<PAGE>
 
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                 _____________

                                   FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 5(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


For the Quarter Ended September 30, 1997     Commission File No. 33-62895
-------------------------------------------------------------------------

                  John Hancock Variable Life Insurance Company
                  --------------------------------------------
             (Exact name of registrant as specified in its charter)

          Massachusetts                               04-2664016
-------------------------------------------------------------------------
 (State or other jurisdiction of                    I.R.S. Employer
 incorporation or organization)                     Identification No.)
 
 200 Clarendon Street, Boston, Massachusetts             02117
-------------------------------------------------------------------------
 (Address of principal executive offices               (Zip Code)
 
 Registrant's telephone number, including area code    (617)572-9196
                                                       -------------
                                     None
------------------------------------------------------------------------------
    (Former name, former address, and former fiscal year if changed since last
report.)

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) been subject to such filing requirements
for the past 90 days.

                              Yes X    No 
                                  -       -  

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE> 
<CAPTION> 

                                      Shares Outstanding
              Class                   at September 30, 1997
              -----                   ---------------------
<S>                                   <C> 
     common stock,                           50,000
     $50 par value
</TABLE> 
<PAGE>
 
                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
                  --------------------------------------------
                                   FORM 10-Q
                   FOR THE QUARTER ENDED SEPTEMBER 30, 1997

                               TABLE OF CONTENTS

                                                                      Page
                                                                      ----

PART I.   FINANCIAL INFORMATION

Item 1.   Unaudited Financial Statements
<TABLE>
<CAPTION>
<S>                                                     <C> 
          Statements of Financial 
          Position as of September 30, 1997 
          and December 31, 1996                         . . . . . . . .  2
 
          Statements of Operations and
          Unassigned Deficit for the
          Three and Nine Months Ended
          September 30, 1997 and 1996                   . . . . . . . .  3
 
          Statements of Cash Flows
          for the Nine Months Ended
          September 30, 1997 and 1996                   . . . . . . . .  4
 
          Statements of Stockholder's Equity
          for the Nine Months Ended
          September 30, 1997 and 1996                   . . . . . . . .  5
 
          Condensed Notes to Financial
          Statements                                    . . . . . . . .  6
 
Item 2.   Management's Discussion
          and Analysis                                  . . . . . . . .  7
 

PART II   OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K              . . . . . . . . 10

</TABLE>
SIGNATURES

        
<PAGE>
 
                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                        STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
                                         (Unaudited)
                                        September 30  December 31
                                            1997         1996
                                        ------------------------
 
                                               (In millions)
<S>                                       <C>        <C>
ASSETS
 Bonds                                    $  899.9      $  753.5
 Preferred stocks                             17.4           9.6
 Common stocks                                 4.3           1.4
 Investment in affiliates                     78.7          72.0
 Mortgage loans on real                                          
  estate                                     245.5         212.1 
 Real estate                                  40.0          38.8
 Policy loans                                101.5          80.8
 Cash and temporary cash                                         
  investments                                  0.0          31.9 
 Premiums due and deferred                    33.2          36.8
 Investment income due and                                       
  accrued                                     25.7          22.6 
 Other general account assets                 13.5          17.8
 Assets held in separate                   
  accounts                                 4,430.7       3,290.5
                                         -----------------------
                          TOTAL ASSETS    $5,890.4      $4,567.8
                                         =======================
 
OBLIGATIONS AND STOCKHOLDER'S EQUITY
 
OBLIGATIONS
 Policy reserves                          $  932.2      $  877.8
 Federal income and other             
  taxes payable                               29.9          29.4
 Other accrued expenses                      164.7          75.1
 Asset valuation reserve                      18.1          16.6
 Obligations related to                                          
  separate accounts                        4,425.4       3,285.8 
                                        ------------------------
                     TOTAL OBLIGATIONS     5,570.3       4,284.7
 
STOCKHOLDER'S EQUITY
 Common Stock, $50 par                  
  value; authorized 50,000                                       
  shares; issued and                                               
  outstanding 50,000 shares                    2.5           2.5  
 Paid-in capital                             377.5         377.5
 Unassigned deficit                          (59.9)        (96.9)
                                        ------------------------
 
 
            TOTAL STOCKHOLDER'S EQUITY       320.1         283.1
                                        ------------------------
                       
 
                 TOTAL OBLIGATIONS AND 
                  STOCKHOLDER'S EQUITY    $5,890.4      $4,567.8
                                        ========================
 
</TABLE>



See condensed notes to the financial statements (unaudited).

<PAGE>
 
                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT
<TABLE>
<CAPTION>
 
 
                                                        (Unaudited)
                                           Three months ended    Nine months ended
                                              September 30          September 30
                                        ------------------------------------------
                                             1997       1996      1997      1996
                                          ----------  --------  --------  --------
 
                                                        (In millions)
 
<S>                                       <C>         <C>       <C>       <C>
INCOME
  Premiums                                   $224.8   $ 198.1    $644.8   $ 683.5
  Net investment income                        22.5      20.7      64.1      56.6
  Other, net                                   96.9      26.8     267.3     100.8
                                        -----------------------------------------
                                              344.2     245.6     976.2     840.9

BENEFITS AND EXPENSES
  Payments to policyholders and                                                   
   beneficiaries                               64.3      57.3     181.3     175.4 
  Additions to reserves to provide for
   future payments to policyholders and
    beneficiaries                             214.4     141.2     578.7     483.3 
  Expenses of providing service to
   policyholders and obtaining new
   insurance                                   46.8      32.4     148.2     127.2
  State and miscellaneous taxes                 4.0       2.9      13.8      11.0
                                        -----------------------------------------
                                              329.5     233.8     922.0     796.9
                                        -----------------------------------------
 
                  GAIN FROM OPERATIONS             
           BEFORE FEDERAL INCOME TAXES
  AND NET REALIZED CAPITAL GAINS (LOSSES)      14.7      11.8      54.2      44.0
 
Federal income taxes                           10.2       8.0      27.2      24.6
                                        -----------------------------------------
                  GAIN FROM OPERATIONS
           BEFORE NET REALIZED CAPITAL
                          GAINS (LOSSES)        4.5       3.8      27.0      19.4
 
Net realized capital gains (losses)            (0.2)      0.8      (0.2)     (0.2)
                                        -----------------------------------------
                              NET GAIN          4.3       4.6      26.8      19.2
 
Unassigned deficit at beginning of            
 period                                       (70.5)   (114.8)    (96.9)   (131.3) 
Net unrealized capital gains (losses) 
 and other adjustments                         (0.2)      0.8       4.3       2.0
Change in reserves on account of change 
 in valuation basis                             6.7       0.0       6.7       0.0
Other reserves and adjustments                 (0.2)     (2.0)     (0.8)     (1.3)
                                        -----------------------------------------
 
    UNASSIGNED DEFICIT AT END OF PERIOD      $(59.9)  $(111.4)   $(59.9)  $(111.4)
                                        =========================================
 
</TABLE>


See condensed notes to the financial statements (unaudited).
<PAGE>
 
                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
 
 
                                              (Unaudited)
                                          Nine months ended
                                              September 30
                                          ------------------
                                            1997      1996
                                          --------  --------
 
                                            (In millions)
 
<S>                                       <C>       <C>
Cash flows from operating activities:
 Insurance premiums                       $ 650.0   $ 688.7
 Net investment income                       61.9      55.4
 Benefits to policyholders and             
  beneficiaries                            (169.2)   (162.1) 
 Dividends paid to policyholders            (13.7)    (11.6)
 Insurance expenses and taxes              (189.4)   (137.2)
 Net transfers to separate accounts        (513.9)   (369.3)
 Other, net                                 262.0      62.8
                                        -------------------
      NET CASH PROVIDED FROM OPERATIONS      87.7     126.7
                                        -------------------
 
Cash flows used in investing activities:
 Bond purchases                            (297.8)   (420.3)
 Bond sales                                  76.7     168.8
 Bond maturities and scheduled               
  redemptions                                36.7      20.8 
 Bond prepayments                            45.2      18.7
 Stock purchases                            (15.7)     (1.5)
 Proceeds from stock sales                    6.2       0.3
 Real estate purchases                       (0.9)     (6.5)
 Real estate sales                            0.1       0.2
 Other invested assets purchases              0.0      (0.2)
 Proceeds from the sale of other              
  invested assets                             0.0       1.0 
 Mortgage loans issued                      (59.3)    (17.5)
 Mortgage loan repayments                    25.0      10.1
 Other, net                                  64.2      22.8
                                        -------------------
  NET CASH USED IN INVESTING ACTIVITIES    (119.6)   (203.3)
                                        -------------------
 
        DECREASE IN CASH AND TEMPORARY
                      CASH INVESTMENTS      (31.9)    (76.6)
Cash and temporary cash investments at       
 beginning of year                           31.9      76.6 
                                        -------------------
 
    CASH AND TEMPORARY CASH INVESTMENTS
                   AT THE END OF PERIOD   $   0.0   $   0.0
                                        ===================
 
</TABLE>



See condensed notes to the financial statements (unaudited).
<PAGE>
 
                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                       STATEMENTS OF STOCKHOLDER'S EQUITY


<TABLE>
<CAPTION>
 
 
                                          Common  Paid-in  Unassigned
                                          Stock   Capital    Deficit     Total
                                        --------------------------------------
                                                     (In millions)
<S>                                       <C>     <C>      <C>          <C>
For the nine months ended 
September 30, 1996 (unaudited)
Balance at January 1, 1996                  $2.5   $377.5     $(131.3)  $248.7
1996 Transactions:
 Net gain                                                        19.2     19.2
 Net unrealized capital gains and        
  other adjustments                                               2.0      2.0  
 Other reserves and adjustments                                  (1.3)    (1.3)
                                        --------------------------------------
Balance at September 30, 1996               $2.5   $377.5     $(111.4)  $268.6
                                        ======================================
 
For the nine months ended 
September 30, 1997 (unaudited)
Balance at January 1, 1997                  $2.5   $377.5     $ (96.9)  $283.1
1997 Transactions:
 Net gain                                                        26.8     26.8
 Net unrealized capital gains and        
  other adjustments                                               4.3      4.3
 Change in reserves on account of
   changes in valuation basis                                     6.7      6.7 
 Other reserves and adjustments                                  (0.8)    (0.8)
                                        --------------------------------------
Balance at September 30, 1997               $2.5   $377.5     $ (59.9)  $320.1
                                        ======================================
 
</TABLE>


See condensed notes to the financial statements (unaudited).
<PAGE>
 
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONDENSED NOTES TO FINANCIAL STATEMENTS
(unaudited)


NOTE 1--BASIS OF PRESENTATION

The accompanying unaudited interim financial statements have been prepared on
the basis of accounting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance and in conformity with the practices of the
National Association of Insurance Commissioners, which practices differ from
generally accepted accounting principles (GAAP).  Pursuant to Financial
Accounting Standard Board Interpretation 40, "Applicability of General Accepted
Accounting Principles to Mutual Life Insurance and Other Enterprises" (FIN 40),
as amended which was effective for 1996 financial statements, financial
statements based on statutory accounting practices can no longer be described as
prepared in conformity with GAAP.

In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the nine months period ended September 30, 1997 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1997.


<PAGE>
 
                     MANAGEMENT DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS



   Financial Condition

   As of September 30, 1997, total assets grew by 29.0% to $5,890.4 million,
from $4,567.8 million at December 31, 1996.  This increase is principally due to
the growth in the separate accounts where assets increased by 34.7% during 1997
from $3,290.5 million at December 31, 1996, to $4,430.7 million at September 30,
1997. Total obligations grew by 30.0% to $5,570.3 million from $4,284.7 million
at December 31, 1996. As with assets, most of this growth was in the separate
accounts, which grew by 34.7% during 1997, from $3,285.8 million at December 31,
1996, to $4,425.4 million at September 30, 1997.  Separate account assets and
liabilities consist primarily of the fund balances associated with variable life
and annuity business.  The asset holdings include fixed income, equity growth,
total return real estate, and global mutual funds, with liabilities representing
amounts due to policyholders. Total stockholder's equity grew by 13.1% from
$283.1 million at December 31, 1996, to $320.1 million at September 30, 1997.

   Investments

   The Company continues to address industry wide issues of asset quality and
liquidity that have emerged in recent years. JHVLICO's bond portfolio is highly
diversified. It maintains  diversity by geographic region, industry group, and
limiting the size of  individual investments relative to the total portfolio.
The Company's holdings in investment (NAIC SVO classes 1 and 2) and medium (NAIC
SVO class 3) grade bonds are 89.6% and 7.9%, respectively, of total general
account bonds at September 30, 1997. The corresponding percentages at December
31, 1996 were 90.5% and 7.2%, respectively.  Most of the medium grade bonds are
private placements that provide long-term financing for medium size companies.
These bonds typically are protected by individually negotiated financial
covenants and/or collateral.  At September 30, 1997, the balance (NAIC SVO
classes 4, 5, and 6) of 2.5% of total general account bonds consists of lower
grade bonds and bonds in default.  Bonds in default represent 0.8% of total
general account bonds.

   Management believes the Company's commercial mortgage lending philosophy and
practices are sound. The Company generally makes mortgage loans against
properties with proven track records and high occupancy levels, and typically
does not make construction or condominium loans nor lend more than 75% of the
property's value at the time of the loan.  To assist in the management of its
mortgage loans, the Company uses a computer-based mortgage risk analysis system.

   The Company has outstanding commitments to purchase long-term bonds, and
issue real estate mortgages totaling $46.8 million, $20.1 million, respectively
at September 30, 1997.  The corresponding amounts at December 31, 1996 were
$42.1 million, and $33.5 million, respectively. The Company monitors the
creditworthiness of borrowers under long-term bond commitments and requires
collateral as deemed necessary.  The majority of these commitments expire in
1997 and 1998.

   Reserves and Obligations

   The Company's obligations principally consist of aggregate reserves for life
policies and contracts of $932.2 million in the general account and obligations
of $4,425.4 million in the separate accounts at September 30, 1997.  The
corresponding amounts at December 31, 1996 were $877.8 million and $3,285.8
million, respectively. These liabilities are computed in accordance with
commonly accepted actuarial standards and are based on actuarial assumptions
which are in accordance with, or more conservative than, those called for in
state regulations.  All reserves meet the requirements of the insurance laws of
the Commonwealth of Massachusetts.  Intensive asset adequacy testing was
performed in 1996 for the vast majority of reserves.  As a result of that
testing, no additional reserves were established.  Adequacy testing is done
annually and generally performed in the fourth quarter.

<PAGE>


   The Company's investment reserves include the Asset Valuation Reserve ("AVR")
required by the NAIC and state insurance regulatory authorities. The AVR is
included in the Company's obligations. At September 30, 1997, and December 31,
1996, the AVR was $18.1 million and $16.6 million, respectively. Since 1995,
there have been no voluntary contributions made to the AVR.  Management believes
the Company's level of reserve is adequate.

   The AVR was established to stabilize statutory surplus from non-interest
related fluctuations in the market value of bonds, stocks, mortgage loans, real
estate and other invested assets.  The AVR generally captures realized and
unrealized capital gains or losses on such assets, other than those resulting
from changes in interest rates.  Each year, the amount of an insurer's AVR will
fluctuate as capital gains or losses are absorbed by the reserve.  To adjust for
such changes over time, an annual contribution must be made to the AVR equal to
20% of the difference between the maximum AVR (as determined annually according
to the type and quality of an insurer's assets) and the actual AVR.  The AVR
provisions permitted a phase-in period whereby the required contribution was 10%
in 1992, 15% in 1993, and the full 20% factor thereafter.

   Such contributions may result in a slower rate of growth of, or a reduction
to, surplus.  Changes in the AVR are accounted for as direct increases or
decreases in surplus.  The impact of the AVR on the surplus position of John
Hancock in the future will depend in part on the composition of the Company's
investment portfolio.

   The Interest Maintenance Reserve ("IMR") captures realized capital gains and
losses (net of taxes) on fixed income investments (primarily bonds and mortgage
loans) resulting from changes in interest rate levels.  These amounts are not
reflected in the Company's capital account and are amortized into net investment
income over the estimated remaining lives of the investments disposed.  At
September 30, 1997 and December 31, 1996  the balance of the IMR was $7.3
million and $5.9 million, respectively. The impact of the IMR on the surplus of
the Company depends upon the amount of future interest related capital gains and
losses on fixed income investments.


   Results of Operations

   For the nine months ending September 30, 1997, the net gain from operations
was $26.8 million, $7.6 million higher than the same period during 1996. For the
quarter ending September 30, 1997, the  net gain from operations was $4.3
million, $0.3 million lower than the same period during 1996.

For the nine months ending September 30, 1997, total revenues increased by
16.1%, or $135.3 million to $976.2 million as compared to the same period during
1996. For the quarter ending September 30, 1997, total revenues increased by
40.1%, or  $98.6 million as compared to the same period in 1996. For the nine
months ending September 30, 1997, premiums, net of premium ceded to reinsurers,
decreased by 5.7%, or $38.7 million to $644.8 million as compared to the same
period during 1996. For the quarter ending September 30, 1997 premiums, net of
premium ceded to reinsurers, increased by 13.5% or $26.7 million as compared to
the same period during 1996. The nine months decrease in premium income is
primarily due to the reinsurance of 50% of the 1997 annuity deposits with the
parent company. The reinsurance agreement was put in place in the fourth quarter
of 1996 and covers annuity deposits from January 1, 1995 forward. For the nine
months ending September 30, 1997, net investment income increased by 13.3% or
$7.5 million to $64.1 million as compared to the same period during 1996. For
the quarter ending September 30, 1997, net investment income increased by 8.7%
or $1.8 million as compared to the same period during 1996. These increases can
be primarily attributed to an increased asset base. For the nine months ending
September 30, 1997, and for the quarter ending September 30, 1997, other income
increased by $166.5 million and $70.1 million respectively compared to the same
periods in 1996. These increases were primarily attributable to the increase in
commission and expense allowances and reserve adjustments on reinsurance ceded.

<PAGE>


For the nine months ending September 30, 1997, total benefits and expenses
increased by 15.7% or $125.1 million to $922.0 million as compared to the same
period during 1996. For the quarter ending September 30, 1997 total benefits and
expenses increased by 40.9% or $95.7 million as compared to the same period
during 1996. For the nine months ending September 30, 1997, benefit payments and
additions to reserves increased by 15.4% or $101.3 million to $760.0 million as
compared to the same period during 1996. For the quarter ending September 30,
1997, benefit payments and additions to reserves increased by 40.4% or $80.2
million as compared to the same period during 1996. For the nine months ending
September 30, 1997, insurance expenses increased by 16.5% or $21.0 million to
$148.2 million as compared to the same period during 1996. For the quarter
ending September 30, 1997, insurance expenses increased by 44.4% or $14.4
million as compared to the same period during 1996. These increases in insurance
expenses were attributable largely to commission expense resulting from the sale
of new business.


   Liquidity and Capital Resources

   The Company's liquidity resources at September 30, 1997, include cash and
short-term investments of $0.0 million, public bonds of $375.2 million, and
investment grade private placement bonds of $462.1 million.  The corresponding
amounts at December 31, 1996 were $31.9 million, $263.2 million, and $439.7
million, respectively.  In addition, the Company's separate accounts are highly
liquid and are available to meet most outflow needs for variable life insurance.

   Management believes the liquidity resources above of $837.3 million as of
September 30, 1997, strongly position the Company to meet all its obligations to
policyholders and others.  Generally, the Company's financing needs are met by
means of funds provided by normal operations.  As of September 30, 1997 and year
end 1996, the Company had no outstanding borrowings from sources outside its
affiliated group.

   Total surplus, or stockholder's equity, including the AVR, is $338.2 million
as of September 30, 1997 compared to $299.7 million as of December 31, 1996. The
current statutory accounting treatment of deferred acquisition cost ("DAC")
taxes results in an understatement of the Company's surplus, which will persist
during periods of growth in new business written.  These taxes result from
federal income tax law that approximates acquisition expenses and then spreads
the corresponding tax deduction over a period of years.  The result is a DAC tax
which is collected immediately and subsequently returned through tax deduction
in later years.

   Since it began its operations, the Company has received a total of $381.8
million in capital contributions from John Hancock, of which $377.5 million is
credited to paid-in capital and $2.5 million is credited to capital stock as of
September 30, 1997.  In 1993, $1.8 million of capital was returned to John
Hancock.  To support the Company's operations, for the indefinite future, John
Hancock is committed to make additional capital contributions if necessary to
ensure that the Company maintains a positive net worth.  The Company's
stockholder's equity, net of unassigned deficit, was $320.1 million at September
30, 1997 and $283.1 million at December 31, 1996.




<PAGE>
 
PART II.  OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits
 
               27.  Financial Data Sheet

          (b)  Reports on Form 8-K

               None



                                   SIGNATURES

     Pursuant to the requirements 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.

                              John Hancock Variable
                              Life Insurance Company
                              ----------------------------
                              (Registrant)

Date:  November 12, 1997      /s/ Thomas J. Lee
       -----------------      ----------------------------
                              Vice President


Date:  November 12, 1997      /s/ Paula M. Pashko
       -----------------      ----------------------------
                              Assistant Controller