UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

             |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2002

                        Commission File Number: 33-62895

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
                Exact name of registrant as specified in charter

         MASSACHUSETTS                              04-2664016
(State or other jurisdiction of         (I.R.S. Employer Identification No.)
incorporation or organization)

                              200 Clarendon Street
                           Boston, Massachusetts 02117
                    (Address of principal executive offices)

                                 (617) 572-6000
              (Registrant's telephone number, including area code)

      Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

      Number of shares outstanding of our only class of common stock as of May
10, 2002:

                                     50,000


                                       1
<PAGE>

PART I   FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                           CONSOLIDATED BALANCE SHEETS

                                                    March 31,
                                                      2002        December 31,
                                                   (Unaudited)       2001
                                                  ----------------------------
                                                          (in millions)
Assets

Investments
Fixed maturities:
   Held-to-maturity--at amortized cost
   (fair value: 2002--$82.8; 2001--$82.1) ....    $    83.9          $    83.7
   Available-for-sale--at fair value
   (cost: 2002--$2,499.3;  2001--$2,391.9) ...      2,504.1            2,412.5
Equity securities:
   Available-for-sale--at fair value
   (cost: 2002--$14.2; 2001--$12.1) ..........         15.8               13.1
Mortgage loans on real estate ................        590.5              580.9
Real estate ..................................         20.6               20.6
Policy loans .................................        353.4              352.0
Short-term investments .......................          0.1               --
Other invested assets ........................         49.3               39.6
                                                  ----------------------------

   Total Investments .........................      3,617.7            3,502.4

Cash and cash equivalents ....................         54.8              115.4
Accrued investment income ....................         62.6               60.8
Premiums and accounts receivable .............          4.3               12.5
Deferred policy acquisition costs ............      1,107.1            1,060.8
Reinsurance recoverable ......................        121.5              110.4
Other assets .................................        132.2              121.8
Separate account assets ......................      6,739.5            6,729.1
                                                  ----------------------------

   Total Assets ..............................    $11,839.7          $11,713.2
                                                  ============================

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


                                       2
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                   CONSOLIDATED BALANCE SHEETS -- (CONTINUED)

                                                     March 31,
                                                        2002      December 31,
                                                    (Unaudited)       2001
                                                    --------------------------
                                                          (in millions)
Liabilities and Shareholder's Equity

Liabilities
Future policy benefits ...................          $ 3,440.9        $ 3,335.4
Policyholders' funds .....................                3.7              3.0
Unearned revenue .........................              230.6            221.0
Unpaid claims and claim expense reserves .               27.1             25.0
Dividends payable to policyholders .......                0.3              0.3
Income taxes .............................              183.0            191.1
Other liabilities ........................              229.7            242.7
Separate account liabilities .............            6,739.5          6,729.1
                                                    --------------------------

   Total Liabilities .....................           10,854.8         10,747.6

Commitments and contingencies - Note 4

Shareholder's Equity
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 ........................              404.4            377.8
Accumulated other comprehensive income ...                5.6             12.9
                                                    --------------------------

   Total Shareholder's Equity ............              984.9            965.6
                                                    --------------------------

   Total Liabilities and Shareholder's Equity       $11,839.7        $11,713.2
                                                    ==========================

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


                                       3
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                   UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

                                                            Three Months Ended
                                                                 March 31,
                                                            2002           2001
                                                          ---------------------
                                                              (in millions)
Revenues
  Premiums ...........................................    $ 12.2         $ 15.4
  Universal life and investment-type product charges .      88.9           96.3
  Net investment income ..............................      62.2           56.6
  Net realized investment and other gains (losses),
     net of related amortization of deferred policy
     acquisition costs $(3.3) and $(0.2), respectively     (12.4)           0.6
  Other revenue ......................................       1.3            0.1
                                                          ---------------------

    Total revenues ...................................     152.2          169.0

Benefits and Expenses
  Benefits to policyholders ..........................      84.0           61.7
  Other operating costs and expenses .................      15.9           23.5
  Amortization of deferred policy acquisition costs,
     excluding amounts related to net realized
     investment and other gains (losses) $(3.3)
     and $(0.2), respectively ........................       7.9           25.7
  Dividends to policyholders .........................       4.8            5.3
                                                          ---------------------

    Total benefits and expenses ......................     112.6          116.2
                                                          ---------------------

Income before income taxes and cumulative
  effect of accounting change ........................      39.6           52.8
Income taxes .........................................      13.0           21.0
                                                          ---------------------

Income before cumulative effect of accounting change .      26.6           31.8

Cumulative effect of accounting change, net of
  tax - Note 1 .......................................      --             (1.6)
                                                          ---------------------

Net income ...........................................    $ 26.6         $ 30.2
                                                          =====================

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


                                       4
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

      UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
                            AND COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                                                         Accumulated
                                                          Additional                       Other           Total
                                                Common      Paid In      Retained       Comprehensive   Shareholder's  Outstanding
                                                 Stock      Capital      Earnings          Income          Equity         Shares
                                                ----------------------------------------------------------------------------------
                                                                       (in millions, except share amounts)

<S>                                               <C>        <C>             <C>          <C>               <C>            <C>
Balance at January 1, 2001................        $2.5       $572.4          $232.9       $(2.2)            $805.6         50,000

Comprehensive income:
   Net income ............................                                     30.2                           30.2

 Other comprehensive income, net of tax:
   Net unrealized gains (losses)..........                                                  4.4                4.4
                                                                                                          -----------
Comprehensive income......................                                                                    34.6
Change in accounting principle - Note 1...                                                  7.2                7.2
                                                ----------------------------------------------------------------------------------

Balance at March 31, 2001.................        $2.5       $572.4          $263.1       $ 9.4             $847.4         50,000
                                                ==================================================================================

Balance at January 1, 2002................        $2.5       $572.4          $377.8       $12.9             $965.6         50,000

Comprehensive income:
   Net income.............................                                     26.6                           26.6

 Other comprehensive income, net of tax:
   Net unrealized gains (losses)..........                                                 (7.3)              (7.3)
                                                                                                          -----------
Comprehensive income......................                                                                    19.3
                                                ----------------------------------------------------------------------------------

Balance at March 31, 2002.................        $2.5       $572.4          $404.4       $ 5.6             $984.9         50,000
                                                ==================================================================================
</TABLE>

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


                                       5
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                              Three Months Ended
                                                                   March 31,
                                                                2002       2001
                                                              ------------------
                                                                (in millions)
Cash flows from operating activities:
  Net income .............................................    $ 26.6     $ 30.2
  Adjustments to reconcile net income to net cash
    provided by operating activities:
     Amortization of discount - fixed maturities .........      (0.3)      (2.7)
     Net realized investment and other (gains) losses,
       net ...............................................      12.4       (0.6)
     Change in deferred policy acquisition costs .........     (32.2)     (14.8)
     Depreciation and amortization .......................      --          0.2
     Increase in accrued investment income ...............      (1.8)      (6.4)
     Decrease in premiums and accounts receivable ........       8.2        4.3
     Increase in other assets and other liabilities, net .     (17.7)    (119.6)
     (Decrease) increase in policy liabilities and
       accruals, net .....................................     (39.4)      66.7
     Decrease (increase) in income taxes .................      (4.1)      32.5
                                                              ------------------
       Net cash used in operating activities .............     (48.3)     (10.2)

Cash flows from investing activities:
  Sales of:
    Fixed maturities available-for-sale ..................     218.4       24.4
    Equity securities available-for-sale .................       1.5        0.1
  Maturities, prepayments and scheduled redemptions of:
    Fixed maturities held-to-maturity ....................       1.0        0.8
    Fixed maturities available-for-sale ..................      36.2       26.0
    Short-term investments and other invested assets .....       0.8       21.7
    Mortgage loans on real estate ........................      11.7        6.4
  Purchases of:
    Fixed maturities held-to-maturity ....................      (1.1)      --
    Fixed maturities available-for-sale ..................    (396.0)    (162.6)
    Equity securities available-for-sale .................      (3.8)      (4.7)
    Real estate ..........................................      --         (0.1)
    Short-term investments and other invested assets .....      (5.8)     (16.8)
  Mortgage loans on real estate issued ...................     (26.1)     (14.5)
  Other, net .............................................      (4.3)     (17.5)
                                                              ------------------
      Net cash used in investing activities ..............    (167.5)    (136.8)

Cash flows from financing activities:
  Universal life and investment-type contract deposits ...     280.8      231.4
  Universal life and investment-type contract
    maturities and withdrawals ...........................    (125.6)    (195.1)
                                                              ------------------
      Net cash provided by financing activities ..........     155.2       36.3
                                                              ------------------
      Net decrease in cash and cash equivalents ..........     (60.6)    (110.7)

Cash and cash equivalents at beginning of period .........     115.4      277.3
                                                              ------------------
      Cash and cash equivalents at end of period .........    $ 54.8     $166.6
                                                              ==================

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


                                       6
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

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 unaudited consolidated financial statements of the Company have
been prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. In the opinion
of management, these unaudited consolidated financial statements contain all
adjustments, consisting of only normal and recurring adjustments, necessary for
a fair presentation of the financial position and results of operations.
Operating results for the three month period ended March 31, 2002 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2002. These unaudited consolidated financial statements should be
read in conjunction with the Company's annual audited financial statements as of
December 31, 2001 included in the Company's Form 10-K for the year ended
December 31, 2001 filed with the United States Securities and Exchange
Commission (hereafter referred to as the Company's 2001 Form 10-K).

The balance sheet at December 31, 2001 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by accounting principles generally accepted in the United
States for complete financial statements.

Cumulative Effect of Accounting Changes

On January 1, 2001, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities," (SFAS No. 133), as amended by SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities, an amendment of FASB
Statement 133". 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 for (1) the
transition adjustment in the adoption of SFAS No. 133, as amended, an increase
in comprehensive income 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 in comprehensive income
of $6.4 million (net of tax of $3.4 million).

Recent Accounting Pronouncements

On January 1, 2002, the Company adopted 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. The
Company has no goodwill, or other purchased indefinite lived intangible assets
subject to SFAS No. 142 and, therefore, the adoption of SFAS No. 142 had no
impact on its earnings or financial position.


                                       7
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Note 2 - Transactions with Parent

John Hancock provides the Company with personnel, property, and facilities in
carrying out certain of its corporate and operational 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 other operating costs and expenses within the
Company's income statements. John Hancock charged the Company a service fee of
$45.3 million and $38.5 million for the three months ended March 31, 2002 and
2001, respectively. As of March 31, 2002 and December 31, 2001, the Company owed
John Hancock $16.8 million and $17.9 million, respectively, 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.

Note 3 -- 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.

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 annuities, consisting of fixed
deferred annuities and variable annuities. This segment distributes its products
through distribution channels including insurance agents and brokers affiliated
with the Company, securities brokerage firms, and financial planners.

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 or losses and other 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 and losses 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)
restructuring costs related to our distribution systems and retail operations;
and (iii) cumulative effect of an accounting change.


                                       8
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Note 3 -- Segment Information - (Continued)

The following table summarizes selected financial information by segment for the
dates and periods indicated, and reconciles segment revenues and segment
after-tax operating income to amounts reported in the consolidated statements of
income:

<TABLE>
<CAPTION>


                                                                         Asset
As of or for the three months ended March 31, 2002:     Protection     Gathering   Consolidated
                                                        ---------------------------------------
<S>                                                     <C>            <C>            <C>
Revenues: ..........................................                (in millions)
  Segment revenues .................................    $   155.5      $     9.1      $   164.6
  Net realized investment and
    other gains (losses) ...........................        (12.4)          --            (12.4)
                                                        ---------------------------------------
  Revenues .........................................    $   143.1      $     9.1      $   152.2
  Net investment income ............................    $    62.3      $    (0.1)     $    62.2

Net Income:
  Segment after-tax operating income ...............    $    33.0      $     1.3      $    34.3
  Net realized investment and
    other gains (losses) ...........................         (8.0)          --             (8.0)
  Restructuring charges ............................          0.3           --              0.3
                                                        ---------------------------------------
  Net income .......................................    $    25.3      $     1.3      $    26.6
                                                        =======================================
Supplemental Information:
  Equity in net income of investees accounted
    for by the equity method .......................    $     1.0           --        $     1.0
  Amortization of deferred policy
    acquisition costs ..............................          4.8      $     3.1            7.9
  Segment assets ...................................    $10,166.6      $ 1,673.1      $11,839.7

                                                                         Asset
As of or for the three months ended March 31, 2001:     Protection     Gathering   Consolidated
                                                        ---------------------------------------
Revenues: ..........................................                 (in millions)
  Segment revenues .................................    $   156.9      $    11.5      $   168.4
  Net realized investment and
    other gains (losses) ...........................          0.6           --              0.6
                                                        ---------------------------------------
  Revenues .........................................    $   157.5      $    11.5      $   169.0
  Net investment income ............................    $    57.2      $    (0.6)     $    56.6

Net Income:
  Segment after-tax operating income ...............    $    31.7      $    (0.3)     $    31.4
  Net realized investment and
    other gains (losses) ...........................          0.4           --              0.4
  Cumulative effect of accounting change, net
    of tax .........................................         (1.6)          --             (1.6)
                                                        ---------------------------------------
  Net income .......................................    $    30.5      $    (0.3)     $    30.2
                                                        =======================================
Supplemental Information:
  Equity in net income of investees accounted
    for by the equity method .......................    $     0.5           --        $     0.5
  Amortization of deferred policy
    acquisition costs ..............................         18.6      $     7.1           25.7
  Segment assets ...................................    $ 8,976.7      $ 2,495.5      $11,472.2
</TABLE>

The Company operates only in the United States and has no reportable SFAS No.
131 major customers.


                                       9
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Note 4 --  Commitments and Contingencies

Class Action

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 $10.3 million
and $7.0 million at March 31, 2002 and December 31, 2001, respectively. No costs
incurred related to the settlement for the three months ended March 31, 2002 or
2001. 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 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.

Other Matters

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 March 31, 2002. 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.

Note 5 -- Value of Business Acquired

The Company recognizes one purchased intangible asset. The Company records an
asset representing the present value of estimated future profits of insurance
policies inforce related to businesses acquired in business combinations. This
asset is recorded as the value of business acquired (VOBA), and is included in
other assets in the consolidated balance sheets. VOBA is amortized in proportion
to the present value of expected gross profits of the businesses acquired.


                                       10
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Note 5 -- Value of Business Acquired - (Continued)

The following tables set forth certain summarized financial information relating
to VOBA as of the dates and periods indicated. (all amounts are in millions)

                                      Gross Carrying  Accumulated   Net Carrying
                                         Amount       Amortization     Amount
                                      ------------------------------------------
Amortizable intangible assets:
March 31, 2002
   VOBA ...........................     $  25.0        $ (16.5)       $  8.5

March 31, 2001
   VOBA ...........................     $  25.0        $ (16.7)       $  8.3

Amortization expense:                           Three Months Ended
                                                     March 31,
                                              2002               2001
                                      ------------------------------------------
VOBA, net of tax of $0.1 and
   $0.1, respectively..............          $ 0.1               $ 0.2

Estimated future amortization
expense for the years ended
December 31,                                Tax Effect        Net Expense
                                      ------------------------------------------

2002...............................          $ 0.4               $ 0.7

2003...............................            0.3                 0.5

2004...............................            0.2                 0.5

2005...............................            0.2                 0.5

2006...............................            0.2                 0.4

2007...............................            0.2                 0.4

The changes in the carrying value of VOBA, presented for each business segment,
for the period indicated are as follows:

                                                        Asset
                                        Protection     Gathering    Consolidated
                                      ------------------------------------------

Balance at January 1, 2002.........       $ 7.3           --           $ 7.3
Amortization.......................        (0.2)          --            (0.2)
Adjustment to unrealized gains on
  securities available-for-sale....         1.4           --             1.4
                                      ------------------------------------------
Balance at  March 31, 2002.........       $ 8.5           --           $ 8.5
                                      ==========================================


                                       11
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

ITEM 2. MANAGEMENT'S DISCUSSION and ANALYSIS OF FINANCIAL CONDITION and RESULTS
of OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of
Operations (MD&A) addresses the consolidated and segment financial condition of
John Hancock Variable Life Insurance Company (the Company) as of March 31, 2002,
compared with December 31, 2001, and its consolidated results of operations for
the three-month periods ended March 31, 2002 and March 31, 2001, and, where
appropriate, factors that may affect future financial performance. This
discussion should be read in conjunction with the Company's MD&A and annual
audited financial statements as of December 31, 2001 included in the Company's
Form 10-K for the year ended December 31, 2001 filed with the Securities and
Exchange Commission (hereafter referred to as the Company's 2001 Form 10-K).

Statements, analyses, and other information contained in this report relating to
trends in the Company's operations and financial results, the markets for the
Company's products, the future development of the Company's business, and the
contingencies and uncertainties to which the Company may be subject, as well as
other statements including words such as "anticipate," "believe," "plan,"
"estimate," "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 the
Company, which may not be those anticipated by management. The Company's actual
results may differ materially from the results anticipated in these
forward-looking statements. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Forward-Looking Statements"
included herein for a discussion of factors that could cause or contribute to
such material differences.

Overview

John Hancock Variable Life Insurance Company (the Company), a wholly-owned
subsidiary of John Hancock Life Insurance Company (John Hancock or the Parent
Company) is a leading life insurance company providing a broad range of products
and services in the retail market, which offers insurance protection and asset
gathering products and services primarily to retail consumers.

Our revenues are derived principally from:

      o     premiums on individual life insurance and annuities with life
            contingencies;
      o     product charges from variable and universal life insurance products
            and annuities;
      o     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.

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- Summary of
Significant Accounting Policies in the notes to consolidated financial tatements
of the Company's 2001 Form 10-K. Note that the application of these accounting
policies in the preparation of this report requires management to


                                       12
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

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 the Company's financial statements and MD&A.

Amortization of Deferred Policy Acquisition Costs

We amortize deferred policy acquisition costs on term life insurance ratably
with premiums. We amortize 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, including net realized investment and other gains
(losses), are adjusted periodically to take into consideration the actual
experience to date and changes in the remaining estimated 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.

Economic Trends

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.


                                       13
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Results of Operations

The table below presents the consolidated results of operations for periods
indicated:

                                                          Three Months Ended
                                                              March 31,
                                                           2002        2001
                                                         -------------------
                                                            (in millions)
      Revenues ......................................    $152.2       $169.0

      Benefits and expenses .........................     112.6        116.2
                                                         -------------------
      Income before income taxes and
        cumulative effect of accounting
        change ......................................      39.6         52.8

      Income taxes ..................................      13.0         21.0
                                                         -------------------
      Income before cumulative effect
          of accounting change ......................      26.6         31.8
      Cumulative effect of accounting change,
          net of tax (1) ............................        --         (1.6)
                                                         -------------------

      Net income ....................................    $ 26.6       $ 30.2
                                                         ===================

(1)   Cumulative effect of accounting changes is shown net of taxes of $0.4
      million for the three months ended March 31, 2001. There was no cumulative
      effect of accounting change for the three months ended March 31, 2002.

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

      Consolidated income before income taxes and cumulative effect of
accounting change of $39.6 million, for the three months ended March 31, 2002
decreased by $13.2 million, or 25.0%, from that reported in the comparable prior
year period. The Protection Segment's income before income taxes and cumulative
effect of accounting change decreased $14.8 million, or 28.0%, for the three
months ended March 31, 2002 compared to the three months ended March 31, 2001
primarily due to Protection's $12.4 million in net realized investment and other
losses for the period. Partially offsetting Protection's decrease was a $1.6
million increase in the Asset Gathering Segment for the three months ended March
31, 2002 from that reported in the comparable prior year period. The increase in
Asset Gathering was a $1.5 million increase in other revenue in the annuities
business due to the sale, at fair value, of certain policies by the Company to
its Parent as part of the safe harbor annuity exchange program.

      Revenues of $152.2 million for the three months ended March 31, 2002
decreased $16.8 million, or 9.9%, compared to the three months ended March 31,
2001, primarily due to a $13.0 million decrease in net realized investment and
other gain (losses). The Protection Segment's $14.5 million decrease in revenues
was primarily driven by $12.4 million in net realized investment and other
losses, a $3.2 million decrease in premiums and a $3.1 million decrease in
universal life and investment-type product charges. These decreases in
Protection Segment revenues were partially offset by a $5.1 million increase in
net investment income. The decrease in premiums is primarily due to higher ceded
reinsurance premiums resulting from a new reinsurance treaty. Universal life and
investment-type product charges decreased primarily due to lower amortization of
unearned revenue in the non-traditional life insurance business. The Protection
Segment's growth in net investment income is being driven by growth in average
account balances. Revenues in the Asset Gathering Segment decreased $2.3 million
primarily due to a decrease of $4.3 million in investment-type product charges
partially offset by a $1.5 million increase in other revenue and $0.5 million
increase in net investment income. Asset Gathering investment-type product
charges decreased primarily due to lower account values driven by poor separate
account performance and policies sold to the Parent Company, as noted
previously.


                                       14
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

      Benefits and expenses of $112.6 million for the three months ended March
31, 2002 decreased $3.6 million, or 3.1%, compared to the three months ended
March 31, 2001, primarily due to a decrease of $3.9 million in the Asset
Gathering Segment. The decrease in Asset Gathering was driven by a $4.0 million
decrease in amortization of deferred policy acquisition costs in the annuities
business due to the policies sold to the Parent Company, as noted previously. In
addition, benefits to policyholders in the Asset Gathering Segment decreased
$0.8 million primarily due to lower average account balances in the annuity
business driven by policies sold to the Parent Company, as noted previously.
Asset Gathering Segment other operating costs and expenses increased $0.9
million primarily due to lower deferrals of acquisition costs driven by lower
sales. Protection's benefits and expense increased $0.3 million primarily due to
a $23.1 million increase in benefits to policyholders, partially offset by
decreases of $13.8 million in amortization of deferred policy acquisition costs,
$8.5 million in other operating costs and expenses and $0.5 million in dividends
to policyholders. Protection Segment benefits to policyholders increased
primarily due to both higher claim volume, as death claims paid net of
reinsurance reimbursement increased $8.9 million, and growth in the
non-traditional life insurance business, as universal life account values
increased by 26% compared to the prior year period. Amortization of deferred
policy acquisition costs decreased primarily due to poor mortality experience on
the non-traditional life insurance business. Other operating costs and expenses
decreased primarily due to higher reinsurance expense allowances due to growth
in the traditional and non-traditional life insurance products.


                                       15
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

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. The Company'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 annuities, consisting of fixed
deferred annuities and variable annuities. This segment distributes its products
through distribution channels including insurance agents and brokers affiliated
with the Company, securities brokerage firms, and financial planners.

We evaluate segment performance on segment after-tax operating income, which
excludes the effect of net realized investment and other gains (losses) and
other unusual or non-recurring events and transactions. Segment after-tax
operating income is determined by adjusting generally accepted accounting
principles (GAAP) net income for net realized investment and other gains
(losses), cumulative effect of accounting changes, and certain other items which
we believe are not indicative of overall operating trends or are one-time in
nature. 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.

                                                             Three Months Ended
                                                                  March 31,
                                                             2002          2001
                                                           ---------------------
Segment Data: ..........................................       (in millions)
Segment after-tax operating income (1):
   Protection Segment ..................................    $33.0         $31.7
   Asset Gathering Segment .............................      1.3          (0.3)
                                                           ---------------------
   Total segment after-tax operating income (1) ........     34.3          31.4

After-tax adjustments: (1)
   Net realized investment and
      other gains (losses) .............................     (8.0)          0.4
   Restructuring charges ...............................      0.3            --
                                                           ---------------------
   Total after-tax adjustments .........................     (7.7)          0.4
                                                           ---------------------

GAAP Reported:
   Income before cumulative effect
      of accounting change .............................     26.6          31.8
   Cumulative effect of accounting change, net of tax ..       --          (1.6)
                                                           ---------------------
   Net income ..........................................    $26.6         $30.2
                                                           =====================

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


                                       16
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Adjustments to GAAP Reported Net Income

      Our GAAP reported net income was affected by net realized investment and
other gains (losses) and other unusual or non-recurring events and transactions
presented in the reconciliation of GAAP reported net income to segment after-tax
operating income in Note 3 - Segment Information in the notes to the unaudited
consolidated financial statements. A description of these adjustments follows.

      In both periods, net realized investment and other gains (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 (losses) have been reduced by
amortization of deferred policy acquisition costs to the extent that such
amortization results from net realized investment and other gains (losses). We
believe presenting net realized investment and other gains (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 (losses) per the unaudited consolidated financial statements and (b) the
adjustment made for net realized investment and other gains (losses) to
calculate segment after-tax operating income for the three months ended March
31, 2002 and 2001.

                                                            Three Months Ended
                                                                 March 31,
                                                           2002            2001
                                                         -----------------------
                                                           (in millions)

Net realized investment and other gains (losses) ......   $(15.7)         $ 0.8

Less amortization of deferred policy acquisition
  costs related to net realized investment and
  other gains (losses) ................................     3.3            (0.2)
                                                         -----------------------
Net realized investment and other gains (losses),
  net of related amortization of deferred policy
  acquisition costs per unaudited consolidated
  financial statements ................................   (12.4)            0.6

Income tax effect .....................................     4.4            (0.2)
                                                         -----------------------

Net realized investment and other gains (losses) -
  after-tax adjustment to calculate segment
  after-tax operating income ..........................   $(8.0)          $ 0.4
                                                         =======================

The Company incurred restructuring charges to reduce costs and increase future
operating efficiency by consolidating portions of our operations. After-tax
restructuring costs were $0.3 million for the three months ended March 31, 2002.
No such costs were incurred in the three months ended March 31, 2001.


                                       17
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Protection Segment

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

                                                            Three Months Ended
                                                                March 31,
                                                           2002           2001
                                                         -----------------------
                                                              (in millions)

Revenues .........................................        $155.5         $156.9

Benefits and expenses ............................         105.4          104.6

Income taxes .....................................          17.1           20.6
                                                         -----------------------

Segment after-tax operating income (1) ...........          33.0           31.7
                                                         -----------------------

After-tax adjustments: (1)
   Net realized investment and other
      gains (losses) .............................          (8.0)           0.4
   Restructuring charges .........................           0.3             --
                                                         -----------------------
Total after-tax adjustments ......................          (7.7)           0.4
                                                         -----------------------

GAAP Reported:
Income before cumulative effect
   of accounting change ..........................          25.3           32.1
Cumulative effect of accounting
   change, net of tax ............................            --           (1.6)
                                                         -----------------------
Net income .......................................        $ 25.3         $ 30.5
                                                          ======================

Other Data:
Segment after-tax operating income:
   Non-traditional life (variable and
      universal life) ............................        $ 34.0         $ 33.3
   Traditional life ..............................          (1.0)          (1.6)
                                                         -----------------------
Segment after-tax operating income (1) ...........        $ 33.0         $ 31.7
                                                         =======================

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

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

      Segment after-tax operating income was $33.0 million for the three months
ended March 31, 2002, an increase of $1.3 million, or 4.1%, from $31.7 million
for the three months ended March 31, 2001. Traditional life insurance segment
after-tax operating income increased $0.6 million. Non-traditional insurance
segment after-tax operating income increased $0.7 million.

      Revenues were $155.5 million for the three months ended March 31, 2002, a
decrease of $1.4 million, or 0.9%, from $156.9 million for the three months
ended March 31, 2001. The decline in revenue was primarily due to a $3.2 million
decrease in premiums and a $3.1 decrease in universal life and investment-type
product charges. The decline in premiums was primarily due to higher ceded
reinsurance premiums of $7.7 million in the traditional life insurance business,
in conjunction with a new reinsurance treaty implemented during 2001. The
decline in product charges was due to lower amortization of unearned revenue of
$5.4 million on the non-traditional life insurance business, partially offset by
an increase in mortality and expense charges of $2.7 million due to a 10.3%
increase in the variable life account values. Partially offsetting these
decreases was an increase in net investment income of $5.1 million primarily due
to a 22.1% increased in average asset balances.


                                       18
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

      Benefits and expenses were $105.4 million for the three months ended March
31, 2002, an increase of $0.8 million, or 0.8%, from $104.6 million for the
three months ended March 31, 2001. Benefits to policyholders increased $23.2
million, or 39.2%, driven by both higher claim volume, as death claims paid net
of reinsurance reimbursement increased $8.9 million, and growth in the
non-traditional life insurance business, as universal life account values
increased by 26% compared to the prior year period. Offsetting this increase
were a decrease in amortization of deferred policy acquisition costs of $13.8
million, or 74.2%, and a decrease in other operating costs and expenses of $8.0
million. The decrease in amortization of deferred policy acquisition costs was
due primarily to poor mortality experience on the non-traditional life insurance
business. The lower operating expenses were primarily due to increased credits
of $10.6 million for reinsurance ceded expense allowances, resulting from both a
new traditional life reinsurance treaty implemented during 2001, and growth in
the non-traditional life business. The Segment's effective tax rate on operating
income decreased to 34.1% for the three months ended March 31, 2002 from 39.4%
for the comparable prior year period, primarily due to affordable housing
investment tax credits and deductions for general account dividends received on
common stock investments.


                                       19
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Asset Gathering Segment

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

                                                              Three Months Ended
                                                                   March 31,
                                                                2002       2001
                                                              -----------------
                                                                 (in millions)
      Revenues ..........................................      $ 9.1      $11.5

      Benefits and expenses .............................        7.7       11.6

      Income taxes ......................................        0.1        0.2

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

      Segment after-tax operating
        (loss) income (1) ...............................        1.3       (0.3)

                                                              -----------------
      GAAP Reported:
      Net income ........................................      $ 1.3      $(0.3)
                                                              ==================

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

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

      Segment after-tax operating income was $1.3 million for the three months
ended March 31, 2002, an increase of $1.6 million from the comparable prior year
period. The increase in segment after-tax operating income was primarily due to
a $1.5 million increase in other revenue due to the sale, at fair value, of
certain policies by the Company to its Parent as part of the safe harbor annuity
exchange program.

      Revenues were $9.1 million for the three months ended March 31, 2002, a
decrease of $2.4 million, or 20.9%, from $11.5 million for the three months
ended March 31, 2001. Lower revenues were primarily due to a decrease in
investment-type product charges of $4.3 million, or 35.0%, to $8.0 million for
the three months ended March 31, 2002 from $12.3 million reported in the
comparable prior year period. Investment-type product charges decreased as a
result of lower account values due to poor separate account performance and
policies sold to the Parent Company, as noted. This decrease was partially
offset by an increase in other income of $1.5 million, to $1.3 million for the
three months ended March 31, 2002, due to policies sold to the Parent Company,
as noted.

      Benefits and expenses decreased $3.9 million, or 33.6%, to $7.7 million
for the three months ended March 31, 2002 from $11.6 million reported in the
comparable prior year period. The decrease in benefits and expenses is primarily
due to a $4.0 million decrease in amortization of deferred policy acquisition
costs and a $0.8 million decrease in benefits to policyholders driven by lower
account balances driven by policies sold to the Parent Company, as noted. The
decreases in amortization of deferred policy acquisition cost and benefits to
policyholders were offset by an increase in other operating costs and expenses
of $0.9 million, due to lower deferrals of acquisition costs on lower sales.


                                       20
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

General Account Investments

Overall Composition of the General Account

Invested assets, excluding separate accounts, totaled $3.7 billion and $3.6
billion as of March 31, 2002 and December 31, 2001, respectively. The portfolio
composition has not significantly changed at March 31, 2002 as compared to
December 31, 2001. The following table shows the composition of investments in
our general account portfolio.

<TABLE>
<CAPTION>
                                                   March 31,                      December 31,
                                                     2002                            2001
                                         ---------------------------------------------------------
                                           Carrying          % of         Carrying           % of
                                             Value           Total          Value            Total
                                         ---------------------------------------------------------
                                         (in millions)                 (in millions)
<S>                                        <C>               <C>          <C>                 <C>
Fixed maturity securities (1) ...          $2,588.0          70.5%        $2,496.2            69.0%
Mortgage loans (2) ..............             590.5          16.1            580.9            16.0
Real estate .....................              20.6           0.6             20.6             0.6
Policy loans (3) ................             353.4           9.6            352.0             9.7
Equity securities ...............              15.8           0.4             13.1             0.4
Other invested assets ...........              49.3           1.3             39.6             1.1
Short-term investments ..........               0.1           0.0              0.0             0.0
Cash and cash equivalents (4) ...              54.8           1.5            115.4             3.2
                                        ----------------------------------------------------------

   Total invested assets ........          $3,672.5         100.0%        $3,617.8           100.0%
                                        ==========================================================
</TABLE>

(1)   In addition to bonds, the fixed maturity security portfolio contains
      redeemable preferred stock with a carrying value of $45.4 million and
      $45.6 million as of March 31, 2002 and December 31, 2001, respectively.
      The total fair value of our fixed maturity security portfolio was $2,586.9
      and $2,494.6 million, at March 31, 2002 and December 31, 2001,
      respectively.
(2)   The fair value for our mortgage loan portfolio was $611.0 and $604.3
      million as of March 31, 2002 and December 31, 2001, 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 the
      Company.

Consistent with the nature of our product liabilities, our assets are heavily
oriented toward fixed maturity securities. We determine the allocation of our
assets primarily on the basis of cash flow and return requirements of our
products and secondarily 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 March 31, 2002, fixed maturity securities represented 70.5% of
general account investment assets with a carrying value of $2.6 billion,
comprised of 63% public securities and 37% private securities. Each year the
Company 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 in the BB category.
Allocations are based on an assessment of relative value and the likelihood of
enhancing risk-adjusted portfolio returns. While the Company 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 the Company's net worth.


                                       21
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

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

                     Fixed Maturity Securities -- By Issuer

<TABLE>
<CAPTION>
                                                         March 31,                     December 31,
                                                           2002                           2001
                                               ---------------------------------------------------------
                                                 Carrying          % of         Carrying            % of
                                                  Value           Total           Value            Total
                                               ---------------------------------------------------------
                                               (in millions)                 (in millions)
<S>                                              <C>               <C>          <C>                <C>
Corporate securities ......................      $2,060.7          79.6%        $1,955.8            78.3%
MBS/ABS ...................................         493.2          19.1            317.1            12.7
U.S. Treasury securities and obligations of
  U.S. government agencies ................          23.6           0.9            214.8             8.6
Debt securities issued by foreign
  governments .............................           6.3           0.2              7.6             0.3
Obligations of states and political
  subdivisions ............................           4.2           0.2              0.9             0.1
                                               ---------------------------------------------------------
Total .....................................      $2,588.0         100.0%        $2,496.2           100.0%
                                               =========================================================
</TABLE>

In keeping with our investment philosophy of tightly managing interest rate
risk, the Company's MBS and 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,
the Company 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.

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 of 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. The
Company'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.

The following table sets forth the SVO ratings for the Company's bond portfolio
along with an equivalent S&P rating agency designation. The majority of bonds
are investment grade, with 87.9% and 87.7% invested in Category 1 and 2
securities as of March 31, 2002 and December 31, 2001, respectively. Below
investment grade bonds were 12.1% and 12.3% of fixed maturity securities and
8.4% of total invested assets as of March 31, 2002 and December 31, 2001. This
allocation reflects the Company'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.


                                       22
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

As of March 31, 2002 and December 31, 2001, a majority, 61.3% and 62.9%,
respectively, of the 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

<TABLE>
<CAPTION>
                                                                        March 31,                        December 31,
                                                           -------------------------------------------------------------------
                                                                          2002                               2001
                                                           -------------------------------------------------------------------
    SVO                       S&P Equivalent                     Carrying           % of            Carrying           % of
 Rating (1)                   Designation (2)                   Value (3)           Total           Value (3)          Total
------------------------------------------------------------------------------------------------------------------------------
                                                               (in millions)                      (in millions)
<S>                                                              <C>               <C>              <C>               <C>
     1      AAA/AA/A..................................           $  936.3           36.8%           $  910.4           37.2%
     2      BBB.......................................            1,298.4           51.1             1,237.9           50.5
     3      BB........................................              188.7            7.4               190.2            7.8
     4      B.........................................               58.7            2.3                59.7            2.4
     5      CCC and lower.............................               36.3            1.4                27.7            1.1
     6      In or near default........................               24.2            1.0                24.7            1.0
                                                           -------------------------------------------------------------------
            Total.....................................           $2,542.6          100.0%           $2,450.6          100.0%
                                                           ===================================================================
</TABLE>

(1)   For securities that are awaiting an SVO rating, the Company 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 $45.4
      million and $45.6 million as of March 31, 2002 and December 31, 2001,
      respectively.

Investment Results

The following table summarizes the Company's investment results for the periods
indicated. Overall, the yield, net of investment expenses, on the general
account portfolio decreased from the first quarter of the prior year. The lower
yield was the result of old assets rolling over into new investments with less
favorable interest rates and narrower acquisition spreads than those present in
our 2001 fixed maturity portfolio. The inflow of new cash was invested at rates
that were less than the overall portfolio earnings rate during the first quarter
of 2001.

<TABLE>
<CAPTION>
                                        Three Months Ended          Three Months Ended
                                          March 31, 2002              March 31, 2001
                                     --------------------------------------------------
                                        Yield        Amount         Yield       Amount
                                     --------------------------------------------------
                                                 (in millions)              (in millions)
<S>                                     <C>        <C>              <C>       <C>
General account assets-excluding
policy loans
  Gross income                          7.13%      $   58.7         8.00%     $   53.4
  Ending assets-excluding policy
    loans                                           3,319.1                    2,691.5
Policy loans
  Gross income                          5.44%           4.8         7.07%          6.0
  Ending assets                                       353.4                      345.0
  Total gross income                    6.97%          63.5         7.90%         59.4
  Less: investment expenses                            (1.3)                      (2.8)
                                                   --------                   --------
    Net investment income               6.83%      $   62.2         7.52%     $   56.6
                                                   ========                   ========
</TABLE>



                                       23
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

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, the
Company'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. The Company 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 March 31, 2002, $2,588.0 million, or 70.5% of
the investment portfolio is held in fixed maturity securities. In addition, the
Company held $54.9 million, or 1.5%, in cash and short-term investments at March
31, 2002. 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 used by operating activities was $48.3 million and $10.2 million
for the three months ended March 31, 2002 and 2001, respectively. The increase
in 2002 as compared to 2001 of $38.1 million resulted primarily from a decrease
in the change in income taxes payable of $36.6 million.

      Net cash used in investing activities was $167.5 million and $136.8
million for the three months ended March 31, 2002 and 2001, respectively. The
increase in cash used in investing activities in 2002 as compared to 2001
resulted from increased net acquisitions of fixed maturities during the three
months ended March 31, 2002, an increase in net purchases of $30.1 million.
Maturities, prepayments and scheduled redemptions, and purchases and sales of
the remaining asset categories, including short-term investments, mortgages,
real estate and equities, offset one another.

      Net cash provided by financing activities was $155.2 million and $36.3
million, for the three months ended March 31, 2002 and 2001, respectively. The
$118.9 million increase in 2002 as compared to 2001 resulted from an increase in
cash payments received as deposits of universal life insurance and
investment-type contracts in and a reduction in cash payments made on
withdrawals of universal life insurance and investment-type contracts. Deposits
on such universal life insurance and investment-type contracts exceeded
withdrawals by $155.2 million for the three months ended March 31, 2002 versus
$36.3 million in the comparable prior year period.

      Given our historical cash flows and that of our wholly owned subsidiary
and current financial results, management believes that the cash flow from the
operating activities over the next year will provide sufficient liquidity for
our operations and pay other operating expenses. Although we anticipate that we
will be able to meet our cash requirements, we can give no assurances in this
regard.


                                       24
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Forward-Looking Statements

      The statements, analyses, and other information contained herein relating
to trends in the Company's operations and financial results, the markets for the
Company's products, the future development of the Company's business, and the
contingencies and uncertainties to which the Company 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
the Company, which may not be those anticipated by management. Our 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 the Company 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) while
the Parent is seeking to renew its catastrophic reinsurance coverage, which also
provides catastrophic reinsurance coverage on the Company's individual life
insurance products and expired on December 31, 2001, if the Parent were unable
to acquire replacement catastrophic reinsurance coverage for individual life
insurance products, the Company's future net income and financial position could
be adversely impacted; (17) litigation and regulatory proceedings may result in
financial losses, harm our reputation and divert management resources, and (18)
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 the Company with the United States Securities and Exchange
Commission from time to time. The Company specifically disclaims any obligation
to update or revise any forward-looking information, whether as a result of new
information, future developments, or otherwise.


                                       25
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

ITEM 3. QUANTITATIVE and QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Capital Markets Risk Management

      The Company 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. The Company'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).

      The Company's principal capital market exposures are credit and interest
rate risk, 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/or interest. Interest
rate risk pertains to the market value fluctuations that occur within fixed
maturity securities or liabilities as market interest rates move. Equity and
foreign currency risk pertain to price fluctuations, associated with the
Company's ownership of equity investments or non-US dollar denominated
investments, driven by dynamic market environments.

Credit Risk

      The Company 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, issuer, industry, geographical, and property-type concentrations. Where
possible, consideration of external measures of creditworthiness, such as
ratings assigned by nationally recognized rating agencies, supplement our
internal credit analysis. The Company uses simulation models to examine the
probability distribution of credit losses to ensure that it can readily
withstand feasible adverse scenarios. In addition, the Company 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
the Company's aggregate experience to be favorable relative to these external
benchmarks and consistent with priced-for levels.

      The Company evaluates its investments in 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 the
Company'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
that provide the Company 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 March 31, 2002 and December 31, 2001, the Company's fixed maturity
portfolio was comprised of 87.9% and 87.7% investment grade securities and 12.1%
and 12.3% below-investment-grade securities, respectively. These percentages are
consistent with recent experience and indicative of the Company's long-standing
investment philosophy of pursuing moderate amounts of credit risk in return for
higher expected returns. We believe that credit risk can be successfully managed
given our proprietary credit evaluation models and experienced personnel.


                                       26
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Interest Rate Risk

      The Company 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.

      Derivative Instruments. The Company uses a variety of derivative financial
instruments, including swaps, caps, floors, and exchange traded futures
contracts, in accordance with Company policy. Permissible derivative
applications include the reduction of economic risk (i.e., hedging) related to
changes in yields, price, 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. The Company
does not make a market or trade derivatives for speculative purposes.

      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 the Company's derivative positions as of March
31, 2002. 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
exposures represent only a point in time and will be subject to change as a
result of ongoing portfolio and risk management activities.

<TABLE>
<CAPTION>
                                                                As of March 31, 2002
                                  ---------------------------------------------------------------------------------------
                                                                                        Fair Value
                                                                  -------------------------------------------------------
                                                     Weighted
                                     Notional      Average Term        -100 Basis                         +100 Basis
                                      Amount         (Years)       Point Change (1)    As of 3/31/02    Point Change (1)
                                  ---------------------------------------------------------------------------------------
                                                   (in millions, except for Weighted Average Term)
<S>                                 <C>                <C>          <C>                  <C>               <C>
Interest rate swaps..........       $  1,506.8         4.1          $  (22.3)            $  (0.8)          $  18.9
Interest rate caps...........            239.4         5.6               1.4                 3.1               5.9
Interest rate floors.........            361.4         8.5               2.6                 1.8               1.3
                                  ---------------                --------------------------------------------------------
      Totals.................       $  2,107.6         5.0          $  (18.3)            $   4.1           $  26.1
                                  ===============                ========================================================
</TABLE>

(1)   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.


                                       27
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

      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
a commercially available derivatives valuation and reporting system, (c)
periodic reporting of each counterparty's "potential exposure", (d) master
netting agreements and, where appropriate, (e) collateral agreements. Futures
contracts trade on organized exchanges and, therefore, have effectively no
credit risk.


                                       28
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

ITEM 6. EXHIBITS and REPORTS on FORM 8-K

(a)   Exhibits

Exhibit
Number                                      Description
------                                      -----------

NONE

b)    Reports on Form 8-K.

There were no reports on Form 8-K required to be filed during the period covered
by this report.


                                       29
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the dates indicated.

                                   JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY


                                   By: /s/ MICHELE G. VAN LEER
                                   ---------------------------------------------
May 13, 2002                       Michele G. Van Leer
                                   Vice Chairman and President


                                   By: /s/ EARL W. BAUCOM
                                   ---------------------------------------------
May 13, 2002                       Earl W. Baucom
                                   Controller
                                   (Principal Accounting Officer)

Date: May 13, 2002

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in the capacities and on the
dates indicated.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

For himself and as Attorney in Fact for:

      David F. D'Alessandro                 Chairman
      Michele G. Van Leer                   Vice Chairman and President
      Robert S. Paster                      Director
      Robert R. Reitano                     Director
      Barbara L. Luddy                      Director
      Bruce M. Jones                        Director
      Paul Strong                           Director


                                       30