life and investment-type product charges .. 365.4 337.1 341.5
Net investment income--Note 3 ....................... 227.0 213.4 174.6
Net realized investment and other gains (losses),
net of related amortization of deferred policy
acquisition costs of $(1.5), $(3.8) and $(0.5),
respectively--Notes 1, 3, and 9 .................... (9.0) (10.6) (4.8)
Other revenue ....................................... 24.0 0.2 0.2
------ ------ ------
Total revenues ...................................... 667.5 568.7 520.4
BENEFITS AND EXPENSES
Benefits to policyholders ........................... 294.1 248.6 260.5
Other operating costs and expenses .................. 76.2 116.8 117.5
Amortization of deferred policy acquisition
costs, excluding amounts related to net realized
investment and other gains (losses) of $(1.5),
$(3.8) and $(0.5), respectively
--Notes 1, 3 and 9 ................................. 67.1 34.0 13.1
Dividends to policyholders .......................... 21.4 26.1 25.7
------ ------ ------
Total benefits and expenses ......................... 458.8 425.5 416.8
------ ------ ------
Income before income taxes and cumulative effect
of accounting change ............................... 208.7 143.2 103.6
Income taxes--Note 5 ................................ 62.2 43.8 35.2
------ ------ ------
Income before cumulative effect of accounting
change ............................................. 146.5 99.4 68.4
Cumulative effect of accounting change,
net of tax .......................................... (1.6) -- --
------ ------ ------
Net income .......................................... $144.9 $ 99.4 $ 68.4
====== ====== ======

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY

AND COMPREHENSIVE INCOME

ACCUMULATED
ADDITIONAL OTHER TOTAL OUTSTANDING
COMMON PAID IN RETAINED COMPREHENSIVE SHAREHOLDER'S SHARES (IN
STOCK CAPITAL EARNINGS INCOME EQUITY THOUSANDS)
------ ---------- -------- ------------- ------------- -------------
(IN MILLIONS)

BALANCE AT JANUARY 1, 1999 ............ $2.5 $377.5 $ 65.1 $ 12.3 $457.4 50.0
Comprehensive income:
Net income ............................ 68.4 68.4
Other comprehensive income, net of tax:
Net unrealized losses ................ (25.7) (25.7)
------
Comprehensive income .................. 42.7
Capital contribution .................. 194.9 194.9
---- ------ ------ ------ ------ ----
BALANCE AT DECEMBER 31, 1999 .......... $2.5 $572.4 $133.5 $(13.4) $695.0 50.0
==== ====== ====== ====== ====== ====
Comprehensive income:
Net income ........................... 99.4 99.4
Other comprehensive income, net of tax:
Net unrealized gains ................. 11.2 11.2
------
Comprehensive income .................. 110.6
---- ------ ------ ------ ------ ----
BALANCE AT DECEMBER 31, 2000 .......... $2.5 $572.4 $232.9 $ (2.2) $805.6 50.0
==== ====== ====== ====== ====== ====
Comprehensive income:
Net income ........................... 144.9 144.9
Other comprehensive income, net of tax:
Net unrealized gains ................. 7.9 7.9
------
Comprehensive income .................. 152.8
Change in accounting principle ........ 7.2 7.2
---- ------ ------ ------ ------ ----
BALANCE AT DECEMBER 31, 2001 .......... $2.5 $572.4 $377.8 $ 12.9 $965.6 50.0
==== ====== ====== ====== ====== ====

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31
2001 2000 1999
--------- ------- -------
(IN MILLIONS)
Cash flows from operating activities:
Net income .................................. $ 144.9 $ 99.4 $ 68.4
Adjustments to reconcile net income to net
cash provided (used) by operating
activities:
Amortization of discount - fixed
maturities .............................. (0.4) (1.9) 1.2
Realized investment losses, net .......... 9.0 10.6 4.8
Change in deferred policy acquisition
costs ................................... (74.1) (141.5) (126.5)
Depreciation and amortization ............ 0.3 1.9 0.6
Increase in accrued investment income .... (8.6) (10.2) (3.5)
Decrease (increase) in premiums and
accounts receivable ..................... (5.5) 0.3 (2.4)
(Increase) decrease in other assets and
other liabilities, net .................. (159.2) 70.7 (58.2)
Increase (decrease) in policy liabilities
and accruals, net ....................... 289.1 (401.1) (377.6)
Increase in income taxes ................. 118.7 22.5 33.8
--------- ------- -------
Net cash provided (used) by operating
activities .............................. 314.2 (349.3) (459.4)
Cash flows from investing activities:
Sales of:
Fixed maturities available-for-sale ........ 184.6 194.6 204.3
Equity securities available-for-sale ....... 6.0 1.0 0.6
Real estate ................................ 3.3 0.2 17.9
Short-term investments and other invested
assets .................................... -- 1.3 1.5
Maturities, prepayments and scheduled
redemptions of:
Fixed maturities held-to-maturity .......... 4.5 79.9 75.8
Fixed maturities available-for-sale ........ 180.4 91.5 53.6
Short-term investments and other invested
assets .................................... 46.5 10.1 --
Mortgage loans on real estate .............. 66.4 85.6 35.8
Purchases of:
Fixed maturities held-to-maturity .......... (5.1) (127.2) (98.8)
Fixed maturities available-for-sale ........ (1,112.3) (424.7) (250.9)
Equity securities available-for-sale ....... (6.1) (0.6) (4.0)
Real estate ................................ (0.6) (0.4) (2.2)
Short-term investments and other invested
assets .................................... (39.6) (38.8) (14.6)
Mortgage loans on real estate issued ....... (85.0) (100.5) (90.3)
Other, net ................................. (25.6) (41.5) (30.6)
--------- ------- -------
Net cash used in investing activities ..... (782.6) (269.5) (101.9)

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

YEAR ENDED DECEMBER 31
2001 2000 1999
-------- -------- --------
(IN MILLIONS)

Cash flows from financing activities:
Capital contribution from parent
company ............................... -- -- $ 194.9
Universal life and investment-type
contract deposits ..................... $1,220.7 $1,067.2 1,026.3
Universal life and investment-type
contract maturities and withdrawals ... (914.2) (430.7) (380.7)
Repayment of long term debt ............ -- -- (61.9)
-------- -------- --------
Net cash provided by financing
activities ............................ 306.5 636.5 778.6
-------- -------- --------
Net (decrease) increase in cash and
cash equivalents ...................... (161.9) 17.7 217.3
Cash and cash equivalents at beginning
of year ................................ 277.3 259.6 42.3
-------- -------- --------
Cash and cash equivalents at
end of year ............................ $ 115.4 $ 277.3 $ 259.6
======== ======== ========

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Basis of Presentation

Certain prior year amounts have been reclassified to conform to the current
year presentation.

Reorganization and Initial Public Offering

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Investments

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Policy loans are carried at unpaid principal balances, which approximate fair
value.

Short-term investments are carried at amortized cost, which approximates fair
value.

Derivative Financial Instruments

Cash and Cash Equivalents

Cash and cash equivalents include cash and all highly liquid debt investments
with a maturity of three months or less when purchased.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Deferred Policy Acquisition Costs

Reinsurance

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Separate Accounts

Future Policy Benefits and Policyholders' Funds

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Participating Insurance

Participating business represents approximately 7.6% and 16.3% of the
Company's life insurance in-force at December 31, 2001 and 2000, respectively.

Revenue Recognition

Premiums from participating and non-participating traditional life insurance
and annuity policies with life contingencies are recognized as income when due.

Federal Income Taxes

Foreign Currency Translation

Gains or losses on foreign currency transactions are reflected in earnings.

Cumulative Effect of Accounting Changes

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements

In June 2001, the FASB issued SFAS No. 141, "Business Combinations." SFAS No.
141 requires that all business combinations be accounted for under a single
method, the purchase method. Use of the pooling-of-interests method is no longer
permitted. SFAS No. 141 also clarifies the criteria to recognize intangible
assets separately from goodwill, and prohibits the amortization of goodwill
relating to acquisitions completed after July 1, 2001. SFAS No. 141 is effective
for business combinations initiated after June 30, 2001.The adoption of SFAS No.
141 did not have a material effect on the Company's results of operations or
financial position.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Codification

NOTE 2. RELATED PARTY TRANSACTIONS

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2. RELATED PARTY TRANSACTIONS (CONTINUED)

NOTE 3. INVESTMENTS

The following information summarizes the components of net investment income
and net realized investment and other gains (losses), net:

YEAR ENDED DECEMBER 31,
2001 2000 1999
------- ------------- ---------
(IN MILLIONS)
NET INVESTMENT INCOME
Fixed maturities .......................... $160.1 $138.5 $127.1
Equity securities ......................... 0.3 0.2 --
Mortgage loans on real estate ............. 42.3 44.3 39.7
Real estate ............................... 2.3 4.1 3.6
Policy loans .............................. 21.1 17.1 13.7
Short-term investments .................... 6.3 19.4 4.5
Other ..................................... 3.3 1.1 (2.0)
------ ------ ------
Gross investment income ................... 235.7 224.7 186.6
Less investment expenses ................. 8.7 11.3 12.0
------ ------ ------
Net investment income ................... $227.0 $213.4 $174.6
====== ====== ======
NET REALIZED INVESTMENT AND OTHER GAINS
(LOSSES), NET OF RELATED AMORTIZATION OF
DEFERRED POLICY ACQUISITION COSTS
Fixed maturities .......................... $(25.1) $(16.0) $ (5.9)
Equity securities ......................... 3.8 0.8 --
Mortgage loans on real estate and real
estate ................................... (1.2) (2.3) 0.9
Derivatives and other invested assets ..... 12.0 3.1 (0.3)
Amortization adjustment for deferred
policy acquisition costs ................. 1.5 3.8 0.5
------ ------ ------
Net realized investment and other losses,
net of related amortization of deferred
policy acquisition costs ................ $ (9.0) $(10.6) $ (4.8)
====== ====== ======

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

The Company's investments in held-to-maturity securities and
available-for-sale securities are summarized below:

GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ------------
(IN MILLIONS)
DECEMBER 31, 2001
HELD-TO-MATURITY:
Corporate securities .......... $ 65.0 $ -- $ 0.8 $ 64.2
Mortgage-backed securities .... 18.7 0.2 1.0 17.9
-------- ----- ----- --------
Total ........................ $ 83.7 $ 0.2 $ 1.8 $ 82.1
======== ===== ===== ========
AVAILABLE-FOR-SALE:
Corporate securities .......... $1,867.5 $67.5 $44.2 $1,890.8
Mortgage-backed securities .... 296.7 6.3 4.7 298.3
Obligations of states and
political subdivisions ....... 0.9 -- -- 0.9
Debt securities issued by
foreign governments .......... 7.2 0.5 -- 7.7
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies .... 219.6 1.1 5.9 214.8
-------- ----- ----- --------
Total fixed maturities ........ 2,391.9 75.4 54.8 2,412.5
Equity securities ............. 12.1 1.5 0.5 13.1
-------- ----- ----- --------
Total ........................ $2,404.0 $76.9 $55.3 $2,425.6
======== ===== ===== ========

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

The amortized cost and fair value of fixed maturities at December 31, 2001, by
contractual maturity, are shown below:

GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ----------
(IN MILLIONS)
DECEMBER 31, 2000
HELD-TO-MATURITY:
Corporate securities ............ $ 684.2 $23.4 $51.0 $ 656.6
Mortgage-backed securities ...... 29.3 0.2 1.2 28.3
Obligations of states and
political subdivisions ......... 1.9 -- -- 1.9
-------- ----- ----- --------
Total ........................... $ 715.4 $23.6 $52.2 $ 686.8
======== ===== ===== ========
AVAILABLE-FOR-SALE:
Corporate securities ............ $ 751.6 $20.6 $27.8 $ 744.4
Mortgage-backed securities ...... 239.1 3.6 3.7 239.0
Obligations of states and
political subdivisions ........ 0.9 -- -- 0.9
Debt securities issued by foreign
governments ................... 11.1 0.3 0.6 10.8
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies ..... 16.1 0.7 0.1 16.7
-------- ----- ----- --------
Total fixed maturities .......... 1,018.8 25.2 32.2 1,011.8
Equity securities ............... 7.1 2.8 1.8 8.1
-------- ----- ----- --------
Total ........................ $1,025.9 $28.0 $34.0 $1,019.9
======== ===== ===== ========

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

The amortized cost and fair value of fixed maturities at December 31, 2001, by
contractual maturity, are shown below:

AMORTIZED FAIR
COST VALUE

(IN MILLIONS)
-------------------
HELD-TO-MATURITY:
Due in one year or less ................................ $ -- $ --
Due after one year through five years .................. 3.0 3.0
Due after five years through ten years ................. 8.6 8.6
Due after ten years .................................... 53.4 52.6
-------- --------
65.0 64.2
Mortgage-backed securities ............................. 18.7 17.9
-------- --------
Total .................................................. $ 83.7 $ 82.1
======== ========
AVAILABLE-FOR-SALE:
Due in one year or less ................................ $ 97.5 $ 99.5
Due after one year through five years .................. 772.0 794.2
Due after five years through ten years ................. 935.2 929.4
Due after ten years .................................... 290.5 291.1
-------- --------
2,095.2 2,114.2
Mortgage-backed securities ............................. 296.7 298.3
-------- --------
Total .................................................. $2,391.9 $2,412.5
======== ========

Expected maturities may differ from contractual maturities because eligible
borrowers may exercise their right to call or prepay obligations with or without
call or prepayment penalties.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

Changes in the allowance for probable losses on mortgage loans on real estate
and real estate to be disposed of are summarized below.

BALANCE AT BALANCE AT
BEGINNING END OF
OF YEAR ADDITIONS DEDUCTIONS YEAR
---------- --------- ---------- ------------
(IN MILLIONS)
Year ended December 31, 2001
Mortgage loans on real estate ... $5.0 $1.7 $1.2 $5.5
Real estate to be disposed of ... 0.7 0.1 -- 0.8
---- ---- ---- ----
Total ........................... $5.7 $1.8 $1.2 $6.3
==== ==== ==== ====
Year ended December 31, 2000
Mortgage loans on real estate ... $3.8 $1.2 $ -- $5.0
Real estate to be disposed of ... -- 0.7 -- 0.7
---- ---- ---- ----
Total ........................... $3.8 $1.9 $ -- $5.7
==== ==== ==== ====
Year ended December 31, 1999
Mortgage loans on real estate ... $3.7 $0.4 $0.3 $3.8
Real estate to be disposed of ... 0.7 -- 0.7 --
---- ---- ---- ----
Total ........................... $4.4 $0.4 $1.0 $3.8
==== ==== ==== ====

DECEMBER 31
2001 2000
------ --------
(IN MILLIONS)
Impaired mortgage loans on real estate with provision for
losses ...................................................... $ 2.4 $ 4.2
Provision for losses ......................................... (1.2) (1.2)
----- -----
Net impaired mortgage loans on real estate ................... $ 1.2 $ 3.0
===== =====

The average investment in impaired loans and the interest income recognized on
impaired loans were as follows:

YEAR ENDED DECEMBER 31
2001 2000 1999
------- ------- ---------
(IN MILLIONS)
Average recorded investment in impaired loans ...... $3.3 $2.1 $--
Interest income recognized on impaired loans ....... 0.5 0.3 --

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

At December 31, 2001, the mortgage portfolio was diversified by geographic
region and specific collateral property type as displayed below:

CARRYING GEOGRAPHIC CARRYING
PROPERTY TYPE AMOUNT CONCENTRATION AMOUNT
- ---------------------- ------------- ----------------------- ---------------
(IN MILLIONS) (IN MILLIONS)

Apartments ............... $115.1 East North Central ........ $ 63.6
Hotels ................... 24.8 East South Central ........ 25.8
Industrial ............... 72.1 Middle Atlantic ........... 50.6
Office buildings ......... 146.4 Mountain .................. 35.5
Retail ................... 35.5 New England ............... 55.1
Mixed Use ................ 5.0 Pacific ................... 111.3
Agricultural ............. 168.9 South Atlantic ............ 152.9
Other .................... 18.6 West North Central ........ 20.6
West South Central ........ 67.7
Canada/Other .............. 3.3
Allowance for losses ..... (5.5) Allowance for losses ...... (5.5)
------ ------
Total .................... $580.9 Total ..................... $580.9
====== ======

Bonds with amortized cost of $24.7 million were non-income producing for
year ended December 31, 2001.

NOTE 4. DERIVATIVES AND HEDGING INSTRUMENTS

The fair value of derivative instruments classified as assets at December
31, 2001 was $16.7 million, and appears on the consolidated balance sheet in
other assets. The fair value of derivative instruments classified as liabilities
at December 31, 2001 was $12.0 million and appears on the consolidated balance
sheet in other liabilities.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. DERIVATIVES AND HEDGING INSTRUMENTS (CONTINUED)

Fair Value Hedges

The Company uses equity collar agreements to reduce its equity market
exposure with respect to certain common stock investments that the Company
holds. A collar consists of a written call option that limits the Company's
potential for gain from appreciation in the stock price as well as a purchased
put option that limits the Company's potential for loss from a decline in the
stock price.

Cash Flow Hedges

The Company used interest rate cap and floor agreements to hedge the
interest rate risk associated with minimum interest rate guarantees in certain
of its life insurance and annuity businesses. Amounts are reclassified from
other comprehensive income if interest rates fall below certain levels.

In 2001, the Company recognized no gains or losses related to the
ineffective portion of its cash flow hedges, and a net gain of $0.2 million
related to the portion of the hedging instruments that was excluded from the
assessment of hedge effectiveness. This amount is recorded in net realized
investment and other gains and losses. All of the Company's hedged forecasted
transactions qualified as cash flow hedges in 2001.

In 2001, none of the Company's cash flow hedges have been discontinued
because of the probability that the original forecasted transaction would not
occur by the end of the originally specified time period documented at inception
of the hedging relationship.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. DERIVATIVES AND HEDGING INSTRUMENTS (CONTINUED)

Derivatives Not Designated as Hedging Instruments

The Company enters into interest rate swap agreements, interest rate
futures contracts, and interest rate cap and floor agreements to manage exposure
to interest rates as described above under Fair Value Hedges without designating
the derivatives as hedging instruments.

NOTE 5. INCOME TAXES

The Company is included in the consolidated federal income tax return of
John Hancock Financial Services, Inc. The federal income taxes of the Company
are allocated on a separate return basis with certain adjustments.

The components of income taxes were as follows:

YEAR ENDED DECEMBER 31
2001 2000 1999
------ ------ ---------
(IN MILLIONS)
Current taxes:
Federal ............................................. $30.1 $15.2 $(1.5)
Foreign ............................................. -- 0.6 0.1
----- ----- -----
30.1 15.8 (1.4)
Deferred taxes:
Federal ............................................. 32.1 28.0 36.6
----- ----- -----
Total income taxes .................................. $62.2 $43.8 $35.2
===== ===== =====

A reconciliation of income taxes computed by applying the federal income
tax rate to income before income taxes and the consolidated income tax expense
charged to operations follows:

YEAR ENDED DECEMBER 31
2001 2000 1999
------- ------- ---------
(IN MILLIONS)
Tax at 35% ........................................ $73.0 $50.1 $36.3
Add (deduct):
Equity base tax .................................. (9.0) (5.6) --
Prior years taxes ................................ 2.1 -- (0.3)
Tax credits ...................................... (0.4) (0.6) (0.1)
Foreign taxes .................................... -- 0.6 0.1
Tax exempt investment income ..................... (5.6) (0.7) (0.7)
Other ............................................ 2.1 -- (0.1)
----- ----- -----
Total income taxes .............................. $62.2 $43.8 $35.2
===== ===== =====

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5. INCOME TAXES (CONTINUED)

The significant components of the Company's deferred tax assets and
liabilities were as follows:

DECEMBER 31
2001 2000
------ --------
(IN MILLIONS)
DEFERRED TAX ASSETS:
Policy reserve adjustments ................................... $238.1 $110.0
Other postretirement benefits ................................ 20.1 23.3
Book over tax basis of investments ........................... 12.0 7.8
Interest ..................................................... -- 7.5
Unrealized holding losses .................................... -- 1.4
------ ------
Total deferred tax assets ................................... 270.2 150.0
DEFERRED TAX LIABILITIES:
Deferred policy acquisition costs ............................ 373.7 199.1
Depreciation ................................................. 2.1 1.8
Basis in partnerships ........................................ 0.6 0.4
Market discount on bonds ..................................... 1.2 0.6
Lease income ................................................. 47.0 35.4
Unrealized gains ............................................. 6.8 --
Other ........................................................ -- 9.5
------ ------
Total deferred tax liabilities .............................. 431.4 246.8
------ ------
Net deferred tax liabilities ................................ $161.2 $ 96.8
====== ======

The Company received an income tax refund of $32.4 million and made income tax
payments of $62.9 million and $13.2 million in 2001, 2000 and 1999,
respectively.

NOTE 6 - REINSURANCE

The effect of reinsurance on premiums written and earned was as follows:

2001 2000 1999
PREMIUMS PREMIUMS PREMIUMS
WRITTEN EARNED WRITTEN EARNED WRITTEN EARNED
------- ------- ------- ------ ------- --------
(IN MILLIONS)
Life Insurance:
Direct .................. $ 82.0 $ 82.0 $34.1 $34.1 $12.1 $12.1
Ceded ................... (21.9) (21.9) (5.5) (5.5) (3.2) (3.2)
------ ------ ----- ----- ----- -----
Net life insurance
premiums .............. $ 60.1 $ 60.1 $28.6 $28.6 $ 8.9 $ 8.9
====== ====== ===== ===== ===== =====

For the year ended December 31, 2001, 2000 and 1999, benefits to policyholders
under life ceded reinsurance contracts were $3.8 million, $3.0 million and $ --
million, respectively.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6. REINSURANCE (CONTINUED)

NOTE 7. COMMITMENTS AND CONTINGENCIES

During 1996, management determined that it was probable that a settlement
would occur and that a minimum loss amount could be reasonably estimated.
Accordingly, the Company recorded its best estimate based on the information
available at the time. The terms of the settlement agreement were negotiated
throughout 1997 and approved by the court on December 31, 1997. In accordance
with the terms of the settlement agreement, the Company contacted class members
during 1998 to determine the actual type of relief to be sought by class
members. The majority of the responses from class members were received by the
fourth quarter of 1998. The type of relief sought by class members differed from
the Company's previous estimates, primarily due to additional outreach
activities by regulatory authorities during 1998 encouraging class members to
consider alternative dispute resolution (ADR) relief. In 1999, the Company
updated its estimate of the cost of claims subject to alternative dispute
resolution relief and revised its reserve estimate accordingly. The reserve
estimate was further evaluated quarterly, and was adjusted as noted above, in
the fourth quarter of 2001. The adjustment to the reserve in 2001 was the result
of the Company being able to better estimate the cost of settling the remaining
claims, which on average tend to be larger, more complicated claims. The
better estimate comes from experience with actual settlements on similar claims.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. SHAREHOLDER'S EQUITY

(a) Common Stock

(b) Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive loss are as follows:

ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSSES)
-----------------
(IN MILLIONS)
Balance at January 1, 1999 ...................................... $ 12.3
Gross unrealized gains (losses) (net of deferred income
tax benefit of $18.0 million) .................................. (34.2)
Reclassification adjustment for gains (losses), realized in
net income (net of tax expense of $1.7 million) ................ (3.1)
Adjustment to deferred policy acquisition costs and present value
of future profits (net of deferred income tax expense of
$6.2 million) .................................................. 11.6
------
Net unrealized gains (losses) ................................... (25.7)
------
Balance at December 31, 1999 .................................... $(13.4)
======

Balance at January 1, 2000 ...................................... $(13.4)
Gross unrealized gains (losses) (net of deferred income
tax expense of $9.7 million) ................................... 18.0
Reclassification adjustment for gains (losses), realized in
net income (net of tax expense of $1.6 million) ................ (2.9)
Adjustment to deferred policy acquisition costs and
present value of future profits (net of deferred income
tax benefit of $2.1 million) ................................... (3.9)
------
Net unrealized gains (losses) ................................... 11.2
------
Balance at December 31, 2000 .................................... $ (2.2)
======

Balance at January 1, 2001 ...................................... $ (2.2)
Gross unrealized gains (losses) (net of deferred income
tax expense of $7.2 million) ................................... 11.8
Reclassification adjustment for gains (losses), realized in
net income (net of tax benefit of $1.1 million) ................ 2.1
Adjustment to deferred policy acquisition costs and
present value of future profits (net of deferred income
tax benefit of $3.2 million) ................................... (6.0)
------
Net unrealized gains (losses) ................................... 7.9
Change in accounting principle .................................. 7.2
------
Balance at December 31, 2001 .................................... $ 12.9
======

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. SHAREHOLDER'S EQUITY (CONTINUED)

Net unrealized investment gains (losses), included in the consolidated balance
sheet as a component of shareholder's equity, are summarized as follows:

2001 2000 1999
------ ---- ------
(IN MILLIONS)
Balance, end of year comprises:
Unrealized investment gains (losses) on:
Fixed maturities ................................. $ 20.6 ($7.0) ($28.7)
Equity investments ............................... 1.0 1.0 (1.4)
Derivatives and other ............................ 5.2 0.3 1.3
------ ----- ------
Total .............................................. 26.8 (5.7) (28.8)
Amounts of unrealized investment (gains) losses
attributable to:
Deferred policy acquisition cost and present
value of future profits ......................... (7.1) 2.1 8.1
Deferred federal income taxes .................... (6.8) 1.4 7.3
------ ----- ------
Total .............................................. (13.9) 3.5 15.4
------ ----- ------
Net unrealized investment gains .................... $ 12.9 ($2.2) ($13.4)
====== ===== ======

Statutory net income and surplus include the accounts of the Company and its
wholly-owned subsidiary, Investors Partners Life Insurance Company.

2001 2000 1999
------ ------ ------
(IN MILLIONS)
Statutory net income ................................ $ 13.1 $ 26.6 $ 77.5
Statutory surplus ................................... 647.0 527.2 468.8

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. SHAREHOLDER'S EQUITY (CONTINUED)

NOTE 9. SEGMENT INFORMATION

ASSET GATHERING SEGMENT. Offers individual variable annuities. This segment
distributes its products through distribution channels including insurance
agents and brokers affiliated with the Company, securities brokerage firms,
financial planners, and banks.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9. SEGMENT INFORMATION (CONTINUED)

ASSET
PROTECTION GATHERING CONSOLIDATED
---------- --------- ------------
(IN MILLIONS)
YEAR ENDED DECEMBER 31, 2001
REVENUES:
Segment revenues ....................... $ 614.3 $ 62.2 $ 676.5
Net realized investment and other
gains (losses) ........................ (9.0) -- (9.0)
-------- -------- ---------
Revenues ............................... $ 605.3 $ 62.2 $ 667.5
======== ======== =========

Net investment income .................. $ 229.2 $ (2.2) $ 227.0
NET INCOME:
Segment after-tax operating income ..... $ 130.0 $ 22.2 $ 152.2
Net realized investment and other
gains (losses) ........................ (5.6) -- (5.6)
Surplus tax ............................ 9.1 -- 9.1
Class action lawsuit ................... (9.2) -- (9.2)
Cumulative effect of accounting
change, net of tax .................... (1.6) -- (1.6)
-------- -------- ---------
Net income ............................. $ 122.7 $ 22.2 $ 144.9
======== ======== =========
SUPPLEMENTAL INFORMATION:
Equity in net income of investees
accounted for by the equity method .... $ 2.7 $ -- $ 2.7
Amortization of deferred policy
acquisition costs ..................... 46.6 20.5 67.1
Income tax expense ..................... 54.8 7.4 62.2
Segment assets ......................... $9,995.5 $1,717.7 $11,713.2
NET REALIZED INVESTMENT AND OTHER GAINS
(LOSSES) DATA:
Net realized investment and other
gains (losses) ........................ $ (10.5) -- $ (10.5)
Less amortization of deferred policy
acquisition costs related to net
realized investment and
other gains (losses) .................. 1.5 -- 1.5
-------- -------- ---------
Net realized investment and other
gains (losses), net of related
amortization of deferred policy
acquisition costs - per consolidated
financial statements .................. (9.0) -- (9.0)
Less income tax effect ................. 3.4 -- 3.4
-------- -------- ---------
Net realized investment and other
gains (losses), net-after-tax
adjustment made to calculate segment
operating income ..................... $ (5.6) -- $ (5.6)
======== ======== =========

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9. SEGMENT INFORMATION (CONTINUED)

ASSET
PROTECTION GATHERING CONSOLIDATED
---------- --------- ------------
(IN MILLIONS)
YEAR ENDED DECEMBER 31, 2000
REVENUES:
Segment revenues ................. $ 530.8 $ 48.5 $ 579.3
Net realized investment and
other gains (losses), net ....... (10.6) -- (10.6)
-------- -------- ---------
Revenues ................... $ 520.2 $ 48.5 $ 568.7
======== ======== =========

Net investment income ...... $ 215.9 $ (2.5) $ 213.4
NET INCOME:
Segment after-tax operating
income .......................... 96.0 6.3 102.3
Net realized investment and
other gains (losses), net ....... (6.8) -- (6.8)
Surplus tax ...................... 5.4 0.2 5.6
Other demutualization related
costs ........................... (0.5) (0.1) (0.6)
Restructuring charges ............ (1.1) -- (1.1)
-------- -------- ---------
Net income ....................... $ 93.0 $ 6.4 $ 99.4
======== ======== =========
SUPPLEMENTAL INFORMATION:
Equity in net income of investees
accounted for by the equity
method .......................... $ 1.3 $ -- $ 1.3
Amortization of deferred policy
acquisition costs ............... 17.6 16.4 34.0
Income tax expense ............... 40.7 3.1 43.8
Segment assets ................... $9,326.9 $2,867.8 $12,194.7
NET REALIZED INVESTMENT AND OTHER
GAINS (LOSSES) DATA:
Net realized investment and other
losses .......................... $ (14.4) -- $ (14.4)
Less amortization of deferred
policy acquisition costs related
to net realized investment and
other gains (losses) ............ 3.8 -- 3.8
-------- -------- ---------
Net realized investment and other
gains (losses), net of related
amortization of deferred policy
acquisition costs - per
consolidated financial
statements ...................... (10.6) -- (10.6)
Less income tax effect ........... 3.8 -- 3.8
-------- -------- ---------
Net realized investment and other
gains (losses), net-after-tax
adjustment made to calculate
segment operating income ........ $ (6.8) -- $ (6.8)
======== ======== =========

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9. SEGMENT INFORMATION (CONTINUED)

ASSET
PROTECTION GATHERING CONSOLIDATED
---------- --------- --------------
(IN MILLIONS)
YEAR ENDED DECEMBER 31, 1999
REVENUES:
Segment revenues ....................... $ 488.0 $ 37.2 $ 525.2
Net realized investment and other
gains (losses), net ................... (4.8) -- (4.8)
-------- -------- ---------
Revenues ............................... $ 483.2 $ 37.2 $ 520.4
======== ======== =========

Net investment income .................. $ 178.1 $ (3.5) $ 174.6
NET INCOME:
Segment after-tax operating income ..... 108.0 6.8 114.8
Net realized investment and other
gains (losses), net ................... (3.1) -- (3.1)
Class action lawsuit ................... (42.9) -- (42.9)
Other demutualization related costs .... (0.3) (0.1) (0.4)
-------- -------- ---------
Net income ............................. $ 61.7 $ 6.7 $ 68.4
======== ======== =========
SUPPLEMENTAL INFORMATION:
Equity in net income of investees
accounted for by the equity method .... $ (0.1) $ -- $ (0.1)
Amortization of deferred policy
acquisition costs ..................... 4.6 8.5 13.1
Income tax expense ..................... 31.8 3.4 35.2
Segment assets ......................... $9,104.6 $2,869.6 $11,974.2
NET REALIZED INVESTMENT AND OTHER
GAINS (LOSSES) DATA:
Net realized investment and other
gains (losses) ........................ $ (5.3) -- $ (5.3)
Less amortization of deferred policy
acquisition costs related to net
realized investment gains (losses) .... 0.5 -- 0.5
-------- -------- ---------
Net realized investment and other
gains (losses), net of related
amortization of deferred policy
acquisition costs - per consolidated
financial statements .................. (4.8) -- (4.8)
Less income tax effect ................. 1.7 -- 1.7
-------- -------- ---------
Net realized investment and other
gains (losses), net-after-tax
adjustment made to calculate
segment operating income .............. $ (3.1) -- $ (3.1)
======== ======== =========

The Company operates only in the United States. The Company has no reportable
major customers and revenues are attributed to countries based on the location
of customers.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company to determine
the fair values of financial instruments:

The carrying amount in the balance sheet for policy loans, short-term
investments and cash and cash equivalents approximates their respective fair
values.

The fair value for commitments approximates the amount of the initial
commitment.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

The following table presents the carrying amounts and fair values of the
Company's financial instruments:

DECEMBER 31 DECEMBER 31
2001 2000
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-------- -------- -------- ----------
(IN MILLIONS) (IN MILLIONS)
ASSETS:
Fixed maturities:
Held-to-maturity ................... $ 83.7 $ 82.1 $ 715.4 $ 686.8
Available-for-sale ................. 2,412.5 2,412.5 1,011.8 1,011.8
Equity securities:
Available-for-sale ................. 13.1 13.1 8.1 8.1
Mortgage loans on real estate ....... 580.9 604.3 554.8 574.2
Policy loans ........................ 352.0 352.0 334.2 334.2
Short-term investments .............. -- -- 21.7 21.7
Cash and cash equivalents .......... 115.4 115.4 277.3 277.3
Derivatives:
Futures contracts, net .............. -- -- 0.1 0.1
Interest rate swap agreements ....... 8.8 8.8 -- --
Interest rate cap agreements ........ 3.5 3.5 2.1 2.1
Interest rate floor agreements ...... 4.5 4.5 4.5 4.5
Currency rate swap agreements ....... 0.4 0.4 -- --
Equity collar agreements ............ 0.8 0.8 0.4 0.4
LIABILITIES:
Fixed rate deferred and immediate
annuities ........................... 53.1 50.3 63.8 60.4
Derivatives:
Interest rate swap agreements ....... 13.2 13.2 -- 1.2
Currency rate swap agreements ....... 0.1 0.1 0.6 0.6
Commitments .......................... -- 57.1 -- 62.9

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE I - SUMMARY OF INVESTMENTS --
OTHER THAN INVESTMENTS IN RELATED PARTIES
AS OF DECEMBER 31, 2001
(IN MILLIONS OF DOLLARS)

COLUMN A COLUMN B COLUMN C COLUMN D
AMOUNT AT WHICH
SHOWN IN THE
CONSOLIDATED
BALANCE
TYPE OF INVESTMENT COST/(2)/ VALUE SHEET
---------- -------- ------------------
Fixed maturity securities,
available-for-sale:
Bonds:
United States government and
government agencies
and authorities $ 219.6 $ 214.8 $ 214.8
States, municipalities and political
subdivisions 6.0 6.0 6.0
Foreign governments 7.2 7.6 7.6
Public utilities 189.3 192.9 192.9
Convertibles and bonds with warrants
attached 25.9 25.1 25.1
All other corporate bonds 1,897.9 1,920.5 1,920.5
Certificates of deposits -- -- --
Redeemable preferred stock 46.0 45.6 45.6
-------- -------- --------
Total fixed maturity securities,
available-for-sale 2,391.9 2,412.5 2,412.5
======== ======== ========
Equity securities,
available-for-sale:
Common stocks:
Public utilities -- -- --
Banks, trust and insurance companies -- -- --
Industrial, miscellaneous and all
other 3.8 5.0 5.0
Non-redeemable preferred stock 8.3 8.1 8.1
-------- -------- --------
Total equity securities,
available-for-sale 12.1 13.1 13.1
======== ======== ========
Fixed maturity securities,
held-to-maturity:
Bonds
United States government and
government agencies
and authorities -- -- --
States, municipalities and political
subdivisions -- -- --
Foreign governments -- -- --
Public utilities -- -- --
Convertibles and bonds with warrants
attached -- -- --
All other corporate bonds 5.1 5.1 5.1
Certificates of deposits 78.6 77.0 78.6
Redeemable preferred stock -- -- --
-------- -------- --------
Total fixed maturity securities,
held-to-maturity 83.7 82.1 83.7
======== ======== ========

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

100

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE I - SUMMARY OF INVESTMENTS --
OTHER THAN INVESTMENTS IN RELATED PARTIES (CONTINUED)
AS OF DECEMBER 31, 2001
(IN MILLIONS OF DOLLARS)

COLUMN A COLUMN B COLUMN C COLUMN D
AMOUNT AT WHICH
SHOWN IN THE
CONSOLIDATED
BALANCE
TYPE OF INVESTMENT COST/(2)/ VALUE SHEET
---------- -------- ---------------
Equity securities, trading:
Common stocks:
Public utilities -- -- --
Banks, trust and insurance companies -- -- --
Industrial, miscellaneous and all other -- -- --
Non-redeemable preferred stock -- -- --
-------- -------- --------
Total equity securities, trading -- -- --
-------- -------- --------
Mortgage loans on real estate, net /(1)/ $ 586.4 xxxx $ 580.9
Real estate, net:
Investment properties /(1)/ 21.4 xxxx 20.6
Acquired in satisfaction of debt/(1)/ -- xxxx --
Policy loans 352.0 xxxx 352.0
Other long-term investments /(2)/ 39.6 xxxx 39.6
Short-term investments -- xxxx --
-------- -------- --------
Total investments $3,487.1 $2,507.7 $3,502.4
======== ======== ========

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

101

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION
AS OF DECEMBER 31, 2001, 2000 AND 1999 AND FOR THE YEAR THEN ENDED
(IN MILLIONS OF DOLLARS)

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

102

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION (CONTINUED)
AS OF DECEMBER 31, 2001, 2000 AND 1999 AND FOR THE YEAR THEN ENDED
(IN MILLIONS OF DOLLARS)

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

103

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY AND SUBSIDIARY

SCHEDULE IV - REINSURANCE
AS OF DECEMBER 31, 2001
(IN MILLIONS OF DOLLARS)

ASSUMED PERCENTAGE
CEDED TO FROM OF AMOUNT
GROSS OTHER OTHER NET ASSUMED TO
AMOUNT COMPANIES COMPANIES AMOUNT NET
---------- --------- --------- --------- ------------

The condensed financial information should be read in conjunction with the
audited consolidated financial statements and notes thereto.

104

APPENDIX A - DETAILS ABOUT OUR GUARANTEED PERIODS

INVESTMENTS THAT SUPPORT OUR GUARANTEE PERIODS

We invest the non-unitized separate account assets, according to our detailed
investment policies and guidelines, in fixed income obligations, including:

. corporate bonds,

. mortgages,

. mortgage-backed and asset-backed securities, and

. government and agency issues.

GUARANTEED INTEREST RATES

We declare the guaranteed rates from time to time as market conditions and
other factors dictate. We advise you of the guaranteed rate for a selected
guarantee period at the time we:

. receive your premium payment,

. effectuate your transfer, or

. renew your guarantee period

105

COMPUTATION OF MARKET VALUE ADJUSTMENT

n
--
1+g 12
(---------) -1
1+c+0.005

where,

. g is the guaranteed rate in effect for the current guarantee period.

. c is the current guaranteed rate in effect for new guarantee periods
with duration equal to the number of years remaining in the current
guarantee period (rounded to the nearest whole number of years). If
we are not currently offering such a guarantee period, we will
declare a guarantee rate, solely for this purpose, consistent with
interest rates currently available.

. n is the number of complete months from the date of withdrawal to the
end of the current guarantee period. (If less than one complete
month remains, n equals one unless the withdrawal is made on the last
day of the guarantee period, in which case no adjustment applies.)

SAMPLE CALCULATION 1: POSITIVE ADJUSTMENT

- ------------------------------------------------------------------------------------------
Amount withdrawn or transferred $10,000
- ------------------------------------------------------------------------------------------
Guarantee period 7 years
- ------------------------------------------------------------------------------------------
Time of withdrawal or transfer beginning of 3rd year of guaranteed period
- ------------------------------------------------------------------------------------------
Guaranteed rate (g) 8%
- ------------------------------------------------------------------------------------------
Guaranteed rate for new 5 year guarantee (c) 7%
- ------------------------------------------------------------------------------------------
Remaining guarantee period (n) 60 months
- ------------------------------------------------------------------------------------------

Market value adjustment:

60
--
1+0.08 12
10,000 x [(--------------) -1] = 234.73
1+0.07+0.005

Amount withdrawn or transferred (adjusted for market value adjustment):
$10,000 + $234.73 = $10,234.73

106

SAMPLE CALCULATION 2: NEGATIVE ADJUSTMENT

- -------------------------------------------------------------------------------------------
Amount withdrawn or transferred $10,000
- -------------------------------------------------------------------------------------------
Guarantee period 7 years
- -------------------------------------------------------------------------------------------
Time of withdrawal or transfer beginning of 3rd year of guaranteed period
- -------------------------------------------------------------------------------------------
Guaranteed rate (g) 8%
- -------------------------------------------------------------------------------------------
Guaranteed rate for new 5 year guarantee (c) 9%
- -------------------------------------------------------------------------------------------
Remaining guarantee period(n) 60 months
- -------------------------------------------------------------------------------------------

Market value adjustment:

60
--
1+0.08 12
10,000 x [(--------------) -1] = 666.42
1+0.09+0.005

Amount withdrawn or transferred (adjusted for money market adjustment):
$10,000 - 666.42 = $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 guaranteed period
- -------------------------------------------------------------------------------------------
Guaranteed rate (g) 8%
- -------------------------------------------------------------------------------------------
Guaranteed rate for new 5 year guarantee (c) 7.75%
- -------------------------------------------------------------------------------------------
Remaining guarantee period(n) 60 months
- -------------------------------------------------------------------------------------------

Market value adjustment:

60
--
1+0.08 12
10,000 x [(---------------) -1] = 114.94
1+0.07775+0.005

Amount withdrawn or transferred (adjusted for market value adjustment):
$10,000 - 114.94 = $9,885.06

________________________________________________________________________

*All interest rates shown have been arbitrarily chosen for purposes of these
examples. In most cases they will bear little or no relation to the rates we
are actually guaranteeing at any time.

107

APPENDIX B - EXAMPLE OF WITHDRAWAL CHARGE CALCULATION

ASSUME THE FOLLOWING FACTS:
On January 1, 1997, you make a $5000 initial premium payment and we issue you
a contract.
On January 1, 1998, you make a $1000 premium payment
On January 1, 1999, you make a $1000 premium payment.
On January 1, 2000, the total value of your contract is $9000 because of good
investment earnings.

Now assume you make a partial withdrawal of $6000 (no tax withholding) on
January 2, 2000. In this case, assuming no prior withdrawals, we would
deduct a CDSL of $272.23. We withdraw a total of $6272.23 from your
contract.

$6000.00 -- withdrawal request payable to you
+ 272.23 -- withdrawal charge payable to us
----------
$6272.23 -- total amount withdrawn from your contract

HERE IS HOW WE DETERMINE THE WITHDRAWAL CHARGE:

1. We FIRST reduce your $5000 INITIAL PREMIUM PAYMENT by the three annual $30
contract fees we assessed on January 1, 1998, 1999, and 2000. We withdraw
the remaining $4910 from your contract.

$5000
-30 -- 1998 contract fee payable to us
-30 -- 1999 contract fee payable to us
-30 -- 2000 contract fee payable to us
------
$4910 -- amount of your initial premium payment we would consider to be
withdrawn.

Under the free withdrawal provision, we deduct 10% of the total value of your
contract at the beginning of the contract year, or $900 (.10 x $9000).
We pay the $900 to you as part of your withdrawal request, and we assess a
withdrawal charge on the remaining balance of $4010. Because you made the
initial premium payment 3 years ago, the withdrawal charge percentage is
5%. We deduct the resulting $200.50 from your contract to cover the
withdrawal charge on your initial premium payment. We pay the remainder of
$3809.50 to you as a part of your withdrawal request.

$4910
-900 -- free withdrawal amount (payable to you)
------
$4010
x .05
-----
$200.50 -- withdrawal charge on initial premium payment (payable to us)

$4010.00
-200.50
-------
3809.50 -- part of withdrawal request payable to you

2. We NEXT deem the entire amount of your 1998 PREMIUM PAYMENT to be withdrawn
and we assess a withdrawal charge on that $1000 amount. Because you made
this premium payment 2 years ago, the withdrawal charge percentage is 5%.
We deduct the resulting $50 from your contract to cover the withdrawal
charge on your 1998 premium payment. We pay the remainder of $950 to you as
a part of your withdrawal request.

$1000
x.05
-----
$50 -- withdrawal charge on 1998 premium payment (payable to us)

108

$1000
- 50
----
$950 -- part of withdrawal request payable to you

3. We NEXT determine what additional amount we need to withdraw to provide you
with the total $6000 you requested, after the deduction of the withdrawal
charge on that additional amount. We have already allocated $900 from the
free withdrawal amount, $3809.50 from your initial premium payment, and $950
from your 1999 premium payment. Therefore, $340.50 is needed to reach
$6000.

$6000.00 -- total withdrawal amount requested
-900.00 -- free withdrawal amount
-3809.50 -- payment deemed from initial premium payment
-950.00 -- payment deemed from 1998 premium payment
-------
$ 340.50 -- additional payment to you needed to reach $6000

We know that the withdrawal charge percentage for this remaining amount is
6%, because you are already deemed to have withdrawn all premiums you paid
prior to 1999. We use the following formula to determine how much more we
need to withdraw:

Remainder due to you = Withdrawal needed - [applicable withdrawal charge
percentage times withdrawal needed]

$340.50 = x - [.06x]
$340.50 = .94x

$340.5
------
0.94 = x

$362.23 = x

$362.23 -- deemed withdrawn from 1999 premium payment
-$340.50 -- part of withdrawal request payable to you
--------
$21.73 -- withdrawal charge on 1999 premium deemed withdrawn (payable to us)

$200.50 -- withdrawal charge on the initial premium payment
50.00 -- withdrawal charge on the 1998 premium payment
21.73 -- withdrawal charge on the 1999 premium payment
-----
$272.23 -- Total withdrawal charge
=======

109

PROSPECTUS DATED MAY 1, 2002
------------------------------------------------------------------------
DECLARATION VARIABLE ANNUITY
------------------------------------------------------------------------
a deferred combination fixed and variable annuity contract issued by
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY ("JHVLICO")
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT JF

The contract enables you to earn fixed rates of interest that we guarantee
for stated periods of time ("guarantee periods") and investment-based
returns in the following variable investment options:

- --------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTION MANAGED BY
-------------------------- ----------
Equity Index ....................... SSgA Funds Management, Inc.
Growth & Income .................... Independence Investment LLC and Putnam
Investment Management LLC.
Fundamental Growth ................. Putnam Investment Management LLC
Small Cap Growth ................... John Hancock Advisers, LLC
V.A. Sovereign Investors. .......... John Hancock Advisers, LLC
V.A. Relative Value ................ John Hancock Advisers, LLC
International Opportunities ........ T. Rowe Price International, Inc.
International Opportunities B ...... T. Rowe Price International, Inc.
V.A. Financial Industries .......... John Hancock Advisers, LLC
Active Bond ........................ John Hancock Advisers, LLC
V.A. Strategic Income .............. John Hancock Advisers, LLC
Money Market ....................... Wellington Management Company, LLP
- --------------------------------------------------------------------------------

The variable investment options shown on page 1 are those available as of
the date of this prospectus. We may add or delete variable investment options in
the future.

When you select one or more of these variable investment options, we invest
your money in the corresponding investment option(s) of one or more of the
following: the John Hancock Variable Series Trust I and the John Hancock
Declaration Trust (together, the " Series Funds"). In this prospectus, the
investment options of the Series Funds are referred to as "funds." In the
prospectuses for the Series Funds, the investment options may also be referred
to as "funds," "portfolios" or "series."

Each Series Fund is a so-called "series" type mutual fund registered with
the Securities and Exchange Commission ("SEC"). The investment results of each
variable investment option you select will depend on those of the corresponding
fund of the Series Fund. Each of the funds is separately managed and has its own
investment objective and strategies. Attached at the end of this prospectus is a
prospectus for each Series Fund. The Series Fund prospectuses contains detailed
information about each available fund. Be sure to read those prospectuses before
selecting any of the variable investment options shown on page 1.

For amounts you don't wish to invest in a variable investment option, you
can choose among several guarantee periods, each of which has its own guaranteed
interest rate and expiration date. If you remove money from a guarantee period
prior to its expiration, however, we may increase or decrease your contract's
value to compensate for changes in interest rates that may have occurred
subsequent to the beginning of that guarantee period. This is known as a "market
value adjustment."

The annuity described in this prospectus may be sold on a group basis. If
you purchase the annuity under a group contract, you will be issued a group
certificate. If that is the case, the word "contract" as used in this prospectus
should be interpreted as meaning the certificate issued to you under the group
contract.

JOHN HANCOCK ANNUITY SERVICING OFFICE

Mail Delivery Phone:
------------- ------
529 Main Street 1-800-824-0335
Charlestown, MA 02129
Fax:
---
1-617-886-2947

********************************************************************************

Please note that the SEC has not approved or disapproved these securities,
or determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.

GUIDE TO THIS PROSPECTUS

This prospectus contains information that you should know before you buy a
contract or exercise any of your rights under the contract. We have arranged the
prospectus in the following way:

. The first section contains an "INDEX OF KEY WORDS."

. Behind the index is the "FEE TABLE." This section highlights the various
fees and expenses you will pay directly or indirectly, if you purchase a
contract.

. Behind the Basic Information is "ADDITIONAL INFORMATION." This section
gives more details about the contract. It generally does not repeat
information contained in the Basic Information.

. "CONDENSED FINANCIAL INFORMATION" follows the "Additional Information."
This gives some basic information about the size and past performance of
the variable investment options.

The Series Fund's prospectus is attached at the end of this prospectus. You
should save these prospectuses for future reference.

- -------------------------------------------------------------------------------
IMPORTANT NOTICES

This is the prospectus - it is not the contract. The prospectus simplifies
many contract provisions to better communicate the contract's essential
features. Your rights and obligations under the contract will be determined by
the language of the contract itself. On request, we will provide the form of
contract for you to review. In any event, when you receive your contract, we
suggest you read it promptly.

We've also filed with the SEC a "Statement of Additional Information,"
dated May 1, 2002. This Statement contains detailed information not included in
the prospectus. Although a separate document from this prospectus, the Statement
of Additional Information has the same legal effect as if it were a part of this
prospectus. We will provide you with a free copy of the Statement upon your
request. To give you an idea what's in the Statement, we have included a copy of
the Statement's table of contents on page 58.

INDEX OF KEY WORDS

We define or explain each of the following key words used in this prospectus
on the pages shown below:

KEY WORD PAGE

Accumulation units. ........................................................25
Annuitant ..................................................................11
Annuity payments ...........................................................13
Annuity period .............................................................13
Contract year ..............................................................11
Date of issue ..............................................................11
Date of maturity ...........................................................25
Free withdrawal amount .....................................................15
Funds .......................................................................2
Guarantee periods ...........................................................2
Investment options .........................................................15
Market value adjustment ....................................................24
Premium payments ...........................................................11
Surrender value ............................................................19
Surrender ..................................................................17
Variable investment options .............................................cover
Withdrawal charge ..........................................................17
Withdrawal .................................................................17

FEE TABLE

The following fee table shows the various fees and expenses that you will
pay, either directly or indirectly, if you purchase a contract. The table does
not include charges for premium taxes (which may vary by state) or fees for any
optional benefit riders that you select.

CONTRACTOWNER TRANSACTION EXPENSES AND ANNUAL CONTRACT FEE

. Maximum Withdrawal Charge (as % of amount withdrawn) 6%

. Annual Contract Fee (applies only to contracts of less than $10,000) $30

SEPARATE ACCOUNT ANNUAL EXPENSES (AS A % OF THE AVERAGE TOTAL VALUE OF THE
CONTRACT)

Initial Premium Payment less than $250,000
------------------------------------------

. Mortality and Expense Risk Charge 0.90%
. Administrative Services Charge 0.35%
-----
. Total Annual Contract Charge 1.25%

Initial Premium Payment $250,000 or more
----------------------------------------

. Mortality and Expense Risk Charge 0.90%
. Administrative Services Charge 0.10%
-----
. Total Annual Contract Charge 1.00%

These annual contract expenses don't apply to amounts held in the guarantee
periods.

ANNUAL FUND EXPENSES (BASED ON % OF AVERAGE NET ASSETS)

--------------
Total Fund Total Fund
Investment Distribution and Other Operating Operating Operating
Management Service Expenses With Expenses With Expenses Absent
Fund Name Fee (12b-1) Fees Reimbursement Reimbursement Reimbursement
- --------- ---------- ---------------- --------------- -------------- --------------

JOHN HANCOCK VARIABLE SERIES TRUST I (NOTE 1):
Equity Index ....................................... 0.13% N/A 0.07% 0.20% 0.20%
Growth & Income .................................... 0.67% N/A 0.05% 0.72% 0.72%
Fundamental Growth ................................. 0.90% N/A 0.10% 1.00% 1.19%
Small Cap Growth ................................... 1.05% N/A 0.10% 1.15% 1.17%
International Opportunities ........................ 1.14% N/A 0.10% 1.24% 1.39%
International Opportunities B * .................... 1.20% N/A 0.10% 1.30% 1.41%
Active Bond ........................................ 0.62% N/A 0.05% 0.67% 0.67%
Money Market ....................................... 0.25% N/A 0.07% 0.32% 0.32%
--------------

-------------
Total Fund Total Fund
Investment Distribution and Other Operating Operating Operating
Management Service Expenses With Expenses With Expenses Absent
Fund Name Fee (12b-1) Fees Reimbursement Reimbursement Reimbursement
- --------- ---------- ---------------- --------------- ------------- ---------------

JOHN HANCOCK DECLARATION TRUST
(NOTE 2):
V.A. Relative Value ............... 0.60% N/A 0.14% 0.74% 0.74%
V.A. Sovereign Investors .......... 0.60% N/A 0.10% 0.70% 0.70%
V.A. Financial Industries ......... 0.80% N/A 0.09% 0.89% 0.89%
V.A. Strategic Income ............. 0.60% N/A 0.10% 0.70% 0.70%
-------------

NOTES TO ANNUAL FUND EXPENSES
(1) Under its current investment management agreements with the John Hancock
Variable Series Trust I, John Hancock Life Insurance Company reimburses a
fund when the fund's "other fund expenses" exceed 0.10% of the fund's
average daily net assets (0.00% for Equity Index). Percentages shown for
the Small Cap Growth, International Opportunities and International
Opportunities B funds are calculated as if the current management fee
schedules, which apply to these funds effective October 1, 2001, were in
effect for all of 2001.

* International Opportunities B was formerly "International Equity."

EXAMPLES

The four examples on the following pages illustrate the current expenses
you would pay, directly or indirectly, on a $1,000 investment allocated to one
of the variable investment options, assuming a 5% annual return on assets.

Examples III and IV assume you have purchased a contract with no optional
benefit riders. We refer to this contract as the "No Rider Contract."

Example I If you "surrender" (turn in) your All Rider Contract at the end of the
- ---------
applicable time period, you would pay:

- ----------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- ----------------------------------------------------------------------------
Equity Index $74 $107 $142 $230
- ----------------------------------------------------------------------------
Growth & Income $79 $122 $168 $283
- ----------------------------------------------------------------------------
Fundamental Growth $82 $131 $182 $310
- ----------------------------------------------------------------------------
Small Cap Growth $84 $135 $189 $324
- ----------------------------------------------------------------------------
V.A. Sovereign Investors $79 $122 $167 $281
- ----------------------------------------------------------------------------
V.A. Relative Value $79 $123 $169 $285
- ----------------------------------------------------------------------------
International Opportunities $84 $138 $194 $333
- ----------------------------------------------------------------------------
International Opportunities B $85 $140 $197 $338
- ----------------------------------------------------------------------------
V.A. Financial Industries $81 $127 $177 $299
- ----------------------------------------------------------------------------
Active Bond $79 $121 $166 $278
- ----------------------------------------------------------------------------
V.A. Strategic Income $79 $122 $167 $281
- ----------------------------------------------------------------------------
Money Market $75 $110 $148 $242
- ----------------------------------------------------------------------------

- ---------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------
Equity Index $20 $62 $106 $230
- ---------------------------------------------------------------------------
Growth & Income $25 $78 $133 $283
- ---------------------------------------------------------------------------
Fundamental Growth $28 $86 $146 $310
- ---------------------------------------------------------------------------
Small Cap Growth $30 $90 $154 $324
- ---------------------------------------------------------------------------
V.A. Sovereign Investors $25 $77 $132 $281
- ---------------------------------------------------------------------------
V.A. Relative Value $25 $78 $134 $285
- ---------------------------------------------------------------------------
International Opportunities $30 $93 $158 $333
- ---------------------------------------------------------------------------
International Opportunities B $31 $95 $161 $338
- ---------------------------------------------------------------------------
V.A. Financial Industries $27 $83 $141 $299
- ---------------------------------------------------------------------------
Active Bond $25 $76 $130 $278
- ---------------------------------------------------------------------------
V.A. Strategic Income $25 $77 $132 $281
- ---------------------------------------------------------------------------
Money Market $21 $65 $112 $242
- ---------------------------------------------------------------------------

Example III If you "surrender" (turn in) your No Rider Contract at the end of
the applicable time period, you would pay:

- ----------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- ----------------------------------------------------------------------------
Equity Index $69 $ 91 $116 $176
- ----------------------------------------------------------------------------
Growth & Income $74 $107 $143 $232
- ----------------------------------------------------------------------------
Fundamental Growth $77 $116 $157 $261
- ----------------------------------------------------------------------------
Small Cap Growth $79 $120 $165 $276
- ----------------------------------------------------------------------------
V.A. Sovereign Investors $74 $107 $142 $230
- ----------------------------------------------------------------------------
V.A. Relative Value $74 $108 $144 $234
- ----------------------------------------------------------------------------
International Opportunities $79 $123 $169 $285
- ----------------------------------------------------------------------------
International Opportunities B $80 $125 $172 $290
- ----------------------------------------------------------------------------
V.A. Financial Industries $76 $112 $151 $249
- ----------------------------------------------------------------------------
Active Bond $74 $106 $140 $226
- ----------------------------------------------------------------------------
V.A. Strategic Income $74 $107 $142 $230
- ----------------------------------------------------------------------------
Money Market $70 $ 95 $122 $189
- ----------------------------------------------------------------------------

- -----------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------------
Equity Index $15 $46 $ 80 $176
- -----------------------------------------------------------------------------
Growth & Income $20 $62 $107 $232
- -----------------------------------------------------------------------------
Fundamental Growth $23 $71 $122 $261
- -----------------------------------------------------------------------------
Small Cap Growth $25 $75 $129 $276
- -----------------------------------------------------------------------------
V.A. Sovereign Investors $20 $62 $106 $230
- -----------------------------------------------------------------------------
V.A. Relative Value $20 $63 $108 $234
- -----------------------------------------------------------------------------
International Opportunities $25 $78 $134 $285
- -----------------------------------------------------------------------------
International Opportunities B $26 $80 $137 $290
- -----------------------------------------------------------------------------
V.A. Financial Industries $22 $68 $116 $249
- -----------------------------------------------------------------------------
Active Bond $20 $61 $105 $226
- -----------------------------------------------------------------------------
V.A. Strategic Income $20 $62 $106 $230
- -----------------------------------------------------------------------------
Money Market $16 $50 $ 87 $189
- -----------------------------------------------------------------------------

BASIC INFORMATION

This "Basic Information" section provides answers to commonly asked
questions about the contract. Here are the page numbers where the questions and
answers appear:

QUESTION STARTING ON PAGE
-------- ----------------

What is the contract? .......................................................... 11

Who owns the contract? ......................................................... 11

Is the owner also the annuitant? ............................................... 11

How can I invest money in a contract? .......................................... 11

How will the value of my investment in the contract change over time? .......... 13

What annuity benefits does the contract provide? ............................... 13

To what extent can JHVLICO vary the terms and conditions of the contracts? ..... 14

What are the tax consequences of owning a contract? ............................ 14

How can I change my contract's investment allocations? ......................... 15

What fees and charges will be deducted from my contract? ....................... 16

How can I withdraw money from my contract? ..................................... 19

What happens if the annuitant dies before my contract's date of maturity? ...... 20

WHAT IS THE CONTRACT?

The contract is a deferred payment variable annuity contract. An "annuity
contract" provides a person (known as the "annuitant" or "payee") with a series
of periodic payments. Because this contract is also a "deferred payment"
contract, the annuity payments will begin on a future date, called the
contract's "date of maturity." Under a "variable annuity" contract, the amount
you have invested can increase or decrease in value daily based upon the value
of the variable investment options chosen. If your annuity is provided under a
master group contract, the term "contract" as used in this prospectus refers to
the certificate you will be issued and not to the master group contract.

WHO OWNS THE CONTRACT?

IS THE OWNER ALSO THE ANNUITANT?

HOW CAN I INVEST MONEY IN A CONTRACT?

Premium payments

Applying for a contract

Once we receive your initial premium payment and all necessary information,
we will issue your contract and invest your initial premium payment within two
business days. If the information is not in good order, we will contact you to
get the necessary information. If for some reason, we are unable to complete
this process within 5 business days, we will either send back your money or get
your permission to keep it until we get all of the necessary information.

In certain situations, we will issue a contract upon receiving the order of
your broker-dealer or financial institution, but delay the effectiveness of the
contract until we receive your signed application. In those situations, if we do
not receive your signed application within our required time period, we will
deem the contract void from the beginning and return your premium payment.

We measure the years and anniversaries of your contract from its date of
issue. We use the term contract year to refer to each period of time between
anniversaries of your contract's date of issue.

Limits on premium payments

You can make premium payments of up to $1,000,000 in any one contract year.
The total of all new premium payments and transfers that you allocate to any one
variable investment option in any one contract year may not exceed $1,000,000.
While the annuitant is alive and the contract is in force, you can make premium
payments at any time before the date of maturity. However,

* as that term is used in "Tax Information," beginning on page 28.
** except for a Roth IRA, which has no age limit.

We will not issue a contract if the proposed annuitant is older than age
84. We may waive any of these limits, however.

Ways to make premium payments

Premium payments made by check or money order should be:

. drawn on a U.S. bank,

. drawn in U.S. dollars, and

. made payable to "John Hancock."

We will not accept credit card checks. Nor will we accept starter or third
party checks that fail to meet our administrative requirements. Premium payments
after the initial premium payment should be sent to the John Hancock Annuity
Servicing Office at the address shown on page 2 of this prospectus. We will also
accept premium payments by wire. We will accept your initial premium payment by
exchange from another insurance company. You can find information about wire
payments under "Premium payments by wire," below. You can find information about
other methods of premium payment by contacting your JHVLICO representative or by
contacting the John Hancock Annuity Servicing Office.

Once we have issued your contract and it becomes effective, we credit you
with any additional premiums you pay as of the day we receive them at the John
Hancock Annuity Servicing Office.

Premium payments by wire

. issue a contract;

. accept premium payments; or

. allow other transactions.

After we issue your contract, subsequent premium payments may be
transmitted by wire through your bank. Information about our bank, our account
number, and the ABA routing number may be obtained from the John Hancock Annuity
Servicing Office. Banks may charge a fee for wire services.

HOW WILL THE VALUE OF MY INVESTMENT IN THE CONTRACT CHANGE OVER TIME?

Like a regular mutual fund, each fund deducts investment management fees
and other operating expenses. These expenses are shown in the fee table on pages
5 and 6. However, unlike a mutual fund, we will also deduct charges relating to
the annuity guarantees and other features provided by the contract. These
charges reduce your investment performance and the amount we credit to your
contract in any variable investment option. We describe these charges under
"What fees and charges will be deducted from my contract?" beginning on page 16.

However, if you prematurely transfer, "surrender" or otherwise withdraw
money from a guarantee period we will increase or reduce the remaining value in
your contract by an amount that approximates the impact that any changes in
interest rates would have had on the market value of a debt instrument with
terms comparable to that guarantee period. This "market value adjustment" (or
"MVA") imposes investment risks on you. We describe how the market value
adjustments work in "Calculation of market value adjustment ("MVA")" beginning
on page 24.

At any time before the date of maturity, the total value of your contract
equals

. the total amount you invested,

. minus all charges we deduct,

. minus all withdrawals you have made,

. plus or minus any positive or negative MVA's that we have made at the time of
any premature withdrawals or transfers you have made from a guarantee period,

. plus or minus each variable investment option's positive or negative
investment return that we credit daily to any of your contract's value daily
while it is in that option, and

. plus the interest we credit to any of your contract's value while it is in a
guarantee period.

WHAT ANNUITY BENEFITS DOES A CONTRACT PROVIDE?

If your contract is still in effect on its date of maturity, it enters what
is called the annuity period. During the annuity period, we make a series of
fixed or variable payments to you as provided under one of our several annuity
options. The form in which we will make the annuity payments, and the proportion
of such payments that will be on a fixed basis and on a variable basis, depend
on the elections that you have in effect on the date of maturity. Therefore you
should exercise care in selecting your date of maturity and your choices that
are in effect on that date.

You should carefully review the discussion under "The annuity period,"
beginning on page 25, for information about all of these choices you can make.

TO WHAT EXTENT CAN JHVLICO VARY THE TERMS AND CONDITIONS OF THE CONTRACTS?

State law insurance requirements

Variations in charges or rates

We may vary the charges, guarantee periods, and other terms of our
contracts where special circumstances result in sales or administrative
expenses, mortality risks or other risks that are different from those normally
associated with the contracts. These include the types of variations discussed
under "Certain changes" in the Additional Information section of this
prospectus.

WHAT ARE THE TAX CONSEQUENCES OF OWNING A CONTRACT?

In most cases, no income tax will have to be paid on amounts you earn under
a contract until these earnings are paid out. All or part of the following
distributions from a contract may constitute a taxable payout of earnings:

. partial withdrawal (including systematic withdrawals),

. full withdrawal ("surrender"),

. payment of any death benefit proceeds, and

. periodic payments under one of our annuity payment options.

How much you will be taxed on distribution is based upon complex tax rules and
depends on matters such as:

. the type of the distribution,

. when the distribution is made,

. the nature of any tax qualified retirement plan for which the contract is
being used, if any, and

. the circumstances under which the payments are made.

If your contract is issued in connection with a tax-qualified retirement
plan, all or part of your premium payments may be tax-deductible.

HOW CAN I CHANGE MY CONTRACT'S INVESTMENT ALLOCATIONS?

Allocation of premium payments

When you apply for your contract, you specify the variable investment
options or guarantee periods (together, your investment options) in which your
premium payments will be allocated. You may change this investment allocation
for future premium payments at any time. Any change in allocation will be
effective as of receipt of your request at the John Hancock Annuity Servicing
Office.

Currently, you may use a maximum of 18 investment options over the life of
your contract. For purposes of this limit, each contribution or transfer of
assets into a variable investment option or guarantee period that you are not
then using counts as one "use" of an investment option, even if you had used
that option at an earlier time. Renewing a guarantee period upon its expiration
does not count as a new use, however, if the new guarantee period has the same
number of years as the expiring one.

Transferring your assets

Up to 12 times during each year of your contract, you may transfer:

. all or part of the assets held in one VARIABLE INVESTMENT OPTION to any other
available variable investment option or guarantee period, or

Transfers under our dollar cost averaging program do not count toward the 12 you
are allowed each year. However, you may not:

. transfer assets within 30 days prior to the contract's date of maturity,

. transfer more than $1,000,000 in a contract year from any one variable
investment option or guarantee period, without our prior approval,

. make any transfer that would cause you to exceed the above-mentioned maximum
of 18 investment options,

. make any transfers, during the annuity period, to or from a fixed investment
option, or

. make any transfer during the annuity period that would result in more than
four investment options being used at once.

Procedure for transferring your assets

. your name,

. daytime telephone number,

. contract number,

. the names of the investment options being transferred to and from each, and

. the amount of each transfer.

The request becomes effective on the day we receive your request, in proper
form, at the John Hancock Annuity Servicing Office.

Telephone transfers

Once you have completed a written authorization, you may request a transfer
by telephone or by fax. If the fax request option becomes unavailable, another
means of telecommunication will be substituted.

The contracts are not designed for professional market timing organizations
or other persons or entities that use programmed or frequent transfers among
investment options. For reasons such as that, we reserve the right to change our
telephone transaction policies or procedures at any time. We also reserve the
right to suspend or terminate the privilege altogether.

Dollar cost averaging program

You may elect, at no cost, to automatically transfer assets from any
variable investment option to one or more other variable investment options on a
monthly, quarterly, semiannual, or annual basis. The following conditions apply
to the dollar cost averaging program:

. you may elect the program only if the total value of your contract equals
$15,000 or more,

. the amount of each transfer must equal at least $250,

. you may change your dollar cost averaging instructions at any time in writing
or, if you have authorized telephone transfers, by telephone,

. you may discontinue the program at any time,

. the program automatically terminates when the variable investment option from
which we are taking the transfers has been exhausted,

. automatic transfers to or from guarantee periods are not permitted.

We reserve the right to suspend or terminate the program at any time.

WHAT FEES AND CHARGES WILL BE DEDUCTED FROM MY CONTRACT?

Mortality and expense risk charge

Administrative services charge

We deduct a daily charge for administrative and clerical services that the
contracts require us to provide.

Annual contract fee

Premium taxes

We make deductions for any applicable premium or similar taxes based on the
amount of a premium payment. Currently, certain local jurisdictions assess a tax
of up to 5% of each premium payment.

Withdrawal charge

If you withdraw some money from your contract prior to the date of maturity
("partial withdrawal") or if you surrender (turn in) your contract, in its
entirety, for cash prior to the date of maturity ("total withdrawal" or
"surrender"), we may assess a withdrawal charge. Some people refer to this
charge as a "contingent deferred withdrawal load." We use this charge to help
defray expenses relating to the sales of the contracts, including commissions
paid and other distribution costs.

Here's how we determine the charge: In any contract year, you may withdraw
up to 10% of the total value of your contract (computed as of the beginning of
the contract year) without the assessment of any withdrawal charge. We refer to
this amount as the "free withdrawal amount." However, if the amount you withdraw
or surrender totals more than the free withdrawal amount during the contract
year, we will assess a withdrawal charge on any amount of the excess that we
attribute to premium payments you made within seven years of the date of the
withdrawal or surrender.

The withdrawal charge percentage depends upon the number of years that have
elapsed from the date you paid the premium to the date of its withdrawal, as
follows:

------------------------------------------------------------
YEARS FROM DATE OF PREMIUM PAYMENT TO
DATE OF SURRENDER OR WITHDRAWAL 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%
------------------------------------------------------------

* AS A PERCENTAGE OF THE AMOUNT OF SUCH PREMIUM THAT WE CONSIDER TO HAVE BEEN
WITHDRAWN (INCLUDING THE WITHDRAWAL CHARGE), AS EXPLAINED IN THE FOLLOWING
TEXT.

Solely for purposes of determining the amount of the withdrawal charge, we
assume that each withdrawal (together with any associated withdrawal charge) is
a withdrawal first from the earliest premium payment, and then from the next
earliest premium payment, and so forth until all payments have been exhausted.
Once a premium payment has been considered to have been "withdrawn" under these
procedures, that premium payment will not enter into any future withdrawal
charge calculations. For this purpose, we also consider any amounts that we
deduct for the annual contract charge to have been withdrawals of premium
payments (which means that no withdrawal charge will ever be paid on those
amounts).

Here's how we deduct the withdrawal charge: We deduct the withdrawal charge
proportionally from each variable investment option and each guarantee period
being reduced by the surrender or withdrawal. For example, if 60% of the
withdrawal amount comes from a "Growth" variable investment option and 40% from
a money market variable investment option, then we will deduct 60% of the
withdrawal charge from the "Growth" option and 40% from the money market option.
If any such option has insufficient remaining value to cover the charge, we will
deduct any shortfall from all of your other investment options, pro-rata based
on the value in each. If your contract as a whole has insufficient surrender
value to pay the entire charge, we will pay you no more than the surrender
value.

You will find examples of how we compute the withdrawal charge in Appendix
B to this prospectus.

When withdrawal charges don't apply: We don't assess a withdrawal charge in
the following situations:

. on amounts applied to an annuity option at the contract's date of maturity or
to pay a death benefit;

. on certain withdrawals if you have elected the nursing home rider that waives
the withdrawal charge; and

How an MVA affects the withdrawal charge: If you make a withdrawal from a
guarantee period at a time when the related MVA results in an upward adjustment
in your remaining value, we will calculate the withdrawal charge as if you had
withdrawn that much less. Similarly, if the MVA results in a downward
adjustment, we will compute any withdrawal charge as if you had withdrawn that
much more.

Other charges

- --------------------------------------------------------------------------------
Stepped up death benefit* 0.15% of total value of your contract
- --------------------------------------------------------------------------------
Accidental death benefit 0.10% of total value of your contract
- --------------------------------------------------------------------------------
0.05% of that portion of your contract's total value
Nursing home waiver attributable to premiums that are still subject to
surrender charges
- --------------------------------------------------------------------------------

*Some people refer to this benefit as the "enhanced stepped-up death
benefit."

We deduct the charge proportionally from each of your investment options,
based on your value in each.

HOW CAN I WITHDRAW MONEY FROM MY CONTRACT?

Surrenders and partial withdrawals

Prior to your contract's date of maturity, if the annuitant is living, you
may:

. surrender your contract for a cash payment of its "surrender value," or

. make a partial withdrawal of the surrender value.

The surrender value of a contract is the total value of a contract, after
any market value adjustment, MINUS the annual contract fee and any applicable
premium tax and withdrawal charges. We will determine the amount surrendered or
withdrawn as of the date we receive your request at the John Hancock Annuity
Servicing Office.

Certain surrenders and withdrawals may result in taxable income to you or
other tax consequences as described under "Tax information," beginning on page
28. Among other things, if you make a full surrender or partial withdrawal from
your contract before you reach age 59 1/2, an additional federal penalty of 10%
generally applies to any taxable portion of the withdrawal.

We will deduct any partial withdrawal proportionally from each of your
investment options based on the value in each, unless you direct otherwise.

Without our prior approval, you may not make a partial withdrawal

. for an amount less than $100, or

. if the remaining total value of your contract would be less than $1,000.

If your "free withdrawal value" at any time is less than $100, you must
withdraw that amount in full, in a single sum, before you make any other partial
withdrawals. We reserve the right to terminate your contract if the value of
your contract becomes zero.

You generally may not make any surrenders or partial withdrawals once we
begin making payments under an annuity option.

Nursing home waiver of withdrawal charge

If your state permits, you may purchase an optional nursing home waiver of
withdrawal charge rider when you apply for a contract. Under this rider, we will
waive the withdrawal charge on any withdrawals, provided all the following
conditions apply:

. you become confined to a nursing home beginning at least 90 days after we
issue your contract.

. you remain in the nursing home for at least 90 consecutive days and receive
skilled nursing care.

. we receive your request for a withdrawal and adequate proof of confinement no
later than 90 days after discharge from the facility.

. your confinement is prescribed by a doctor and medically necessary.

You may not purchase this rider if (1) you are older than 75 years at
application or (2) if you were confined to a nursing home within the past two
years.

You should carefully review the tax considerations for optional benefit
riders on page 28 before selecting this optional benefit rider. For a more
complete description of the terms and conditions of this benefit, you should
refer directly to the rider. We will provide you with a copy on request.

Systematic withdrawal plan

Our optional systematic withdrawal plan enables you to preauthorize
periodic withdrawals. If you elect this plan, we will withdraw a percentage or
dollar amount from your contract on a monthly, quarterly, semiannual, or annual
basis, based upon your instructions. Unless you request otherwise and we agree,
we will deduct the requested amount from each applicable investment option in
the ratio that the value of each bears to the total value of your contract. Each
systematic withdrawal is subject to any withdrawal charge or market value
adjustment that would apply to an otherwise comparable non-systematic
withdrawal. See "How will the value of my investment in the contract change over
time?" beginning on page 13, and "What fees and charges will be deducted from my
contract?" beginning on page 16. The same tax consequences also generally will
apply.

The following conditions apply to systematic withdrawal plans:

. you may elect the plan only if the total value of your contract equals
$15,000 or more,

. the amount of each systematic withdrawal must equal at least $10,

. if the amount of each withdrawal drops below $100 or the total value of your
contract becomes less that $5,000, we will suspend the plan and notify you,

. you may cancel the plan at any time.

We reserve the right to modify the terms or conditions of the plan at any time
without prior notice.

WHAT HAPPENS IF THE ANNUITANT DIES BEFORE MY CONTRACT'S DATE OF MATURITY?

Standard death benefit

If the annuitant dies before your contract's date of maturity, we will pay a
standard death benefit, unless you have elected an enhanced death benefit rider.

The standard death benefit is the greater of:

. the total value of your contract, adjusted by any then-applicable market
value adjustment, or

. the total amount of premium payments made, minus any partial withdrawals and
related withdrawal charges.

We calculate the death benefit value as of the day we receive, in proper order
at the John Hancock Annuity Servicing Office:

. proof of the annuitant's death, and

. any required instructions as to method of settlement.

Enhanced death benefit riders

"Stepped-up" death benefit rider

. the standard death benefit (described above) or

. the highest total value of your contract (adjusted by any market value
adjustment) as of any anniversary of your contract to date, PLUS any premium
payments you have made since that anniversary, MINUS any withdrawals you have
taken (and any related withdrawal charges) since that anniversary.

You may elect this rider ONLY when you apply for the contract and ONLY if
this rider is available in your state. As long as the rider is in effect, you
will pay a monthly charge for this benefit. For a description of this charge,
refer to page 16 under "What fees and charges will be deducted from my
contract?"

Accidental death benefit rider

. the contract's date of maturity, and

. the annuitant's 80/th/ birthday.

. proof of the annuitant's death, and

. any required instructions as to method of settlement.

You may elect this rider ONLY when you apply for the contract. As long as
the rider is in effect, you will pay a monthly charge for this benefit. For a
description of this charge, refer to page 16 under "What fees and charges will
be deducted from my contract?"

You should carefully review the tax considerations for optional benefit
riders on page 28 before selecting this optional benefit rider. For a complete
description of the terms and conditions of this benefit, you should refer
directly to the rider. We will provide you with a copy upon request. Not all
states allow this benefit.

ADDITIONAL INFORMATION
STARTING
CONTENTS OF THIS SECTION ON PAGE

Description of JHVLICO ................................................. 23

Who should purchase a contract ......................................... 23

How we support the variable investment options ......................... 23

How we support the guarantee periods ................................... 24

How the guarantee periods work ......................................... 24

The accumulation period ................................................ 25

The annuity period ..................................................... 25

Variable investment option valuation procedures ........................ 27

Distribution requirements following death of owner ..................... 28

Miscellaneous provisions ............................................... 28

Tax information ........................................................ 28

Further information about JHVLICO ...................................... 34

Management's discussion and analysis ................................... 36

Performance information ................................................ 56

Reports ................................................................ 57

Voting privileges ...................................................... 57

Certain changes ........................................................ 57

Distribution of contracts .............................................. 58

Experts ................................................................ 58

Registration statement ................................................. 58

Condensed financial information ........................................ 59

Appendix A - Details About Our Guarantee Periods ....................... 100

Appendix B - Examples of Withdrawal Charge Calculation ................. 103

DESCRIPTION OF JHVLICO

We are JHVLICO, a stock life insurance company organized, in 1979, under
the laws of the Commonwealth of Massachusetts. We have authority to transact
business in all states, except New York. We are a wholly-owned subsidiary of
John Hancock Life Insurance Company ("John Hancock"), a Massachusetts stock life
insurance company. On February 1, 2000, John Hancock Mutual Life Insurance
Company (which was chartered in Massachusetts in 1862) converted to a stock
company by "demutualizing" and changed its name to John Hancock Life Insurance
Company. As part of the demutualization process, John Hancock became a
subsidiary of John Hancock Financial Services, Inc., a newly formed
publicly-traded corporation. John Hancock's home office is at John Hancock
Place, Boston, Massachusetts 02117. At year end 2001, John Hancock's assets were
approximately $81 billion and it had invested approximately $575 million in
JHVLICO in connection with JHVLICO's organization and operation.

WHO SHOULD PURCHASE A CONTRACT?

. traditional individual retirement annuity plans ("traditional IRAs")
satisfying the requirements of Section 408 of the Code;

. non-deductible IRA plans ("Roth IRAs") satisfying the requirements of Section
408A of the Code;

. SIMPLE IRA plans adopted under Section 408(p) of the Code;

. Simplified Employee Pension plans ("SEPs") adopted under Section 408(k) of
the Code; and

. annuity purchase plans adopted under Section 403(b) of the Code by public
school systems and certain other tax-exempt organizations.

We do not currently offer the contracts to every type of tax-qualified
plan, and we may not offer the contracts for all types of tax-qualified plans in
the future. In certain circumstances, we may make the contracts available for
purchase under deferred compensation plans maintained by a state or political
subdivision or tax exempt organization under Section 457 of the Code or by
pension or profit-sharing plans qualified under section 401(a) of the Code. We
provide general federal income tax information for contracts purchased in
connection with tax qualified retirement plans beginning on page 30.

We may include certain requirements from the above sources in endorsements
or riders to the affected contracts. In other cases, we do not. In no event,
however, do we undertake to assure a contract's compliance with all plan, tax
law, and ERISA requirements applicable to a tax-qualified or non tax-qualified
retirement plan. Therefore, if you use or plan to use a contract in connection
with such a plan, you must consult with competent legal and tax advisers to
ensure that you know of (and comply with) all such requirements that apply in
your circumstances.

To accommodate "employer-related" pension and profit-sharing plans, we
provide "unisex" purchase rates. That means the annuity purchase rates are the
same for males and females. Any questions you have as to whether you are
participating in an "employer-related" pension or profit-sharing plan should be
directed to your employer. Any question you or your employer have about unisex
rates may be directed to the John Hancock Annuity Servicing Office.

HOW WE SUPPORT THE VARIABLE INVESTMENT OPTIONS

We hold the fund shares that support our variable investment options in
John Hancock Variable Annuity Account JF (the "Account"), a separate account
established by JHVLICO under Massachusetts law. The Account is registered as a
unit investment trust under the Investment Company Act of 1940 ("1940 Act").

The Account's assets, including each Series Fund's shares, belong to
JHVLICO. Each contract provides that amounts we hold in the Account pursuant to
the policies cannot be reached by any other persons who may have claims against
us.

All of JHVLICO's general assets also support JHVLICO's obligations under
the contracts, as well as all of its other obligations and liabilities. These
general assets consist of all

HOW WE SUPPORT THE GUARANTEE PERIODS

HOW THE GUARANTEE PERIODS WORK

Amounts you allocate to the guarantee periods earn interest at a guaranteed
rate commencing with the date of allocation. At the expiration of the guarantee
period, we will automatically transfer its accumulated value to a money market
variable investment option under your contract, unless you elect to:

. withdraw all or a portion of any such amount from the contract,

. allocate all or a portion of such amount to a new guarantee period or periods
of the same or different duration as the expiring guarantee period, or

. allocate all or a portion of such amount to one or more of the variable
investment options.

You must notify us of any such election, by mailing a request to us at the
John Hancock Annuity Servicing Office at least 30 days prior to the end of the
expiring guarantee period. We will notify you of the end of the guarantee period
at least 30 days prior its expiration. The first day of the new guarantee period
or other reallocation will begin the day after the end of the expiring guarantee
period.

Guaranteed interest rates

Each guarantee period has its own guaranteed rate. 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 time you allocate or transfer money to a
guarantee period, a new guarantee period, with a new interest rate, begins to
run with respect to that amount. The amount allocated or transferred earns a
guaranteed rate that will continue unchanged until the end of that period. We
will not make available any guarantee period offering a guaranteed rate below
3%.

- --------------------------------------------------------------------------------
We make the final determination of guaranteed rates to be declared. We
cannot predict or assure the level of any future guaranteed rates or the
availability of any future guaranteed periods.
- --------------------------------------------------------------------------------

Calculation of market value adjustment ("MVA")

If you withdraw, surrender, transfer, or otherwise remove money from a
guarantee period prior to its expiration date, we will apply a market value
adjustment.

A market value adjustment also generally applies to:

. death benefits pursuant to your contract,

. amounts you apply to an annuity option, and

. amounts paid in a single sum in lieu of an annuity.

The market value adjustment increases or decreases your remaining value in
the guarantee period. If the value in that guarantee period is insufficient to
pay any negative MVA, we will deduct any excess from the value in your other
investment options pro-rata based on the value in each. If there is insufficient
value in your other investment options, we will in no event pay out more than
the surrender value of the contract.

Here is how the MVA works:
- --------------------------------------------------------------------------------
We compare

. the guaranteed rate of the guarantee period from which the assets are being
taken WITH
. the guaranteed rate we are currently offering for guarantee periods of the
same duration as remains in the guarantee period from which the assets are
being taken.

If the first rate exceeds the second by more than 1/2 %, the market value
adjustment produces an increase in your contract's value. If the first rate does
not exceed the second by at least 1/2 %, the market value adjustment produces a
decrease in your contract's value.
- --------------------------------------------------------------------------------

For this purpose, we consider that the amount withdrawn from the guarantee
period includes the amount of any negative MVA and is reduced by the amount of
any positive MVA.

The mathematical formula and sample calculations for the market value
adjustment appear in Appendix A.

THE ACCUMULATION PERIOD

Your value in our variable investment options

Valuation of accumulation units

To determine the number of accumulation units that a specific transaction
will purchase or cancel, we use the following formula:

----------------------------------------------
dollar amount of transaction
DIVIDED BY
value of one accumulation unit for the
applicable variable investment option at the
time of such transaction
----------------------------------------------

Therefore, at any time prior to the date of maturity, the total value of
your contract in a variable investment option can be computed according to the
following formula:

-----------------------------------------------
number of accumulation units in the
variable investment options
TIMES
value of one accumulation unit for the
applicable variable investment option at that
time
-----------------------------------------------

Your value in the guarantee periods

On any date, the total value of your contract in a guarantee period equals:

. the amount of premium payments or transferred amounts allocated to the
guarantee period, MINUS

. the amount of any withdrawals or transfers paid out of the guarantee
period, MINUS

. the amount of any negative market value adjustments resulting from such
withdrawals or transfers, PLUS

. the amount of any positive market value adjustments resulting from such
withdrawals and transfers, MINUS

. the amount of any charges and fees deducted from that guarantee period,
PLUS

. interest compounded daily on any amounts in the guarantee period from time to
time at the effective annual rate of interest we have declared for that
guarantee period.

THE ANNUITY PERIOD

Date of maturity

. at least 6 months after the date the first premium payment is applied to
your contract, and

. no later than the maximum age specified in your contract (normally age
95).

Choosing fixed or variable annuity payments

During the annuity period, the total value of your contract must be
allocated to no more than four investment options. During the annuity period, we
do not offer the guarantee periods. Instead, we offer annuity payments on a
fixed basis as one investment option, and annuity payments on a variable basis
for EACH variable investment option.

four investment options with the largest values (directing all guarantee periods
as a single option), pro-rata based on the amount of the total value of your
contract that you have in each.

We will make a market value adjustment to any remaining guarantee period
amounts on the date of maturity, before we apply such amounts to an annuity
payment option.

Once annuity payments commence, you may not make transfers from fixed to
variable or from variable to fixed.

Selecting an annuity option

Each contract provides, at the time of its issuance, for annuity payments
to commence on the date of maturity pursuant to Option A: "life annuity with 10
years guaranteed" (discussed under "Annuity options" on page 27).

If the initial monthly payment under an annuity option would be less than
$50, we may make a single sum payment equal to the total surrender value of your
contract on the date the initial payment would be payable. Such single payment
would replace all other benefits.

Subject to that $50 minimum limitation, your beneficiary may elect an
annuity option if:

. you have not made an election prior to the annuitant's death;

. the beneficiary is entitled to payment of a death benefit of at least
$5,000 in a single sum; and

. the beneficiary notifies us of the election prior to the date the
proceeds become payable.

Variable monthly annuity payments

The amount of each subsequent variable annuity payment under that variable
investment option depends upon the investment performance of that variable
investment option.

Here's how it works:

. if that actual net investment return exceeds the "assumed investment rate"
(explained below), the current monthly payment will be larger than the
previous one.

. if the actual net investment return is less than the assumed investment rate,
the current monthly payment will be smaller than the previous one.

Assumed investment rate

The assumed investment rate for any variable portion of your annuity
payments will be 3 1/2 % per year, except as follows.

You may elect an assumed investment rate of 5% or 6%, provided such a rate
is available in your state. If you elect a higher assumed investment rate, your
initial variable annuity payment will also be higher. Eventually, however, the
monthly variable annuity payments may be smaller than if you had elected a lower
assumed investment rate.

Fixed monthly annuity payments

The dollar amount of each fixed monthly annuity payment is specified during
the entire period of annuity payments, according to the provisions of the
annuity option selected. To determine such dollar amount we first, in accordance
with the procedures described above, calculate the amount to be applied to the
fixed annuity option as of the date of maturity. We then subtract any applicable
premium tax charge and divide the difference by $1,000.

We then multiply the result by the greater of:

. the applicable fixed annuity purchase rate shown in the appropriate table
in the contract; or

. the rate we currently offer at the time of annuitization. (This current rate
may be based on the sex of the annuitant, unless prohibited by law.)

Annuity options

Here are some of the annuity options that are available, subject to the
terms and conditions described above. We reserve the right to make available
optional methods of payment in addition to those annuity options listed here and
in your contract.

OPTION B: LIFE ANNUITY WITHOUT FURTHER PAYMENT ON DEATH OF PAYEE - We will
make monthly payments to the payee as long as he or she lives. We guarantee no
minimum number of payments.

OPTION D: JOINT AND 1/2 SURVIVOR; OR JOINT AND 2/3 SURVIVOR - We will
provide payments monthly, quarterly, semiannually, and annually for the payee's
life and the life of the payee's spouse/joint payee. Upon the death of one
payee, we will continue payments (reduced to 1/2 or 2/3 the full payment amount)
to the surviving payee. All payments stop at the death of the surviving payee.

If the payee is more than 85 years old on the date of maturity, the
following two options are not available:

. Option A: "life annuity with 5 years guaranteed" and

. Option B: "life annuity without further payment on the death of payee."

VARIABLE INVESTMENT OPTION VALUATION PROCEDURES

DISTRIBUTION REQUIREMENTS FOLLOWING DEATH OF OWNER

If you did not purchase your contract under a tax qualified plan (as that
term is used below), the Code requires that the following distribution
provisions apply if you die. We summarize these provisions in the following box.
In most cases, these provisions do not cause a problem if you are also the
annuitant under your policy. If you have designated someone other than yourself
as the annuitant, however, your heirs will have less discretion than you would
have had in determining when and how the contract's value would be paid out.

- --------------------------------------------------------------------------------
IF YOU DIE BEFORE ANNUITY PAYMENTS HAVE BEGUN:
. if the contract's designated beneficiary is your surviving
spouse, your spouse may continue the contract in force as the
owner.
. if the beneficiary is not your surviving spouse OR if the beneficiary is your
surviving spouse but chooses not to continue the contract, the "entire
interest" (as discussed below) in the contract on the date of your death must
be:

(1) paid out in full within five years of your death or

(2) applied in full towards the purchase of a life annuity on the
beneficiary with payments commencing within one year of your death.

. the surrender value if paid out in full within five years of your death, or
. the total value of your contract applied in full towards the purchase
of a life annuity on the beneficiary with payments commencing within one year
of your death.

IF YOU DIE ON OR AFTER ANNUITY PAYMENTS HAVE BEGUN:

. any remaining amount that we owe must be paid out at least as rapidly as
under the method of making annuity payments that is then in use.
- --------------------------------------------------------------------------------

The Code imposes very similar distribution requirements on contracts used
to fund tax qualified plans. We provide the required provisions for tax
qualified plans in separate disclosures and endorsements.

Notice of the death of an owner or annuitant should be furnished promptly
to the John Hancock Annuity Servicing Office.

MISCELLANEOUS PROVISIONS

Assignment; change of owner or beneficiary

Subject to these limits, while the annuitant is alive, you may designate
someone else as the owner by written notice to the John Hancock Annuity
Servicing Office. The contract designates the person you choose as beneficiary.
You may change the beneficiary by written notice no later than receipt of due
proof of the death of the annuitant. Changes of owner or beneficiary will take
effect whether or not you or the annuitant is then alive. However, these changes
are subject to:

. the rights of any assignees of record,

. the any action taken prior to receipt of the notice, and

. certain other conditions.

An assignment, pledge, or other transfer may be a taxable event. See "Tax
information" below. Therefore, you should consult a competent tax adviser before
taking any such action.

TAX INFORMATION

Our income taxes

We are taxed as a life insurance company under the Internal Revenue Code
(the "Code"). The Account is taxed as part of our operations and is not taxed
separately.

The contracts permit us to deduct a charge for any taxes we incur that are
attributable to the operation or existence of the contracts or the Account.
Currently, we do not anticipate making a charge such taxes. If the level of the
current taxes increases, however, or is expected to increase in the future, we
reserve the right to make a charge in the future.

Special Considerations for Optional Benefit Riders

If you have elected the optional stepped-up death benefit rider or
accidental death benefit rider, it is our understanding that the charges
relating to these riders are not subject to current taxation. The Internal
Revenue Service ("IRS") might take the position, however, that each charge
associated with the rider is deemed a partial withdrawal from the contract
subject to current income tax to the extent of any gains and, if applicable, the
10% penalty tax for premature distributions from annuities. We understand that
you are not prevented from adding any of our

optional death benefit riders to your contract if it is issued as an IRA.
However, the law is unclear because IRAs generally may not invest in "life
insurance contracts." Therefore, it is possible that a contract may be
disqualified as an IRA if it has an optional death benefit rider added to it.
If so, you may be subject to increased taxes.

At present, the IRS has not provided guidance as to the tax effect of
adding an optional nursing home waiver of withdrawal charge rider to an annuity
contract. The IRS might take the position that each charge associated with this
rider is deemed a withdrawal from the contract subject to current income tax to
the extent of any gains and, if applicable, the 10% penalty tax for premature
withdrawals.

We do not currently report rider charges as partial withdrawals, but we may
do so in the future if we believe that the IRS would require us to report them
as such. You should consult a competent tax adviser before electing any of these
optional benefit riders.

Contracts not purchased to fund a tax qualified plan

Undistributed gains

However, a contract owned other than by a natural person (e.g.,
corporations, partnerships, limited liability companies and other such entities)
does not generally qualify as an annuity for tax purposes. Any increase in value
therefore would constitute ordinary taxable income to such an owner in the year
earned.

Annuity payments

When we make payments under a contract in the form of an annuity, each
payment will result in taxable ordinary income to you, to the extent that each
such payment exceeds an allocable portion of your "investment in the contract"
(as defined in the Code). In general, your "investment in the contract" equals
the aggregate amount of premium payments you have made over the life of the
contract, reduced by any amounts previously distributed from the contract that
were not subject to tax.

The Code prescribes the allocable portion of each such annuity payment to
be excluded from income according to one formula if the payments are variable
and a somewhat different formula if the payments are fixed. In each case,
speaking generally, the formula seeks to allocate an appropriate amount of the
investment in the contract to each payment. After the entire "investment in the
contract" has been distributed, any remaining payment is fully taxable.

Surrenders, withdrawals and death benefits

When we make a single sum payment from a contract, you have ordinary
taxable income, to the extent the payment exceeds your "investment in the
contract" (discussed above). Such a single sum payment can occur, for example,
if you surrender your contract before the date of maturity or if no annuity
payment option is selected for a death benefit payment.

All or part of any death benefit proceeds may constitute a taxable payout
of earnings. A death benefit payment generally results in taxable ordinary
income to the extent such payment exceeds your "investment in the contract."

Penalty for premature withdrawals

substantially equal periodic payments over the life of the payee (or over the
joint lives of the payee and the payee's beneficiary).

Puerto Rico annuity contracts not purchased to fund a tax qualified plan

Under the Puerto Rico tax laws, distributions from a contract not purchased
to fund a tax qualified plan ("Non-Qualified Contract") before annuitization are
treated as non-taxable return of principal until the principal is fully
recovered. Thereafter, all distributions are fully taxable. Distributions after
annuitization are treated as part taxable income and part non-taxable return of
principal. The amount excluded from gross income after annuitization is equal to
the amount of the distribution in excess of 3% of the total purchase payments
paid, until an amount equal to the total purchase payments paid has been
excluded. Thereafter, the entire distribution from a Non-Qualified Contract is
included in gross income. Puerto Rico does not currently impose an early
withdrawal penalty tax. Generally, Puerto Rico does not require income tax to be
withheld from distributions of income.

Diversification requirements

Contracts purchased for a tax qualified plan

We have no responsibility for determining whether a particular retirement
plan or a particular contribution to the plan satisfies the applicable
requirements of the Code, or whether a particular employee is eligible for
inclusion under a plan. In general, the Code imposes limitations on the amount
of annual compensation that can be contributed into a tax-qualified plan, and
contains rules to limit the amount you can contribute to all of your
tax-qualified plans. Trustees and administrators of tax qualified plans may,
however, generally invest and reinvest existing plan assets without regard to
such Code imposed limitations on contributions. Certain distributions from tax
qualified plans may be transferred directly to another plan, unless funds are
added from other sources, without regard to such limitations.

Tax-free rollovers

For tax years beginning in 2002, if permitted under your plans, you may
make a tax-free rollover from:

. a traditional IRA to another traditional IRA,

. a traditional IRA to another tax-qualified plan, including a Section 403(b)
plan

. any tax-qualified plan (other than a Section 457 deferred compensation plan
maintained by a tax-exempt organization) to a traditional IRA,

. a Section 457 deferred compensation plan maintained by a tax-exempt
organization to another Section 457 deferred compensation plan maintained by
a tax-exempt organization and

. a traditional IRA to a Roth IRA, subject to special restrictions discussed
below.

In addition, if your spouse survives you, he or she is permitted to
rollover your tax-qualified retirement account to another tax-qualified
retirement account in which your surviving spouse participates, to the extent
permitted by your surviving spouse' plan.

Traditional IRAs

. 100% of compensation includable in your gross income, or

The amount of your deduction is based on the following factors:

. whether you or your spouse is an active participant in an employer sponsored
retirement plan,

. your federal income tax filing status, and

. your "Modified Adjusted Gross Income."

Your traditional IRA deduction is subject to phase out limits, based on
your Modified Adjusted Gross Income, which are applicable according to your
filing status and whether you or your spouse are active participants in an
employer sponsored retirement plan. You can still contribute to a traditional
IRA even if your contributions are not deductible.

The tax law requires that annuity payments under a traditional IRA contract
begin no later than April 1 of the year following the year in which the owner
attains age 70 1/2.

Roth IRAs

Distributions. If you hold your Roth IRA for at least five years the payee
-------------
will not owe any federal income taxes or early withdrawal penalties on amounts
paid out from the contract:

. after you reach age 59 1/2,

. on your death or disability, or

. to qualified first-time home buyers (not to exceed a lifetime limitation of
$10,000) as specified in the Code.

amount of your contributions is taxable to you as ordinary income and possibly
subject to the 10% penalty tax (unless certain exceptions apply as specified in
Code section 72(t).