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 September 30, 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
November 8, 2002:

                                     50,000
<PAGE>

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                              September 30,
                                                                 2002        December 31,
                                                              (Unaudited)        2001
                                                              ---------------------------
                                                                    (in millions)
<S>                                                           <C>               <C>
Assets

Investments
Fixed maturities:
   Held-to-maturity--at amortized cost
   (fair value: September 30--$82.0; December 31--$82.1) ..   $    82.4         $    83.7
   Available-for-sale--at fair value
   (cost: September 30--$2,810.0; December 31--$2,391.9) ..     2,868.0           2,412.5
Equity securities:
   Available-for-sale--at fair value
   (cost: September 30--$14.0; December 31--$12.1) ........        14.6              13.1
Mortgage loans on real estate .............................       653.0             580.9
Real estate ...............................................        20.6              20.6
Policy loans ..............................................       360.1             352.0
Short-term investments ....................................         0.1                --
Other invested assets .....................................        73.2              39.6
                                                              ---------         ---------

   Total Investments ......................................     4,072.0           3,502.4

Cash and cash equivalents .................................        72.5             115.4
Accrued investment income .................................        72.3              60.8
Premiums and accounts receivable ..........................         2.1              12.5
Deferred policy acquisition costs .........................     1,109.3           1,060.8
Reinsurance recoverable ...................................       141.0             110.4
Other assets ..............................................       123.2             121.8
Separate account assets ...................................     5,609.6           6,729.1
                                                              ---------         ---------

   Total Assets ...........................................   $11,202.0         $11,713.2
                                                              =========         =========
</TABLE>

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)

<TABLE>
<CAPTION>
                                                                           September 30,
                                                                              2002         December 31,
                                                                           (Unaudited)        2001
                                                                           ---------------------------
                                                                                  (in millions)
<S>                                                                        <C>               <C>
Liabilities and Shareholder's Equity

Liabilities
Future policy benefits .................................................   $ 3,827.2         $ 3,335.4
Policyholders' funds ...................................................         3.4               3.0
Unearned revenue .......................................................       230.9             221.0
Unpaid claims and claim expense reserves ...............................        22.3              25.0
Dividends payable to policyholders .....................................         0.3               0.3
Income taxes ...........................................................       193.2             191.1
Other liabilities ......................................................       277.6             242.7
Separate account liabilities ...........................................     5,609.6           6,729.1
                                                                           ---------         ---------

   Total Liabilities ...................................................    10,164.5          10,747.6

Commitments and contingencies - Note 4

Shareholder's Equity
Common stock, $50 par value; 50,000 shares authorized and outstanding ..         2.5               2.5
Additional paid in capital .............................................       572.4             572.4
Retained earnings ......................................................       443.0             377.8
Accumulated other comprehensive income .................................        19.6              12.9
                                                                           ---------         ---------

   Total Shareholder's Equity ..........................................     1,037.5             965.6
                                                                           ---------         ---------

   Total Liabilities and Shareholder's Equity ..........................   $11,202.0         $11,713.2
                                                                           =========         =========
</TABLE>

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

<TABLE>
<CAPTION>
                                                                  Three Months Ended    Nine months Ended
                                                                     September 30,        September 30,
                                                                   2002        2001      2002        2001
                                                                  ------------------    ------------------
                                                                                 (in millions)
<S>                                                               <C>         <C>       <C>         <C>
Revenues
  Premiums ....................................................   $ 12.7      $ 15.0    $ 40.4      $ 46.7
  Universal life and investment-type product charges ..........     94.8        87.1     269.1       272.3
  Net investment income .......................................     68.1        57.6     195.3       168.1
  Net realized investment and other gains (losses), net of
    related amortization of deferred policy acquisition costs
    $1.6 and $(1.2) for the three months ended September 30,
    2002 and 2001 and $(2.9) and $(0.1) for the nine months
    ended September 30, 2002 and 2001, respectively ...........     (0.9)       (3.3)    (16.3)       (2.7)
  Other revenue ...............................................       --         0.1       1.3         0.2
                                                                  ------------------    ------------------

    Total revenues ............................................    174.7       156.5     489.8       484.6

Benefits and Expenses
  Benefits to policyholders ...................................     85.8        81.6     267.2       209.9
  Other operating costs and expenses ..........................     19.2        17.9      46.0        61.5
  Amortization of deferred policy acquisition costs,
    excluding amounts related to net realized investment and
    other gains (losses) $1.6 and $(1.2) for the three months
    ended September 30, 2002 and 2001 and $(2.9) and $(0.1)
    for the nine months ended September 30, 2002 and 2001,
    respectively ..............................................     48.8        13.1      64.6        50.6
  Dividends to policyholders ..................................      4.4         5.2      14.2        16.1
                                                                  ------------------    ------------------

    Total benefits and expenses ...............................    158.2       117.8     392.0       338.1
                                                                  ------------------    ------------------

Income before income taxes and cumulative
  effect of accounting change ...................................   16.5        38.7      97.8       146.5
Income taxes ....................................................    7.0         7.3      32.6        47.1
                                                                  ------------------    ------------------

Income before cumulative effect of accounting change ..........      9.5        31.4      65.2        99.4

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

Net income ....................................................   $  9.5      $ 31.4    $ 65.2      $ 97.8
                                                                  ==================    ==================
</TABLE>

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       Outstanding
                                               Common       Paid In         Retained   Comprehensive  Shareholder's     Shares
                                                Stock       Capital         Earnings       Income        Equity        (actual)
                                             -----------------------------------------------------------------------------------
                                                              (in millions, except outstanding shares data)

<S>                                          <C>           <C>              <C>           <C>           <C>               <C>
Balance at July 1, 2001 ..................   $    2.5      $  572.4         $  299.3      $   13.0      $  887.2          50,000

Comprehensive income:
   Net income ............................                                      31.4                        31.4

Other comprehensive income, net of tax:
   Net unrealized gains (losses) .........                                                    13.3          13.3
                                                                                                         --------
Comprehensive income .....................                                                                  44.7
                                             -----------------------------------------------------------------------------------

Balance at September 30, 2001 ............   $    2.5      $  572.4         $  330.7      $   26.3      $  931.9          50,000
                                             ===================================================================================

Balance at July 1, 2002 ..................   $    2.5      $  572.4         $  433.5      $   19.3      $1,027.7          50,000

Comprehensive income:
   Net income ............................                                       9.5                         9.5

Other comprehensive income, net of tax:
   Net unrealized gains (losses) .........                                                     0.3           0.3
                                                                                                          --------
Comprehensive income .....................                                                                   9.8
                                             -----------------------------------------------------------------------------------

Balance at September 30, 2002 ............   $    2.5      $  572.4         $  443.0      $   19.6      $1,037.5          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 CHANGES IN SHAREHOLDER'S EQUITY
                     AND COMPREHENSIVE INCOME - (CONTINUED)

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

<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 .............................                                   97.8                         97.8

Other comprehensive income, net of tax:
  Net unrealized gains (losses) ..........                                                21.3            21.3
                                                                                                       --------
Comprehensive income .....................                                                               119.1
Change in accounting principle, net
    of tax - Note 1 ......................                                                 7.2             7.2
                                             ----------------------------------------------------------------------------------

Balance at September 30, 2001 ............   $    2.5     $  572.4       $  330.7     $   26.3        $  931.9           50,000
                                             ==================================================================================

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

Comprehensive income:
  Net income .............................                                   65.2                         65.2

Other comprehensive income, net of tax:
  Net unrealized gains (losses) ..........                                                 6.7             6.7
                                                                                                       --------
Comprehensive income .....................                                                                71.9
                                             ----------------------------------------------------------------------------------

Balance at September 30, 2002 ............   $    2.5     $  572.4       $  443.0     $   19.6        $1,037.5           50,000
                                             ==================================================================================
</TABLE>

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


                                       6
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                 Nine Months Ended
                                                                                    September 30,
                                                                                  2002       2001
                                                                                 ------------------
                                                                                   (in millions)
<S>                                                                              <C>        <C>
Cash flows from operating activities:
  Net income .................................................................   $  65.2    $  97.8
  Adjustments to reconcile net income to net cash (used in) provided by
  operating activities:
    Amortization of discount - fixed maturities ..............................      (0.2)      (0.1)
    Net realized investment and other losses (gains) .........................      16.3        2.7
    Change in deferred policy acquisition costs ..............................     (71.2)     (62.8)
    Depreciation and amortization ............................................       1.0        0.5
    Increase in accrued investment income ....................................     (11.5)     (10.1)
    Decrease in premiums and accounts receivable .............................      10.4        3.5
    Increase in other assets and other liabilities, net ......................     (39.2)    (131.8)
    (Decrease) increase in policy liabilities and accruals, net ..............     (68.0)     272.2
    (Decrease) increase in income taxes ......................................      (1.5)      71.1
                                                                                 -------    -------

      Net cash (used in) provided by operating activities ....................     (98.7)     243.0

Cash flows from investing activities:
  Sales of:
    Fixed maturities available-for-sale ......................................     346.6       50.9
    Equity securities available-for-sale .....................................       6.5        4.7
    Real estate ..............................................................       0.3        0.1
  Maturities, prepayments and scheduled redemptions of:
    Fixed maturities held-to-maturity ........................................       2.6        3.5
    Fixed maturities available-for-sale ......................................     124.7      126.9
    Short-term investments and other invested assets .........................       2.2       36.9
    Mortgage loans on real estate ............................................      75.7       53.0
  Purchases of:
    Fixed maturities held-to-maturity ........................................      (1.1)      (1.2)
    Fixed maturities available-for-sale ......................................    (901.0)    (654.0)
    Equity securities available-for-sale .....................................      (6.9)      (1.2)
    Real estate ..............................................................      (0.1)      (0.5)
    Short-term investments and other invested assets .........................     (22.4)     (34.2)
  Mortgage loans on real estate issued .......................................    (126.8)     (43.5)
  Other, net .................................................................     (18.4)     (22.6)
                                                                                 -------    -------

      Net cash used in investing activities ..................................    (518.1)    (481.2)

Cash flows from financing activities:
  Universal life and investment-type contract deposits .......................     878.1      813.9
  Universal life and investment-type contract maturities and withdrawals .....    (304.2)    (719.9)
                                                                                 -------    -------

      Net cash provided by financing activities ..............................     573.9       94.0
                                                                                 -------    -------

      Net decrease in cash and cash equivalents ..............................     (42.9)    (144.2)

Cash and cash equivalents at beginning of period .............................     115.4      277.3
                                                                                 -------    -------

Cash and cash equivalents at end of period ...................................   $  72.5    $ 133.1
                                                                                 =======    =======
</TABLE>

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


                                       7
<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 Company's financial position and results of
operations. Operating results for the three and nine month periods ended
September 30, 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). All of the Company's United States Securities and Exchange
Commission filings are available on the internet at www.sec.gov, under the name
Hancock John Variable Life.

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.

Deferred Policy Acquisition Costs and Unearned Revenue

Costs that vary with, and are related primarily to, the production of new
business have been deferred to the extent that they are deemed recoverable. Such
costs include commissions, certain costs of policy issue and underwriting, and
certain agency expenses. The Company tests the recoverability of its deferred
policy acquisition costs quarterly with a model that uses data such as market
performance, lapse rates, mortality experience and expense levels. As of
September 30, 2002, the Company's deferred policy acquisition costs are deemed
recoverable. Similarly, any amounts assessed for services to be provided over
future periods are recorded as unearned revenue. For non-participating products,
such costs are being amortized over the premium-paying period of the related
policies using assumptions consistent with those used in computing policy
benefit reserves. For participating traditional life insurance policies, such
costs are being amortized over the life of the contracts at a constant rate
based on the present value of the estimated gross margin amounts expected to be
realized over the lives of the contracts. Estimated gross margin amounts include
anticipated premiums and investment results less claims and administrative
expenses, changes in the net level premium reserve and expected annual
policyholder dividends. For universal life insurance contracts and
investment-type products, such costs and revenues are being amortized generally
in proportion to the present value of expected gross profits arising principally
from surrender charges, investment results, and mortality and expense margins.

In the development of expected gross profits, the Company is required to
estimate the growth in the policyholder account balances upon which certain
asset based fees are charged. In doing so, the Company assumes that, over the
long term, account balances will grow from investment performance. The rate of
growth takes into account the current fixed income/equity mix of account
balances as well as historical fixed income and equity returns. The Company also
assumes that historical variances from the long-term rate will reverse over the
next five year period. The resulting rates for the next five years are reviewed
for reasonableness, and they are raised or lowered if they produce an annual
growth rate that the Company believes to be unreasonable.


                                       8
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Note 1 -- Summary of Significant Accounting Policies - (Continued)

The effects on the amortization of deferred policy acquisition costs and
unearned revenues of revisions to estimated gross margins and profits are
reflected in earnings in the period such revisions are made. Expected gross
profits or expected gross margins are discounted at periodically revised
interest rates, which are applied to the remaining benefit period. At September
30, 2002, the average discount rate was 6.2% and the total amortization period
life was 30 years for universal life products.

As of September 30, 2002, the Company changed several future assumptions with
respect to the expected gross profits in its variable life and variable annuity
businesses. First, we lowered the long-term growth rate assumption from 9% to
8%, gross of fees. Second, we lowered the average rates for the next five years
from the mid-teens to 13%. Finally, we increased certain fee rates on these
policies (the variable series trust (VST) fee increase). These three changes are
referred to collectively elsewhere in this document as the Q3 unlocking. The
results of these changes in assumptions at September 30, 2002 was a net
write-off of deferred policy acquisition costs of $15.1 million in the variable
annuity business in the Asset Gathering Segment and $10.2 million (net of $10.4
million of unearned revenue and $1.3 million in policy benefit reserves) in the
variable life business in the Protection Segment. Total amortization of deferred
policy acquisition costs, including the write-offs mentioned previously, was
$48.8 million and $13.1 million for the three month periods ended September 30,
2002 and 2001, respectively, and $64.6 million and $50.6 million for the nine
month periods ended September 30, 2002 and 2001, respectively.

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

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

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.


                                       9
<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 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
$38.3 million and $40.0 million for the three month period ended September 30,
2002 and 2001, respectively, and $122.7 million and $120.0 million for the nine
month period ended September 30, 2002 and 2001, respectively. As of September
30, 2002, the Company owed John Hancock $11.5 million related to these services,
which is included in other liabilities. John Hancock has guaranteed that, if
necessary, it will make additional capital contributions to prevent the
Company's shareholder's equity from declining below $1.0 million.

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, financial planners and banks.

The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. Allocations of net investment income
are based on the amount of assets allocated to each segment. Other costs and
operating expenses are allocated to each segment based on a review of the nature
of such costs, cost allocations utilizing time studies, and other relevant
allocation methodologies.

Management of the Company evaluates performance based on segment after-tax
operating income, which excludes the effect of net realized investment and other
gains 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)  benefits to policyholders and expenses incurred relating to the settlement
      of a class action lawsuit against the Company involving a dispute
      regarding disclosure of costs on various modes of life insurance policy
      premium payment;

(iii) restructuring costs related to our distribution systems and retail
      operations;

(iv)  cumulative effect of an accounting change; and

(v)   the surplus tax on mutual life insurance companies that was allocated by
      John Hancock to the Company.


                                       10
<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>
As of or for the three months ended September 30, 2002:                       Asset
                                                               Protection   Gathering Consolidated
                                                               -----------------------------------
                                                                          (in millions)
<S>                                                            <C>          <C>          <C>
Revenues:
  Revenues from external customers .........................   $   100.4    $     7.1    $   107.5
  Net investment income ....................................        67.2          0.9         68.1
                                                               -----------------------------------
  Segment revenues .........................................       167.6          8.0        175.6
  Net realized investment and other gains (losses) .........        (0.9)          --         (0.9)
                                                               -----------------------------------
  Revenues .................................................   $   166.7    $     8.0    $   174.7
                                                               ===================================
Net Income:
  Segment after-tax operating income .......................   $    22.2    $   (12.2)   $    10.0
  Net realized investment and other gains (losses) .........        (0.5)          --         (0.5)
                                                               -----------------------------------
  Net income ...............................................   $    21.7    $   (12.2)   $     9.5
                                                               ===================================
Supplemental Information:
  Equity in net income of investees accounted
    for by the equity method ...............................   $     0.7           --    $     0.7
  Amortization of deferred policy acquisition costs ........        28.5    $    20.3         48.8
  Segment assets ...........................................   $ 9,744.8    $ 1,457.2    $11,202.0

<CAPTION>
                                                                              Asset
As of or for the three months ended September 30, 2001:        Protection   Gathering  Consolidated
                                                               -----------------------------------
                                                                          (in millions)
<S>                                                            <C>          <C>          <C>
Revenues:
  Revenues from external customers .........................   $    93.0    $     9.2    $   102.2
  Net investment income ....................................        57.9         (0.3)        57.6
                                                               -----------------------------------
  Segment revenues .........................................       150.9          8.9        159.8
  Net realized investment and other gains (losses) .........        (3.3)          --         (3.3)
                                                               -----------------------------------
  Revenues .................................................   $   147.6    $     8.9    $   156.5
                                                               ===================================
Net Income:
  Segment after-tax operating income .......................   $    26.3    $     2.5    $    28.8
  Net realized investment and other gains (losses) .........        (2.0)          --         (2.0)
  Surplus tax ..............................................         4.6           --          4.6
                                                               -----------------------------------
  Net income ...............................................   $    28.9    $     2.5    $    31.4
                                                               ===================================
Supplemental Information:
  Equity in net income of investees accounted
    for by the equity method ...............................   $     3.5           --    $     3.5
  Amortization of deferred policy acquisition costs ........        13.0    $     0.1         13.1
  Segment assets ...........................................   $ 9,194.5    $ 1,642.0    $10,836.5
</TABLE>


                                       11
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Note 3 -- Segment Information - (Continued)

<TABLE>
<CAPTION>
                                                                             Asset
As of or for the nine months ended September 30, 2002:         Protection  Gathering  Consolidated
                                                               -----------------------------------
                                                                          (in millions)
<S>                                                            <C>          <C>          <C>
Revenues:
  Revenues from external customers .........................   $   286.4    $    24.4    $   310.8
  Net investment income ....................................       194.2          1.1        195.3
                                                               -----------------------------------
  Segment revenues .........................................       480.6         25.5        506.1
  Net realized investment and other gains (losses) .........       (16.3)          --        (16.3)
                                                               -----------------------------------
  Revenues .................................................   $   464.3    $    25.5    $   489.8
                                                               ===================================
Net Income:
  Segment after-tax operating income .......................   $    90.2    $   (10.5)   $    79.7
  Net realized investment and other gains (losses) .........       (10.3)          --        (10.3)
  Class action lawsuit .....................................        (4.5)          --         (4.5)
  Restructuring charges ....................................         0.3           --          0.3
                                                               -----------------------------------
  Net income ...............................................   $    75.7    $   (10.5)   $    65.2
                                                               ===================================
Supplemental Information:
  Equity in net income of investees accounted
    for by the equity method ...............................   $     2.8           --    $     2.8
  Amortization of deferred policy acquisition costs ........        36.6    $    28.0         64.6
  Segment assets ...........................................   $ 9,744.8    $ 1,457.2    $11,202.0

<CAPTION>
                                                                             Asset
As of or for the nine months ended September 30, 2001:         Protection  Gathering  Consolidated
                                                               -----------------------------------
                                                                          (in millions)
<S>                                                            <C>          <C>          <C>
Revenues:
  Revenues from external customers .........................   $   286.1    $    33.1    $   319.2
  Net investment income ....................................       169.8         (1.7)       168.1
                                                               -----------------------------------
  Segment revenues .........................................       455.9         31.4        487.3
  Net realized investment and other gains (losses) .........        (2.7)          --         (2.7)
                                                               -----------------------------------
  Revenues .................................................   $   453.2    $    31.4    $   484.6
                                                               ===================================
Net Income:
  Segment after-tax operating income .......................   $    90.7    $     5.9    $    96.6
  Net realized investment and other gains (losses) .........        (1.8)          --         (1.8)
  Surplus tax ..............................................         4.6           --          4.6
  Cumulative effect of accounting change, net of tax .......        (1.6)          --         (1.6)
                                                               -----------------------------------
  Net income ...............................................   $    91.9    $     5.9    $    97.8
                                                               ===================================
Supplemental Information:
  Equity in net income of investees accounted
    for by the equity method ...............................   $     2.2           --    $     2.2
  Amortization of deferred policy acquisition costs ........        41.0    $     9.6         50.6
  Segment assets ...........................................   $ 9,194.5    $ 1,642.0    $10,836.5
</TABLE>

The Company operates only in the United States. The Company has no reportable
major customers and revenues are attributed to countries based on the location
of customers.


                                       12
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Note 4 -- Contingencies and Other Matters

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 $3.4 million and
$14.1 million at September 30, 2002 and December 31, 2001, respectively. There
were no costs related to the settlement incurred for the three and nine month
periods ended September 30, 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 initial
estimates. In 1999, the Company updated its estimate of the cost of claims
subject to alternative dispute resolution (ADR) relief and revised its reserve
estimate accordingly. The reserve estimate was further evaluated quarterly, and
was adjusted in the fourth quarter of 2001. The adjustment to the reserve in the
fourth quarter of 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. We
continue to evaluate the reserve estimate quarterly. 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 in
litigation from time to time with claimants, beneficiaries and others, and a
number of litigation matters were pending as of September 30, 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.


                                       13
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Note 5 -- Value of Business Acquired

The Company's purchased intangible assets include the value of business acquired
(VOBA). The present value of estimated future profits of insurance policies in
force related to business acquired is recorded as VOBA. VOBA is amortized in
proportion to the present value of expected gross profits of the business
acquired.

The following tables set forth certain summarized financial information relating
to VOBA as of the dates and periods indicated.

<TABLE>
<CAPTION>
                                                               Accumulated
                                                    Gross     Amortization
                                                   Carrying     and Other   Net Carrying
                                                    Amount       Changes       Amount
                                                -----------------------------------------
                                                              (in millions)
<S>                                                 <C>         <C>            <C>
Amortizable intangible assets:
September 30, 2002
  VOBA........................................      $ 25.0      $ (18.9)       $ 6.1

September 30, 2001
  VOBA........................................      $ 25.0      $ (19.0)       $ 6.0
</TABLE>

<TABLE>
<CAPTION>
                                                 Three Months Ended   Nine Months Ended
                                                   September 30,        September 30,
                                                  2002        2001    2002        2001
                                                -------------------   -------------------
                                                              (in millions)
<S>                                               <C>       <C>        <C>       <C>
Amortization expense:
VOBA, net of tax of $0.2 million and $0.1
  million for the three months ended
  September 30, 2002 and 2001, respectively,
  and net of tax of $0.3 million and $0.4
  million for the nine months ended
  September 30, 2002 and 2001,
  respectively..........................          $ 0.3     $ 0.2      $ 0.5     $ 0.7
</TABLE>

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

2002..........................................            $ 0.4      $ 0.7
2003..........................................            $ 0.3      $ 0.5
2004..........................................            $ 0.2      $ 0.4
2005..........................................            $ 0.2      $ 0.4
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 periods indicated, are as follows:

<TABLE>
<CAPTION>
                                                               Asset
                                                Protection   Gathering    Consolidated
                                                --------------------------------------
                                                          (in millions)
<S>                                                <C>                       <C>
VOBA balance at July 1, 2002..................     $ 7.0       --            $ 7.0
Amortization and other changes:
  Amortization................................      (0.4)      --             (0.4)
  Change in unrealized gains on securities
    available-for-sale........................      (0.5)      --             (0.5)
                                                --------------------------------------
VOBA balance at September 30, 2002............     $ 6.1       --            $ 6.1
                                                ======================================
</TABLE>


                                       14
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

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

<TABLE>
<CAPTION>
                                                                           Asset
                                                            Protection   Gathering  Consolidated
                                                            ------------------------------------
                                                                        (in millions)
<S>                                                         <C>                         <C>
VOBA balance at January 1, 2002 .........................   $7.3             --         $7.3
Amortization and other changes:
  Amortization ..........................................   (0.8)            --         (0.8)
  Change in unrealized gains on securities
    available-for-sale ..................................   (0.4)            --         (0.4)
                                                            ------------------------------------
VOBA balance at September 30, 2002 ......................   $6.1             --         $6.1
                                                            ====================================
</TABLE>


                                       15
<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 September 30,
2002, compared with December 31, 2001, and its consolidated results of
operations for the three and nine month periods ended September 30, 2002 and
September 30, 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). All of the Company's United States Securities and
Exchange Commission filings are available on the internet at www.sec.gov under
the name Hancock John Variable Life Insurance Company.

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 potential effects on
the Company. Future events and their effect on the Company may not be these
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
statements 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 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


                                       16
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

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 and Unearned Revenue

Costs that vary with, and are related to, the production of business have been
deferred to the extent that they are deemed recoverable. Such costs include
commissions, certain costs of policy issue and underwriting, and certain agency
expenses. Similarly, any amounts assessed for services to be provided over
future periods are recorded as unearned revenue The Company tests the
recoverability of its deferred policy acquisition costs quarterly with a model
that uses data such as market performance, lapse rates, mortality experience and
expense levels. 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 and unearned revenue such
that the percentage of gross profits to the amount of deferred policy
acquisition costs and unearned revenue 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 impact quarter to quarter earnings.

Q3 Unlockings: As of September 30, 2002, the Company changed several future
assumptions with respect to the expected gross profits in its variable life
business in the Protection Segment and variable annuity business in the Asset
gathering Segment. First, we lowered the long-term growth rate assumption from
9% to 8%, gross of fees (which are approximately 1% to 2%). Second, we lowered
average growth rates for the next five years from the mid-teens to 13% gross of
fees. Finally, we increased certain fee rates on these policies (the variable
series trust (VST) fee increase). These three changes are referred to
collectively elsewhere in this document as the Q3 unlocking. The result of these
changes in assumptions was a net write-off of deferred policy acquisition costs
of $15.1 million in the variable annuity business in the Asset Gathering Segment
and $10.2 million (net of $10.4 million of unearned revenue and $1.3 million in
policy benefit reserves) in the variable life business in the Protection
Segment.

The accelerated amortization will reduce the total amortization of DAC in future
periods, but will accelerate the amortization in the short term. We estimate
that, in the fourth quarter of 2002, DAC amortization will be accelerated by
$0.3 million in the Protection Segment and $0.5 million in the Asset Gathering
Segment. As a result of the recent equity market declines and the Q3 unlocking,
the sensitivity of future DAC and unearned revenue amortization to equity and
fixed income market performance has changed from the amounts that were
previously disclosed. As mentioned above, our assumptions for the next five
years are an average rate of 13%. To the extent that actual performance varies
from that assumption, DAC and unearned revenue amortization will be adjusted.
The table below shows the estimated additional/(reduced) amortization that would
be expected in the next quarter under various asset growth scenarios.

           Estimated Accelerated (reduced) amortization in Q4 of 2002
                           Annualized Q4 2002 returns

                                                        Asset
                                       Protection     Gathering       Total
                                      ----------------------------------------
                                                   (in millions)

20%.............................         $ (0.9)       $ (0.8)      $ (1.7)
13%.............................             --            --           --
 8%.............................            0.7           0.6          1.3
 0%.............................            1.8           1.7          3.5


                                       17
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

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 General
Account Investments section of this document and 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. Our
approach is based on currently available information, include information
obtained by reviewing similarly traded securities in the market, and we believe
it to be appropriate and fundamentally sound. However, different pricing models
or assumptions or changes in relevant current information could produce
different valuation results. The Company's pricing model takes into account a
number of factors based on current market conditions and trading levels of
similar securities. These include current market based factors related to credit
quality, country of issue, market sector and average investment life. The
resulting prices are then reviewed by the pricing analysts and members of the
Controller's Department. Our pricing analysts take appropriate action to reduce
valuation of securities where an event occurs which negatively impacts the
securities' value. Certain events that could impact the valuation of securities
include issuer credit ratings, business climate, management changes, litigation
and government actions, among others. Then, every quarter, there is a
comprehensive review of all impaired securities and problem loans by a group
consisting of the CIO and the Bond Investment Committee. See "Management's
Discussion and Analysis of Financial and Results of Operations - 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.

Reinsurance

We reinsure portions of the risks we assume for our protection products. The
maximum amount of individual ordinary life insurance retained by us on any life
is $10 million under an individual policy and $20 million under a second-to-die
policy. As of January 1, 2001, we established additional reinsurance programs,
which limit our exposure to fluctuations in life claims for individuals for whom
the net amount at risk is $3 million or more.

The Company enters into reinsurance agreements to specifically address insurance
exposure to multiple life insurance claims as a result of a catastrophic event.
The Company has put into place, effective July 1, 2002, catastrophic reinsurance
covering life insurance policies written by the parent and all of its U.S. life
insurance subsidiaries. The deductible for individual and group coverages
combined is $25 million per occurrence and the limit of coverage is $40 million
per occurrence. Both the deductible and the limit apply to the combined U.S.
insurance companies, including the parent. Should catastrophic reinsurance
become unavailable to the Company in the future, the absence of, or further
limitations on, reinsurance coverage could adversely affect the Company's future
net income and financial position.

By entering into reinsurance agreements with a diverse group of highly rated
reinsurers, we seek to control our exposure to losses. Our reinsurance, however,
does not discharge our legal obligations to pay policy claims on the policies
reinsured. As a result, we enter into reinsurance agreements only with highly
rated reinsurers. Nevertheless, there can be no assurance that all our
reinsurers will pay the claims we make against them. Failure of a reinsurer to
pay a claim could adversely affect our business, financial condition or results
of operations.


                                       18
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

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. The
appreciation of equity markets in the 1990's resulted in variable products,
including variable life insurance and variable annuities, accounting for the
majority of increases in total premiums and deposits for the insurance industry.
This trend reversed in 2001 and 2002 due to declines in equity market
performance and we have seen investors return to stable investment products. We
believe, 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 and, more recently, variable annuity
products have experienced declines, sales of fixed annuity products, single life
insurance, universal life insurance and term life insurance, and corporate owned
life insurance have increased.


                                       19
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Results of Operations

The table below presents the consolidated results of operations for the periods
presented.

<TABLE>
<CAPTION>
                                                Three Months Ended    Nine Months Ended
                                                  September 30,          September 30,
                                                2002         2001     2002         2001
                                               -----------------------------------------
                                                             (in millions)

<S>                                            <C>          <C>      <C>          <C>
Revenues ...................................   $174.7       $156.5   $489.8       $484.6

Benefits and expenses ......................    158.2        117.8    392.0        338.1
                                               -------------------   -------------------

Income before income taxes and
  cumulative effect of accounting change ...     16.5         38.7     97.8        146.5

Income taxes ...............................      7.0          7.3     32.6         47.1
                                               -------------------   -------------------

Income before cumulative effect of
  accounting change ........................      9.5         31.4     65.2         99.4
Cumulative effect of accounting change,
  net of tax (1) ...........................       --           --       --         (1.6)
                                               -------------------   -------------------

Net income .................................   $  9.5       $ 31.4   $ 65.2       $ 97.8
                                               ===================   ===================
</TABLE>

(1)   Cumulative effect of accounting change is shown net of taxes of $0.4
      million for the nine month period ended September 30, 2001. There was no
      cumulative effect of accounting change for the three and nine month
      periods ended September 30, 2002, nor for the three month period ended
      September 30, 2001.

Three Months Ended September 30, 2002 Compared to Three Months Ended
September 30, 2001

Consolidated pre-tax income of $16.5 million for the three months ended
September 30, 2002 decreased by $22.2 million, or 57.4%, from the prior year.
The Protection Segment's pre-tax income decreased $3.1 million, or 8.6%, for the
three months ended September 30, 2002 compared to the prior year primarily due
to higher amortization of deferred policy acquisition costs (DAC) driven by the
Q3 unlocking of the DAC asset (See Note 1 - Summary of Significant Accounting
Policies in the notes to the unaudited consolidated financial statements and the
Critical Accounting Policies in this MD&A) and increased operating costs and
expenses. Pre-tax loss in the Asset Gathering Segment was $16.7 million compared
to pre-tax income of $2.4 million in the prior year. This decrease was due to an
$18.2 million increase in benefits and expenses primarily driven by amortization
of DAC due to the current quarter unlocking of the DAC asset as mentioned
previously.

Revenues of $174.7 million for the three months ended September 30, 2002
increased $18.2 million, or 11.6%, compared to the prior year. The Protection
Segment's revenues increased $19.2 million due to increases in universal life
and investment-type product charges of $9.8 million and net investment income of
$9.3 million partially offset by a decrease in premiums. Universal life and
investment-type product charges increased as a result of increased expense
charges and higher amortization of deferred revenue. The increase in
amortization of deferred revenue is related to the Q3 unlocking mentioned
previously. Revenues in the Asset Gathering Segment decreased $1.0 million
driven by a decrease in investment-type product charges offset by an increase in
net investment income. 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, at fair value, as part of the safe harbor exchange
program in prior periods.

Benefits and expenses of $158.2 million for the three months ended September 30,
2002 increased $40.4 million, or 34.3%, compared to the prior year, due to an
increase of $22.2 million, or 20.0%, in the Protection Segment. The increase in
the Protection Segment was driven by an increase of $15.4 million in
amortization of DAC and an increase of $3.4 million in benefits to policyholders
driven by higher claims in the traditional life insurance business. Amortization
of DAC increased as a result of the Q3 unlocking of the DAC asset in the
non-traditional life insurance business (See Note 1 - Summary of Significant
Accounting Policies in the notes to the unaudited consolidated financial
statements and the Critical Accounting Policies in this MD&A). In addition other
operating costs and expenses increased by $4.2 million. The increase in other
operating costs and expenses is due to growth in the non-traditional life
insurance business.


                                       20
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Benefits and expenses in the Asset Gathering Segment increased $18.2 million
from the prior year driven by a $20.2 million increase in amortization of DAC,
primarily due to the Q3 unlocking of the DAC asset in the variable annuity
business. This increase was partially offset by lower operating expenses due to
ongoing company-wide cost reduction programs.

Nine months Ended September 30, 2002 Compared to Nine months Ended
September 30, 2001

Consolidated pre-tax income of $97.8 million for the nine months ended
September 30, 2002 decreased by $48.7 million, or 33.2%, from the prior year.
The Protection Segment's pre-tax income decreased $24.8 million, or 17.9%, for
the nine months ended September 30, 2002 compared to the prior year due to an
increase in net realized investment and other losses of $13.6 million and an
increase in benefits to policyholders of $56.3 million, or 27.7%. Offsetting
these changes was an increase in net investment income of $24.4 million, or
14.4%, a decrease in other operating costs and expenses of $14.0 million, or
25.7%, and a decrease in amortization of deferred policy acquisition costs of
$4.4 million, or 10.7%, despite the impact of the Q3 unlocking (See Note 1 -
Summary of Significant Accounting Policies in the notes to the unaudited
consolidated financial statements and the Critical Accounting Policies in this
MD&A). Pre-tax income in the Asset Gathering Segment decreased $23.9 million
from the prior year. The change in the Asset Gathering Segment was due to an
increase of $18.5 million in amortization of deferred policy acquisition costs
and a $10.0 million, or 30.2%, decrease in investment-type product charges
partially offset by an increase of $2.9 million in net investment income and a
decrease of $1.5 million in other operating costs and expenses.

Revenues of $489.8 million for the nine months ended September 30, 2002
increased $5.2 million, or 1.1%, due to a increase of $11.2 million, or 2.5%, in
revenues in the Protection Segment and a decrease of $6.0 million in revenues in
the Asset Gathering Segment. The Protection Segment's increase in revenues was
driven by an increase of $24.4 million, or 14.4%, in net investment income due
to increased asset balances, and an increase of $6.7 million, or 2.8%, in
universal life and investment-type product charges primarily due to increased
expense charges. Partially offsetting these increases was an increase in net
realized investment and other losses of $13.6 million, driven by impairments on
fixed income securities and a decrease in premiums of 13.5%, or $6.3 million,
primarily due to a higher amount of the traditional life insurance business
being reinsured. Ceded reinsurance premiums as a percent of premiums were 46%
compared to 19% in the prior year resulting from a new life insurance
reinsurance treaty implemented during 2001. Revenues in the Asset Gathering
Segment decreased $6.0 million, or 19.1%, due to decreases of approximately
$10.0 million, or 30.2%, in investment-type product charges offset by an
increase in net investment income of $2.9 million and an increase in other
revenue of $1.1 million for the nine months ended September 30, 2002 from the
prior year. The decrease in investment-type product charges was driven by lower
account values due to poor separate account performance and policies sold to the
Parent Company as part of the safe harbor annuity exchange program. The increase
in net investment income was due to a $46.6 million increase in average invested
assets, principally on a line of fixed annuities which was first offered by the
Company in the fourth quarter of 2001. The increase in other income was due to a
gain on sale, at fair value, of policies to the Parent Company, as part of the
safe harbor exchange program in prior periods.

Benefits and expenses of $392.0 million for the nine months ended September 30,
2002 increased $53.9 million, or 15.9%, compared to the prior year due to an
increase of $36.0 million, or 11.5%, in the Protection Segment. The increase in
the Protection Segment was driven by an increase in benefits to policyholders of
$56.3 million, or 27.7%, driven by growth in the non-traditional life insurance
business. In addition, Protection Segment benefits to policyholders increased
$6.9 million due to a reserve recorded in the second quarter of 2002 for the
settlement of the "Modal Premium" class action lawsuit. The reserve was recorded
to provide relief to class members and for legal and administrative costs
associated with the settlement. The Protection Segment's increase in benefits to
policyholders was partially offset by a decrease of $14.0 million, or 25.7%, in
operating costs and expenses and a decrease of $4.4 million, or 10.7%, in
amortization of deferred policy acquisition costs. The decrease in operating
costs and expenses was driven by increased credits of 27.0%, or $19.4 million
for reinsurance ceded expense allowance, resulting from both a new traditional
life insurance treaty implemented during 2001 and growth in the non-traditional
life insurance business. Amortization of deferred policy acquisition costs
decreased despite the Q3 unlocking of the DAC asset discussed previously.
Benefits and expenses in the Asset Gathering Segment increased $17.9 million
from the prior year due to an increase of $18.5 million in amortization of
deferred policy acquisition costs, driven by the Q3 unlocking of the DAC asset
mentioned previously. This was partially offset by a decrease in other operating
costs and expenses of $1.5 million driven by on-going company-wide cost
reduction programs.


                                       21
<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.

<TABLE>
<CAPTION>
                                                    Three Months Ended       Nine Months Ended
                                                       September 30,           September 30,
                                                     2002          2001      2002         2001
                                                   --------------------------------------------
                                                                  (in millions)
<S>                                                <C>           <C>       <C>           <C>
Segment Data: (1)
Segment after-tax operating income:
  Protection Segment ...........................   $ 22.2        $ 26.3    $ 90.2        $ 90.7
  Asset Gathering Segment ......................    (12.2)          2.5     (10.5)          5.9
                                                   --------------------    --------------------
  Total segment after-tax operating income .....     10.0          28.8      79.7          96.6

After-tax adjustments: (1)
  Net realized investment and
    other gains (losses) .......................     (0.5)         (2.0)    (10.3)         (1.8)
  Class action lawsuit .........................       --            --      (4.5)           --
  Surplus tax ..................................       --           4.6        --           4.6
  Restructuring charges ........................       --            --       0.3            --
                                                   --------------------    --------------------
  Total after-tax adjustments ..................     (0.5)          2.6     (14.5)          2.8
                                                   --------------------    --------------------

GAAP Reported:
  Income before cumulative effect
    of accounting change .......................      9.5          31.4      65.2          99.4
  Cumulative effect of accounting change,
    net of tax .................................       --            --        --          (1.6)
                                                   --------------------    --------------------
  Net income ...................................   $  9.5        $ 31.4    $ 65.2        $ 97.8
                                                   ====================    ====================
</TABLE>

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


                                       22
<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 and nine months ended
September 30, 2002 and 2001.

<TABLE>
<CAPTION>
                                                         Three Months Ended   Nine Months Ended
                                                            September 30,       September 30,
                                                         2002         2001     2002        2001
                                                         --------------------------------------
                                                                      (in millions)

<S>                                                      <C>         <C>      <C>         <C>
Net realized investment and other gains (losses) .....   $ 0.7       $(4.5)   $(19.2)     $(2.8)

Less amortization of deferred policy acquisition
  costs related to net realized investment and
  other gains ........................................    (1.6)        1.2       2.9        0.1
                                                         -----------------    -----------------
Net realized investment and other gains,
  net of related amortization of deferred
  policy acquisition costs per unaudited
  consolidated financial statements ..................    (0.9)       (3.3)    (16.3)      (2.7)

Less income tax effect ...............................     0.4         1.3       6.0        0.9
                                                         -----------------    -----------------
Net realized investment and other gains
  (losses), net - after-tax adjustment to
  calculate segment operating income .................   $(0.5)      $(2.0)   $(10.3)     $(1.8)
                                                         =================    =================
</TABLE>

The Company incurred after-tax restructuring charges to reduce costs and
increase future operating efficiency by consolidating portions of our
operations. After-tax restructuring costs net of related curtailment pension and
other post employment benefit related gains, were $0.3 million for the nine
month periods ended September 30, 2002. No such gains were incurred in the three
month periods ended September 30, 2002 and 2001, respectively, or in the nine
month period end September 30, 2001.

During the nine month period ended September 30, 2002, the Company incurred a
$4.5 million after-tax charge related to the settlement of the Modal Premium
class action lawsuit. The settlement agreement involves policyholders who paid
premiums on a monthly, quarterly, or semi-annual basis rather than annually. The
settlement costs are intended to provide for relief to class members and for
legal and administrative costs associated with the settlement. In entering into
the settlement, the Company specifically denied any wrongdoing. Although some
uncertainty remains as to the entire cost of claims, it is expected that the
final cost of the settlement will not differ materially from the amounts
presently provided by the Company.

Effective within the year 2000, the Company is no longer subject to the surplus
tax imposed on mutual life insurance companies and their wholly-owned stock
subsidiaries. During the three and nine month periods ended September 30, 2001,
the Company recognized a reduction in equity based taxes of $4.6 million,
respectively, resulting from a revised estimate related to prior years. This
after-tax credit was excluded from after-tax operating income for these periods.


                                       23
<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.

<TABLE>
<CAPTION>
                                               Three Months Ended     Nine Months Ended
                                                  September 30,         September 30,
                                                2002        2001      2002        2001
                                               ----------------------------------------
                                                             (in millions)

<S>                                            <C>         <C>       <C>         <C>
Revenues (1) ...............................   $167.6      $150.9    $480.6      $455.9

Benefits and expenses ......................    133.5       111.3     344.3       314.7

Income taxes ...............................     11.9        13.3      46.1        50.5
                                               ------------------    ------------------

Segment after-tax operating income (1) .....     22.2        26.3      90.2        90.7
                                               ------------------    ------------------

After-tax adjustments: (1)
  Net realized investment and other gains
    (losses) ...............................     (0.5)       (2.0)    (10.3)       (1.8)
  Class action lawsuit .....................       --          --      (4.5)         --
  Surplus tax ..............................       --         4.6        --         4.6
  Restructuring charges ....................       --          --       0.3          --
                                               ------------------    ------------------
Total after-tax adjustments ................     (0.5)        2.6     (14.5)        2.8

GAAP Reported:
Income before cumulative effect of
  accounting change ........................     21.7        28.9      75.7        93.5
Cumulative effect of accounting change,
  net of tax ...............................       --          --        --        (1.6)
                                               ------------------    ------------------
Net income .................................   $ 21.7      $ 28.9    $ 75.7      $ 91.9
                                               ==================    ==================

Other Data:
Segment after-tax operating income:
  Non-traditional life (variable and
    universal life) ........................   $ 24.8      $ 26.4    $ 91.3      $ 90.3
  Traditional life .........................     (2.6)       (0.1)     (1.1)        0.4
                                               ------------------    ------------------
Segment after-tax operating income (1) .....   $ 22.2      $ 26.3    $ 90.2      $ 90.7
                                               ==================    ==================
</TABLE>

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

Three Months Ended September 30, 2002 Compared to Three Months Ended
September 30, 2001

Segment after-tax operating income decreased 15.6%, or $4.1 million, from the
prior year. Non-traditional life insurance business after-tax operating income
decreased $1.6 million, primarily due to higher amortization of deferred policy
acquisition costs (DAC) driven by the Q3 unlocking of the DAC asset and
increased operating costs and expenses partially offset by higher net investment
income and increased universal life and product-type fee income also driven by
the Q3 unlocking. Traditional life insurance business after-tax operating income
decreased $2.5 million, primarily due to lower premiums and higher benefits to
policyholders partially offset by lower operating costs and expenses.

Revenues increased 11.1%, or $16.7 million from the prior year due to increases
in universal life and investment-type products charges and net investment income
partially offset by a decrease in premiums. Universal life and investment-type
product charges increased 12.5%, or $9.8 million, primarily due to increased
expense charges of $6.2 million and higher amortization of unearned revenue of
$4.4 million. The increase in amortization of unearned revenue included $10.4
million associated with the Q3 unlocking (See Note 1 - Summary of Significant
Accounting Policies in the notes to the unaudited financial statements and the
Critical Accounting Policies in this MD&A). The Segment's net investment income
increased 16.1%, or $9.3 million, primarily due to increased asset balances.
Premiums decreased 15.6%, or $2.3 million, due to a higher percent of the
traditional life insurance business being


                                       24
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

reinsured. Ceded reinsurance premiums as a percent of premiums were at 48%
compared to 21% in the prior year resulting from a new life insurance
reinsurance treaty implemented during 2001.

Benefits and expenses increased 20.0%, or $22.2 million, from the prior year.
Benefits to policyholders increased 4.3%, or $3.4 million, primarily due to
higher claims in the traditional life insurance business. Other operating costs
and expenses increased 32.2%, or $4.2 million, primarily due to growth in the
non-traditional life insurance business. Amortization of deferred policy
acquisition costs increased 118.8%, or $15.4 million, primarily due to the
non-traditional life insurance business driven by a $21.9 million Q3 unlocking
of the DAC asset (See Note 1 - Summary of Significant Accounting Policies in the
notes to the unaudited financial statements and the Critical Accounting Policies
in this MD&A). The Segment's effective tax rate on operating income was 34.9%
compared to 33.6% for the prior year. The increase was primarily due to
decreased dividend received deductions.

Nine months Ended September 30, 2002 Compared to Nine months Ended
September 30, 2001

Segment after-tax operating income decreased 0.6%, or $0.5 million, from the
prior year. Non-traditional life insurance business after-tax operating income
increased $1.0 million, primarily due to increased universal life and
product-type fee income driven by the Q3 unlocking, higher net investment
income, lower operating costs and expenses partially offset by increased
benefits to policyholders. Traditional life insurance business after-tax
operating income decreased $1.5 million, primarily due to lower premiums and
higher benefits to policyholders partially offset by lower operating costs and
expenses.

Revenues increased 5.4%, or $24.7 million from the prior year due to increases
in universal life and investment-type products charges and net investment income
partially offset by a decrease in premiums. Universal life and investment-type
product charges increased 2.8%, or $6.7 million, primarily due to increased
expense charges of $8.4 million. The Segment's net investment income increased
14.4%, or $24.4 million, primarily due to increased asset balances. Premiums
decreased 13.5%, or $6.3 million, due to a higher percent of the traditional
life insurance business being reinsured. Ceded reinsurance premiums as a percent
of premiums were 46% compared to 19% in the prior year resulting from a new life
insurance treaty implemented during 2001.

Benefits and expenses increased 9.4%, or $29.6 million, from the prior year.
Benefits to policyholders increased 24.3%, or $49.4 million, primarily due to
growth in the non-traditional life insurance business. Other operating costs and
expenses decreased 24.7%, or $13.4 million, primarily due to increased credits
of 27.0%, or $19.4 million for reinsurance ceded expense allowance, resulting
from both a new traditional life reinsurance treaty implemented during 2001 and
growth in the non-traditional life insurance business. Amortization of deferred
policy acquisition costs decreased 10.7%, or $4.4 million, primarily due to poor
mortality experience in the non-traditional life insurance business and also
additional amortization in the prior period resulting from the growth of the
in-force and poor separate account performance. Partially offsetting this
decline was a $21.9 million Q3 unlocking of the non-traditional life insurance
business DAC asset mentioned previously. The Segment's effective tax rate on
operating income was 33.8% compared to 35.8% for the prior year. The decrease
was primarily due to increased dividend received deductions.


                                       25
<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.

<TABLE>
<CAPTION>
                                           Three Months Ended     Nine Months Ended
                                              September 30,         September 30,
                                            2002         2001     2002         2001
                                           ------------------    ------------------
                                                         (in millions)

<S>                                        <C>          <C>      <C>          <C>
Revenues (1) ............................  $ 8.0        $ 8.9    $ 25.5       $31.4

Benefits and expenses ...................   24.6          6.5      41.3        23.4

Income taxes ............................   (4.4)        (0.1)     (5.3)        2.1
                                           ------------------    ------------------

Segment after-tax operating income (1) ..  (12.2)         2.5     (10.5)        5.9
                                           ------------------    ------------------

GAAP Reported:
Net income ..............................  $(12.2)      $ 2.5    $(10.5)      $ 5.9
                                           ==================    ==================
</TABLE>

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

Three Months Ended September 30, 2002 Compared to Three Months Ended
September 30, 2001

Segment after-tax operating income decreased $14.7 million from the prior year.
The decrease in segment after-tax operating income was due to a $18.1 million
increase in benefits and expenses primarily driven by amortization of deferred
policy acquisition costs (DAC) due to the current quarter unlocking of the DAC
asset as described in Note 1. Partially offsetting the increase to benefits and
expenses were decreased investment-type product charges 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 and poor equity performance.

Revenues decreased 10.1%, or $0.9 million from the prior year. Lower revenues
were due to a decrease in investment-type product charges of 22.8% or $2.1
million from the prior year. 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, at fair value, as part of the safe harbor
exchange program. This decrease was partially offset by an increase in net
investment income of $1.2 million, to $0.9 million, for the three months ended
September 30, 2002, due to a $63.8 million increase in average invested assets
in the fixed annuity product line, which was first offered by the Company in the
fourth quarter of 2001.

Benefits and expenses increased $18.1 million, to $24.6 million from prior year
period. The increase in benefits and expenses is due to a $20.2 million increase
in amortization of DAC, primarily due to the variable annuity business, driven
by the $15.1 million Q3 unlocking of the DAC asset (See Note 1 - Summary of
Significant Accounting Policies in the note to the audited consolidated
financial statements and the Critical Accounting Policies in this MD&A). This
increase in DAC was partially offset by 37.8%, or $2.8 million, lower operating
expenses due to ongoing company-wide cost reduction programs. The Segment's
effective tax rate on operating income was 26.5% for the three months ended
September 30, 2002, due to increased dividend received deductions in variable
annuity separate accounts, compared to (4.2)% for the prior year period.

Nine months Ended September 30, 2002 Compared to Nine months Ended
September 30, 2001

Segment after-tax operating income decreased $16.4 million from the prior year.
The decrease in segment after-tax operating income was due to a $17.9 million
increase in benefits and expenses driven by amortization of deferred acquisition
costs and a 18.8%, or $5.9 million decrease in revenues due to the decrease in
product fees resulting from lower separate account fund values from continued
poor equity market performance.


                                       26
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Revenues decreased 18.8%, or $5.9 million from the prior year. Revenues consists
primarily of $23.1 million in investment-type product charges on variable
annuity products, which decreased 30.2%, or $10.0 million from the prior 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, at fair value, as part of the safe harbor exchange program. This
decrease was partially offset by both an increase in net investment income of
$2.9 million for the three months ended September 30, 2002, due in part to an
increase of $46.6 million in average invested assets on a line of fixed annuity
products, which was first offered by the Company in the fourth quarter of 2001,
and an increase of $1.2 million in other income due to the sale, at fair value,
of certain accounts by the Company to its Parent as part of the safe harbor
annuity exchange program in the current year.

Benefits and expenses increased $17.9 million, to $ 41.3 million from the prior
year period. The increase in benefits and expenses is due to a $18.5 million
increase in amortization of deferred policy acquisition costs, primarily due to
the variable annuity business driven by the $15.1 million Q3 unlocking of the
DAC asset, mentioned previously. This increase in deferred policy acquisition
costs was partially offset by a decrease of 24.3%, or $4.5 million, in operating
expenses due to ongoing company-wide cost reduction programs. The Segment's
effective tax rate on operating income was 33.5% for the nine months ended
September 30, 2002, due to increased dividend received deductions in variable
annuity separate accounts, compared to 26.3% for the prior year period.


                                       27
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

General Account Investments

We manage our general account assets in investment segments that support
specific classes of product liabilities. These investment segments permit us to
implement investment policies that both support the financial characteristics of
the underlying liabilities, and also provide returns on our invested capital.
The investment segments also enable us to gauge the performance and
profitability of our various businesses.

Asset/Liability Risk Management

Our primary investment objective is to maximize after-tax returns within
acceptable risk parameters. We are exposed to two primary types of investment
risk:

      o     Interest rate risk, meaning changes in the market value of fixed
            maturity securities as interest rates change over time, and
      o     Credit risk, meaning uncertainties associated with the continued
            ability of an obligor to make timely payments of principal and
            interest

We use a variety of techniques to control interest rate risk in our portfolio of
assets and liabilities. In general, our risk management philosophy is to limit
the net impact of interest rate changes on our assets and liabilities. Assets
are invested predominantly in fixed income securities, and the asset portfolio
is matched with the liabilities so as to eliminate the Company's exposure to
changes in the overall level of interest rates. Each investment segment holds
bonds, mortgages, and other asset types that will satisfy the projected cash
needs of its underlying liabilities. Another important aspect of our
asset-liability management efforts is the use of interest rate derivatives. We
selectively apply derivative instruments, such as interest rate swaps and
futures, to reduce the interest rate risk inherent in combined portfolios of
assets and liabilities. For a more complete discussion of the interest rate risk
management practices, please see the Interest Rate Risk section in the
Quantitative and Qualitative Disclosures about Market Risk section of this
document.

Management of credit risk is central to our business and we devote considerable
resources to the credit analysis underlying each investment acquisition. Our
corporate bond management group employs a staff of highly specialized,
experienced, and well-trained credit analysts. We rely on these analysts'
ability to analyze complex private financing transactions and to acquire the
investments needed to profitably fund our liability requirements. In addition,
when investing in private fixed maturity securities, we rely upon broad access
to proprietary management information, negotiated protective covenants, and call
protection features and collateral protection.

Our bond portfolio is reviewed on a continuous basis to assess the integrity of
current quality ratings. As circumstances warrant, specific investments are
"re-rated" with the adjusted quality ratings reflected in our investment system.
All bonds are evaluated regularly against the following criteria:

      o     material declines in the issuer's revenues or margins;
      o     significant management or organizational changes;
      o     significant uncertainty regarding the issuer's industry;
      o     debt service coverage or cash flow ratios that fall below
            industry-specific thresholds;
      o     violation of financial covenants; and
      o     other business factors that relate to the issuer.

Product prices are set on the basis of expected default losses over the long
term. Actual losses therefore vary above and below this average, and the market
value of the portfolio as a whole also changes as market credit spreads move up
and down during an economic cycle. The Company is able to hold to this
investment strategy over the long term, both because of its strong capital
position, the fixed nature of its liabilities and the matching of those
liabilities with assets, and because of the experience gained through many
decades of a consistent investment philosophy. Despite the current high levels
of market default rates and widened credit spreads, we expect losses on our
investment portfolio to approximate losses assumed in product pricing over the
economic cycle. We generally intend to hold all of our fixed maturity
investments to maturity to meet liability payments, and to ride out any
unrealized gains and losses over the long term.


                                       28
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

Overall Composition of the General Account

Invested assets, excluding separate accounts, totaled $4.1 billion and $3.6
billion as of September 30, 2002 and December 31, 2001, respectively. The
portfolio composition has not significantly changed at September 30, 2002 as
compared to December 31, 2001. The following table shows the composition of
investments in our general account portfolio.

                                  As of September 30,     As of December 31,
                                         2002                   2001
                               ------------------------------------------------
                                Carrying      % of       Carrying     % of
                                  Value       Total       Value       Total
                               ------------------------------------------------
                               (in millions)          (in millions)

Fixed maturity securities (1)   $2,950.4       71.2%   $2,496.2       69.0%
Mortgage loans (2)                 653.0       15.7       580.9       16.0
Real estate                         20.6        0.5        20.6        0.6
Policy loans (3)                   360.1        8.7       352.0        9.7
Equity securities                   14.6        0.4        13.1        0.4
Other invested assets               73.2        1.8        39.6        1.1
Short-term investments               0.1         --          --         --
Cash and cash equivalents (4)       72.5        1.7       115.4        3.2
                               ------------------------------------------------

  Total invested assets         $4,144.5      100.0%   $3,617.8      100.0%
                               ------------------------------------------------

(1)   In addition to bonds, the fixed maturity security portfolio contains
      redeemable preferred stock with a carrying value of $50.0 million and
      $45.6 million as of September 30, 2002 and December 31, 2001,
      respectively. The total fair value of the fixed maturity security
      portfolio was $2,950.0 and $2,494.6 million, at September 30, 2002 and
      December 31, 2001, respectively.
(2)   The fair value of the mortgage loan portfolio was $704.6 and $604.3
      million as of September 30, 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 the Company's product liabilities,
      assets are heavily oriented toward fixed maturity securities. The Company
      determines the allocation of assets primarily on the basis of cash flow
      and return requirements of its products and by the level of investment
      risk.

Fixed Maturity Securities. The fixed maturity securities portfolio is
predominantly comprised of low risk, investment grade, publicly and privately
traded corporate bonds and senior tranches of asset-backed securities (ABS) and
mortgage-backed securities (MBS), with the balance invested in government bonds.
The fixed maturity securities portfolio also includes redeemable preferred
stock. As of September 30, 2002, fixed maturity securities represented 71.2% of
general account investment assets with a carrying value of $3.0 billion, roughly
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 assets.


                                       29
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

The following table shows the composition by our internal industry
classification of the fixed maturity securities portfolio and the unrealized
gains and losses contained therein.

             Fixed Maturity Securities -- By Industry Classification

<TABLE>
<CAPTION>
                                                             As of September 30, 2002
                                    ----------------------------------------------------------------------------
                                                          Carrying  Value          Carrying Value of
                                                   Net     of Securities           Securities with
                                      Total    Unrealized   with Gross    Gross         Gross             Gross
                                    Carrying      Gain      Unrealized  Unrealized    Unrealized       Unrealized
                                      Value      (Loss)       Gains       Gains         Losses            Losses
                                    ----------------------------------------------------------------------------
                                                                  (in millions)
<S>                                 <C>        <C>         <C>          <C>           <C>               <C>
Corporate securities:
    Banking and finance .........   $  440.7   $   20.2    $  349.0     $   23.5      $   91.7          $   (3.3)
    Communications ..............      132.1       (6.3)       57.2          4.4          74.9             (10.7)
    Government ..................       63.5        3.4        47.6          4.3          15.9              (0.9)
    Manufacturing ...............      534.8       13.6       401.3         27.4         133.5             (13.8)
    Oil & gas ...................      354.6        1.7       265.3         20.1          89.3             (18.4)
    Services / trade ............      189.8       10.3       168.2         11.8          21.6              (1.5)
    Transportation ..............      205.1       (2.4)      137.7          9.4          67.4             (11.8)
    Utilities ...................      520.7       (8.3)      345.3         28.5         175.4             (36.8)
                                    ----------------------------------------------------------------------------
  Total Corporate Securities ....    2,441.3       32.2     1,771.6        129.4         669.7             (97.2)

Asset-back and mortgage-backed
  securities ....................      469.4       23.0       392.3         30.2          77.1              (7.2)
U.S. Treasury securities and
  obligations of U.S.
  government Agencies ...........       28.4        2.3        28.4          2.3            --                --
Debt securities issued by
  foreign Governments ...........        5.8       (0.1)        3.5          0.4           2.3              (0.5)
Obligations of states and
  political subdivisions ........        5.5        0.2         5.5          0.2            --                --
                                    ----------------------------------------------------------------------------
  Total .........................   $2,950.4   $   57.6    $2,201.3     $  162.5      $  749.1          $ (104.9)
                                    ============================================================================
</TABLE>

As of September 30, 2002, there are $162.5 million of gross unrealized gains and
$104.9 million of the gross unrealized losses on the fixed maturities portfolio.
$91.5 million, or 87.2%, of those unrealized losses are concentrated in the
manufacturing, oil and gas, transportation, utilities and communications
industries. Only the communications transportation and utilities have net
unrealized losses.

Manufacturing: Manufacturing is a large, diverse sector encompassing cyclical
industries. Low commodity prices continue to pressure the subsectors of mining,
chemicals, metals, and forest products. When the economy recovers, these
cyclical subsectors should recover and the bonds of companies in these
subsectors should recover as well. We have financed these subsectors though
several economic cycles and have the ability and intent to hold our investments
until they recover in value or mature. Our portfolio should also benefit from
our underwriting process where we stress test each company's financial
performance through a recession scenario.

Oil & Gas: In the Oil & Gas industry much of our unrealized loss arises from
companies in emerging markets, primarily Latin America. Our philosophy in
emerging markets is to generally lend to those companies with dollar based
export products such as oil companies. Emerging markets continue to experience
significant stress and bond prices across most emerging market countries are
down. However, our oil & gas investments are faring well as these companies have
dollar based revenues to pay their debts and have continued to do so. In many
cases, investments are structured so that all export revenues first pass through
an offshore trust and our debt service is then paid before any dollars are
released back to the company. This type of transaction is known as an export
receivables investment. All of our Venezuelan transactions are structured in
this manner.

Transportation: The Transportation sector consists largely of air, rail, and
automotive manufacturers and service companies. All of these subsectors are
experiencing cyclical downturns, particularly the airline industry, having


                                       30
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

been impacted both by the recession and the fallout from September 11. While
most airlines are losing money, we lend to this industry almost exclusively on a
secured basis (approximately 99% of our loans are secured). These secured
airline financings are of two types: Equipment Trust Certificates (ETC's) and
Enhanced Equipment Trust Certificates (EETC's). The ETC's initially have an 80%
loan-to-value ratio and the EETC senior tranches initially have a 40-50%
loan-to-value and include a provision for a third party to pay interest for
eighteen months from a default. For us to lose money on an ETC, three things
must happen: the airline must default, the airline must decide it does not want
to fly our aircraft, and the aircraft must be worth less than our loan. When
lending to this industry, we underwrite both the airline and the aircraft. We've
been lending to this industry in this fashion for 25 years through several
economic cycles and have seen values on our secured airline bonds fall and
recover thorough these cycles.

Utilities: The Utility sector has faced a number of challenges over the past few
years including the California Power Crisis, the Enron bankruptcy, and the
recession which has resulted in a drop in demand. More recently, there have been
issues around energy trading activities and the financial liquidity of some
large merchant industry players. These events caused a general widening in
utility and project finance bond spreads over the course of the quarter. We
expect continued stress in this sector as owners of merchant plants work through
their liquidity issues with the banks. Investors are likely to see continued
restructurings and/or bankruptcy filings from those companies unable to reach
agreement with the banks. Longer term we believe the reduction in power supply
from reduced capital expenditures and the shutting of inefficient plants will
support a gradual rise in power prices that will help this sector recover. We
currently intend to hold our positions until the recover.

Communications: The Communication sector has experienced aggressive expansion,
which has resulted in considerable excess capacity. There have been high profile
companies, which have filed for bankruptcy. Among the remaining players, further
pressure has resulted. Our strategy has been to focus on operating companies
with strong balance sheets and diversified product offerings. As in past
recessions, we see pressure on these bonds. We would expect improvement when the
economy begins to recover.

The following table shows the composition by credit quality of the securities
with gross unrealized losses in our fixed maturity securities portfolio.

          Unrealized Losses on Fixed Maturity Securities -- By Quality

<TABLE>
<CAPTION>
                                                         As of September 30, 2002
                                           -----------------------------------------------------
                                              Carrying
                                              Value of
                                             Securities
                                               with
                                               Gross                     Gross
                   S&P Equivalent            Unrealized                Unrealized
  SVO Rating (1)   Designation (2)          Losses (3)(4)  % of Total  Losses (3)(4)  % of Total
------------------------------------------------------------------------------------------------
                                            (in millions)             (in millions)
<S>                <C>                          <C>           <C>        <C>           <C>
       1           AAA/AA/A.............        $  160.5       22.2%     $   8.4         8.1%
       2           BBB..................           347.2       48.0         47.9        46.2
       3           BB...................           129.9       17.9         22.8        22.0
       4           B....................            59.1        8.2         15.2        14.7
       5           CCC and lower........            17.6        2.4          9.1         8.8
       6           In or near default ..             9.6        1.3          0.2         0.2
                                           -----------------------------------------------------
                   Total................        $  723.9      100.0%     $ 103.6       100.0%
                                           =====================================================
</TABLE>

(1)   With respect to 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 $25.2
      million and unrealized losses of $1.3 million.
(4)   Includes 63 securities that are awaiting an independent rating with a
      carrying value of $94.6 million and unrealized losses of $3.3 million. Due
      to lags between the funding of an investment, the processing of final
      legal documents, the filing with the SVO, and the rating by the SVO, there
      will always be a number of unrated securities at each statement date.
      Unrated securities comprised 12.6% and 3.1% of the total carrying value
      and total gross unrealized losses of securities in a loss position
      including redeemable preferred stock, respectively.


                                       31
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

At September 30, 2002, $56.3 million, or 54.3%, of the gross unrealized losses
are on securities that are rated investment grade. Unrealized losses on
investment grade securities principally relate to changes in interest rates or
changes in credit spreads since the securities were acquired. Any such
unrealized losses are recognized in income if, and when, we decide to sell such
securities (note that such a decision only would be made with respect to our
available-for-sale portfolio). We believe that the discussion of securities with
ongoing unrealized losses should focus on below investment grade securities that
generally are more likely to develop credit concerns.

As of September 30, 2002, there are $47.3 million of the gross unrealized losses
on the below investment grade securities in the fixed maturities portfolios. Of
this amount, 67.2% has been in place for over six months. The Company believes,
however, that after its comprehensive review of each borrower's ability to meet
the obligations of the notes, and based on information available at this time,
these securities will continue to pay as scheduled, and the Company has the
ability and the intent to hold these securities until they recover in value or
mature. The scheduled maturity dates for securities in an unrealized loss
position at September 30, 2002 is shown below.

          Unrealized Losses on Fixed Maturity Securities -- By Maturity

<TABLE>
<CAPTION>
                                                                 September 30, 2002
                                                    ----------------------------------------
                                                     Carrying Value of
                                                    Securities with Gross   Gross Unrealized
                                                     Unrealized Loss              Loss
                                                    ----------------------------------------
                                                                 (in millions)

<S>                                                     <C>                         <C>
Due in one year or less ......................          $ 37.2                      $  2.6
Due after one year through five years ........           216.4                        25.1
Due after five years through ten years .......           278.3                        50.7
Due after ten years ..........................           140.1                        19.3
                                                    ----------------------------------------

Asset-backed and mortgage-backed securities ..            77.1                         7.2
                                                    ----------------------------------------

Total ........................................          $749.1                      $104.9
                                                    =========================================
</TABLE>

As of September 30, 2002 we had 11 securities that had an unrealized loss of $2
million or more. They include:

<TABLE>
<CAPTION>
                                                                  Carrying   Unrealized
Description of Issuer                                               Value       Loss
---------------------------------------------------------------------------------------
                                                                      (in millions)

<S>                                                                            <C>
Unregulated power / pipeline energy company ....................   $ 2.4       $7.3
Unregulated energy generator and supplier ......................     9.7        7.0
Secured financings to large US airline .........................     3.1        3.0
US integrated producer of petrochemicals and related
  products .....................................................     6.2        2.9
Large US based merchant energy generator........................     2.5        2.8
Large US wireless telecommunication company.....................    13.0        2.3
Oilfield service company .......................................     2.0        2.2
US telecommunications company ..................................     6.8        2.2
Lease financing with US fossil fuel power generator.............     5.5        2.1
Large integrated energy company ................................     6.2        2.0
Joint venture with Venezuelean oil company with two
  large US oil companies .......................................     6.8        2.6
---------------------------------------------------------------------------------------
</TABLE>

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 (See the SVO website at www.naic.org/1SVO/, for more
information). Category 1 is the highest quality rating, and Category 6 is the
lowest. Categories 1 and 2 are the equivalent of investment grade debt as
defined by rating agencies such as Standard & Poors (S&P) and Moody's (i.e.,
BBB-/Baa3 or higher), while Categories 3-6 are the equivalent of
below-investment grade securities. SVO ratings are reviewed and may be revised
at least once a year.

The following table sets forth the SVO ratings for the Company's bond portfolio
along with an equivalent S&P rating agency designation. The majority of bonds
are investment grade, with 88.3% and 87.7% invested in Category 1 and 2
securities as of September 30, 2002 and December 31, 2001, respectively. Below
investment grade bonds were 11.7% and 12.3% of fixed maturity investments
excluding redeemable preferred stocks and 8.2% and 8.4% of total invested assets
as of September 30, 2001 and December 31, 2001, respectively. This allocation
reflects the Company's strategy of avoiding the unpredictability of interest
rate risk in favor of relying on the ability of bond analysts 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.


                                       32
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

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, which typically is the case for our
private placement securities. The spread pricing matrix is based on credit
quality, country of issue, market sector and average investment life and is
created for these dimensions through brokers' estimates of public spreads
derived from their respective publications. 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 changed from month to month based on changes in the market. 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 resulting prices are then reviewed by the pricing
analysts and members of the Controller's department. 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. Then, every quarter, there is a comprehensive review of all impaired
securities and problem loans by a group consisting of the CIO and the Bond
Investment Committee.

A majority (59.3%) of the below investment grade bonds are in 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. The carrying value of bonds in
or near default was $30.0 million and $24.7 million as of September 30, 2002 and
December 31, 2001, respectively. At September 30, 2002 and December 31, 2001,
$0.4 million and $0.5 million, respectively of interest on bonds in or near
default was included in accrued investment income. Unless the Company reasonably
expects to collect investment income on bonds in or near default, the accrual
will be ceased and any accrued income reversed. Management judgment is used and
the actual results could be materially different.


                                       33
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                     Fixed Maturity Securities -- By Quality

<TABLE>
<CAPTION>
                                                    As of September 30,      As of December 31,
                                                           2002                    2001
                                                  --------------------------------------------------
     SVO                 S&P Equivalent             Carrying      % of      Carrying       % of
  Rating (1)            Designation (2)           Value (3)(4)    Total   Value (3)(4)     Total
----------------------------------------------------------------------------------------------------
                                                  (in millions)           (in millions)
<S>           <C>                                 <C>              <C>       <C>           <C>
      1       AAA/AA/A.....................       $   1,003.8       34.6%    $  910.4       37.2%
      2       BBB..........................           1,558.7       53.7      1,237.9       50.5
      3       BB...........................             200.5        6.9        190.2        7.8
      4       B............................              74.2        2.6         59.7        2.4
      5       CCC and lower................              33.2        1.2         27.7        1.1
      6       In or near default...........              30.0        1.0         24.7        1.0
                                                  --------------------------------------------------
              Total........................       $   2,900.4      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 $50.0
      million and $45.6 million as of September 30, 2002 and December 31, 2001,
      respectively.
(4)   Includes 184 securities that are awaiting an SVO rating with a carrying
      value of $248.4 million as of September 30, 2002. Due to lags between the
      funding of an investment, the processing of final legal documents, the
      filing with the SVO, and the rating by the SVO, there will always be a
      number of unrated securities at each statement date.

Mortgage Loans. As of September 30, 2002 and December 31, 2001, the Company held
mortgage loans with a carrying value of $653.0 million and $580.9 million,
respectively, including $174.1 million and $166.3 million, respectively, of
agricultural loans and $478.9 million and $414.6 million, respectively, of
commercial loans.

The following table shows the Company's agricultural mortgage loan portfolio by
its three major sectors: agribusiness, timber and production agriculture.

<TABLE>
<CAPTION>
                                  As of September 30, 2002                  As of December 31, 2001
                            -------------------------------------    --------------------------------------
                                                     % of Total                                % of Total
                            Amortized    Carrying     Carrying       Amortized   Carrying       Carrying
                              Cost        Value         Value           Cost       Value          Value
                            -------------------------------------    --------------------------------------
                                (in millions)                            (in millions)
<S>                         <C>          <C>            <C>          <C>          <C>             <C>
Agri-business ...........   $117.9       $117.1          67.3%       $115.0       $112.8           67.8%
Timber ..................     56.9         56.5          32.4          52.8         52.4           31.5
Production agriculture ..      0.5          0.5           0.3           1.1          1.1            0.7
                            -------------------------------------    --------------------------------------
  Total .................   $175.3       $174.1         100.0%       $168.9       $166.3          100.0%
                            =====================================    ======================================
</TABLE>


                                       34
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

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 third quarter of the prior year.
The lower yield was the result of old assets rolling over into new investments
with lower interest rates. The inflow of new cash was invested at rates that
were lower than the overall portfolio earnings rate during the third quarter of
2001.

<TABLE>
<CAPTION>
                                                     Three Months Ended                            Nine Months Ended
                                                As of                  As of                 As of                   As of
                                            September 30,          September 30,          September 30,           September 30,
                                                2002                   2001                   2002                    2001
                                          ----------------------------------------------------------------------------------------
                                           Yield   Amount         Yield    Amount        Yield    Amount         Yield    Amount
                                          ----------------------------------------------------------------------------------------
                                                (in millions)           (in millions)          (in millions)          (in millions)

<S>                                       <C>     <C>             <C>     <C>             <C>        <C>          <C>     <C>
General account assets-
excluding policy loans
  Gross income ....................       7.03%   $   64.3        7.55%   $   54.6        6.95%      184.2        7.41%   $  158.0
  Ending assets-excluding policy
    Loans .........................                3,784.4                 3,027.6                 3,784.4                 3,027.6
Policy loans
  Gross income ....................       6.09%        5.5        5.65%        4.9        5.90%       15.8        6.21%       16.0
  Ending assets ...................                  360.1                   350.9                   360.1                   350.9

    Total gross income ............       6.94%       69.8        7.35%       59.5        6.85%      200.0        7.28%      174.0

    Less: investment expenses .....                   (1.7)                   (1.9)                   (4.7)                   (5.9)
                                                  --------                --------                --------                --------
      Net investment income .......       6.77%   $   68.1        7.11%   $   57.6        6.69%   $  195.3        7.03%   $  168.1
                                                  ========                ========                ========                ========
</TABLE>

      Impairments: The Company has a process in place to identify securities
that could potentially have an impairment that is other than temporary. This
process involves monitoring market events that could impact issuers' credit
ratings, business climate, management changes, litigation and government
actions, and other similar factors. This process also involves monitoring late
payments, downgrades by rating agencies, key financial ratios, financial
statements, revenue forecasts and cash flow projections as indicators of credit
issues.

      At the end of each quarter, our Investment Review Committee reviews all
securities trading below ninety cents on the dollar, to determine whether
impairments need to be taken. This committee includes the head of workouts, the
head of each industry team, and the head of portfolio management. The analysis
focuses on each company's or project's ability to service its debts in a timely
fashion and the length of time the security has been trading below cost. To
supplement this process, a bi-annual review is made of the entire fixed maturity
portfolio to assess credit quality, including a review of all impairments with
the Committee of Finance, a subcommittee of the Board of Directors.

      The Company considers relevant facts and circumstances in evaluating
whether the impairment of a security is other than temporary. Relevant facts and
circumstances considered include (1) the length of time the fair value has been
below cost; (2) the financial position of the issuer, including the current and
future impact of any specific events; and (3) the Company's ability and intent
to hold the security to maturity or until it recovers in value. To the extent
the Company determines that a security is deemed to be other than temporarily
impaired, the difference between amortized cost and fair value would be charged
to earnings.

      There are a number of significant risks and uncertainties inherent in the
process of monitoring impairments and determining if an impairment is other than
temporary. These risks and uncertainties include (1) the risk that our
assessment of an issuer's ability to meet all of its contractual obligations
will change based on changes in the credit characteristics of that issuer, or
(2) the risk that the economic outlook will be worse than expected or have more
of an impact on the issuer than anticipated, and (3) the risk that new
information obtained by us or changes in other facts and circumstances lead us
to change our intent to hold the security to maturity or until it recovers in
value.

      Any of these situations could result in a charge to earnings in a future
period to the extent of the impairment charge recorded. Because the majority of
our portfolio is classified as available-for-sale and held at fair value with
the related unrealized gains (losses) recorded in shareholders' equity, the
charge to earnings would not have a significant impact on shareholders' equity.

      The Company recorded net realized investment and other losses of $0.9
million and $16.3 million in the three and nine month periods ended September
30, 2002, which were driven by write-downs and sales of securities. The
following list shows the largest impairment on fixed income securities recorded
during the quarter, the related circumstances giving rise to the loss and a
discussion of how those circumstances impacted other material investments held.
Unless noted otherwise, all of the items shown are impairments of securities
held at September 30, 2002.

o     $8.4 million on securities issued by the holding company of a large
      domestic power producer that was downgraded to below investment grade
      status in July due to liquidity concerns. We also hold senior debt at
      various projects of this producer that is suported by cash flows of those
      projects and does not depend on the financial support of the parent.

o     $4.2 million on securities of an Australian power project that failed to
      produce the benefits expected from the deregulation of that country's
      power industry. The curcumstances of this impairment have no impact on
      other investments.


                                       35
<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 immediate capital needs to facilitate business operations.
Historically, our 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 September 30, 2002, $2,562.5 million, or 88.3% of the
fixed maturity securities held by us and rated by Standard & Poor's Ratings
Services, a division of the McGraw-Hill Companies, Inc. (S&P) or the National
Association of Insurance Commissioners were rated investment grade (BBB or
higher by S&P or 1 or 2 by the National Association of Insurance Commissioners).
The remaining $337.9 million, or 11.7%, of fixed maturity investments, and 8.2%
of invested assets, were rated non-investment grade. For additional discussion
of our investment portfolio see the General Account Investments section above in
this Management's Discussion and Analysis of Financial Condition and Results of
Segment Operations.

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

Net cash (used in) provided by operating activities was $(98.7) million and
$243.0 million for the nine months ended September 30, 2002 and 2001,
respectively. Cash flows from operating activities are affected by the timing of
premiums received, fees received and investment income. The $341.7 million
decrease in the first nine months of 2002 compared to the same period in 2001
resulted primarily from a $340.2 million decrease in policy liabilities.

Net cash used in investing activities was $518.1 million and $481.2 million for
the nine months ended September 30, 2002 and 2001, respectively. Changes in the
cash provided by investing activities primarily relate to the management of the
Company's investment portfolios and the investment of excess capital generated
by operating and financing activities. The increase in cash used in investing
activities in 2002 as compared to 2001 resulted from increased net acquisitions
of mortgage loans of $60.6 million and short-term investment of $22.9 million,
net of maturities, prepayments and scheduled redemptions during the nine months
ended September 30, 2002 as compared to same period in 2001. Partially
offsetting these uses of cash was an increase in net sales and maturities,
prepayments and scheduled redemptions of fixed maturities of $45.7 million
during the same nine month period.

Net cash provided by financing activities was $573.9 million and $94.0 million,
for the nine months ended September 30, 2002 and 2001, respectively. Changes in
cash provided by financing activities relate to excess deposits or withdrawals
under investment type contracts. The $479.9 increase for the first nine months
of 2002 as compared to the same period in 2001 resulted from a $64.2 million
increase in cash payments received as deposits for universal life insurance and
investment-type contracts and a $415.7 million reduction in cash payments made
on maturities and withdrawals of universal life insurance and investment-type
contracts.

We maintain reinsurance programs designed to protect against large or unusual
losses. Based on our review of our reinsurers' financial statements and
reputations in the reinsurance marketplace, we believe that our reinsurers are
financially sound, and, therefore, that we have so significant exposure to
uncollectible reinsurance in excess of uncollectible amounts already recognized
in our unaudited consolidated financial statements. The Company has also entered
into reinsurance agreements which transfers risks and profits to John Hancock
Life Insurance Company, the parent. The reinsurance agreements provide
reinsurance expense allowances to reimburse the Company for the


                                       36
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

related expenses. The agreements cover variable annuity, variable life insurance
and term life insurance contracts issued by the Company.

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.


                                       37
<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. The Company's
actual results may differ materially from the results anticipated in these
forward-looking statements.

These forward-looking statements are subject to risks and uncertainties
including, but not limited to, the risks that (1) a significant downgrade in our
ratings for claims-paying ability and financial strength may lead to policy and
contract withdrawals and materially harm our ability to market our products; (2)
new laws and regulations, including the recently-enacted Sarbanes-Oxley Act of
2002, or changes to existing laws or regulations, (including, but not limited
to, those relating to the Federal Estate Tax Laws), and the applications and
interpretations given to these laws, may adversely affect the Company's sales of
insurance and investment-related 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 third party
distribution relationships; (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) we may
incur multiple life insurance claims as a result of a catastrophic event which,
because of higher deductibles and lower limits, could adversely affect the
Company's future net income and financial position; (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 filed by
the Company with the United States Securities and Exchange Commission. 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.


                                       38
<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 Parent'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 has a process in place to identify securities that could potentially
have an impairment that is other than temporary. This process involves
monitoring market events that could impact issuers' credit ratings, business
climate, management changes, litigation and government actions, and other
similar factors. This process also involves monitoring late payments, downgrades
by rating agencies, key financial ratios, financial statements, revenue
forecasts and cash flow projections as indicators of credit issues.

At the end of each quarter, the Parent's Investment Review Committee reviews all
securities trading below ninety cents on the dollar to determine whether
impairments need to be taken. This committee includes the head of workouts, the
head of each industry team, and the head of portfolio management. The analysis
focuses on each company's or project's ability to service its debts in a timely
fashion and the length of time the security has been trading below cost. The
results of the analysis are reviewed by the Parent's Committee of Finance, a
subcommittee of the Parent's Board of Directors, quarterly. To supplement this
process, a bi-annual review is made of the entire fixed maturity portfolio to
assess credit quality including a review of all impairments with the Parent's
Committee of Finance.


                                       39
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

The Company considers relevant facts and circumstances in evaluating whether the
impairment of a security is other than temporary. Relevant facts and
circumstances considered include (1) the length of time the fair value has been
below cost; (2) the financial position of the issuer, including the current and
future impact of any specific events; and (3) the Company's ability and intent
to hold the security to maturity or until it recovers in value. To the extent
the Company determines that a security is deemed to be other than temporarily
impaired, the difference between amortized cost and fair value would be charged
to earnings.

There are a number of significant risks and uncertainties inherent in the
process of monitoring impairments and determining if an impairment is other than
temporary. These risks and uncertainties include (1) the risk that our
assessment of an issuer's ability to meet all of its contractual obligations
will change based on changes in the credit characteristics of that issuer, (2)
the risk that the economic outlook will be worse than expected or have more of
an impact on the issuer than anticipated and (3) the risk that new information
obtained by us or changes in other facts and circumstances lead us to change our
intent to hold the security to maturity or until it recovers in value.

Any of these situations could result in a charge to earnings in a future period
to the extent of the impairment charge recorded. Because the majority of our
portfolio is classified as available-for-sale and held at fair value with the
related unrealized gains (losses) recorded in shareholder's equity, the charge
to earnings would not have a significant impact on shareholder's equity.

As of September 30, 2002 and December 31, 2002, the Company's fixed maturity
portfolio was comprised of 88.3% and 87.7% investment grade securities and 11.7%
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 the Parent's proprietary credit evaluation models and experienced
personnel.

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 within our
Protection and Asset Gathering Segments.

The Company manages interest rate sensitive segments of the business, and the
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 (e.g., immediate annuities) sophisticated duration-matching
techniques are utilized to manage the segment's exposure to both parallel and
non-parallel yield curve movements. Typically this type of management is
expressed as a targeted duration mismatch of zero with an operational tolerance
of 90 days, with other measures used for limiting exposure to non-parallel risk.
For non-guaranteed rate products, such as whole life insurance or single premium
deferred annuities, liability cash flows are less predictable. Therefore, a
conventional duration-matching strategy is less effective at managing the
inherent risk. For these products, we manage interest rate risk based on
scenario-based portfolio modeling that seeks to identify the most appropriate
investment strategy given probable policyholder behavior and liability crediting
needs under a wide range of interest rate environments.

We project asset and liability cash flows on guaranteed rate products and then
discount them against credit-specific interest rate curves to attain fair
values. Duration is then calculated by re-pricing these cash flows against a
modified or "shocked" interest rate curve and evaluating the change in fair
value versus the base case. As of September 30, 2002 and December 31, 2001, the
fair value of invested assets supporting duration-managed liabilities was
approximately $1,224.9 million and $1,156.0 million, respectively. Based on the
information and assumptions we use in our duration calculations in effect as of
December 31, 2001, we estimate that a 100 basis point immediate, parallel
increase in interest rates ("rate shock") would have no effect on the net fair
value, or surplus, of our duration managed assets and liabilities based on our
targeted mismatch of zero, but could be -/+ $3.1 million based on our
operational tolerance of 90 days.

The risk management method for non-guaranteed rate products, such as whole life
insurance or single premium deferred annuities is less formulaic, but more
complex, due to the less predictable nature of the liability cash flows. For
these products, we manage interest rate risk based on scenario-based portfolio
modeling that seeks to identify the most appropriate investment strategy given
probable policyholder behavior and liability crediting needs under a wide range
of interest rate environments. As of September 30, 2002 and December 31, 2001,
the fair value of invested assets supporting liabilities managed under this
modeling was approximately $2,985.3 million and $2,680.0 million, respectively.
A rate shock (as defined above) would decrease the fair value of these assets by
$99.9 million, which we estimate would be offset by a comparable change in the
fair value of the associated liabilities, thus minimizing the impact on surplus.


                                       40
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

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'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 that are
managing interest rate risk as of September 30, 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 September 30, 2002
                              ------------------------------------------------------------------------------
                                                                             Fair Value
                                                      ------------------------------------------------------

                                             Weighted
                                Notional   Average Term     -100 Basis                          +100 Basis
                                Amount       (Years)      Point Change (1)  As of 9/30/02   Point Change (1)
                              ------------------------------------------------------------------------------
                                             (in millions, except for Weighted Average Term)

<S>                            <C>              <C>           <C>             <C>                <C>
Interest rate swaps.......     $ 2,053.8        4.9           $ (84.9)        $ (53.5)           $ (21.0)
Futures contracts.........          13.0        5.6              (0.7)            0.1                0.8
Interest rate caps........         239.4        5.1               2.3             2.0                2.8
Interest rate floors......         485.4        7.6              25.1            15.0                8.6
                              ------------            ------------------------------------------------------
    Totals................     $ 2,791.6        5.4           $ (58.2)        $ (36.4)          $   (8.8)
                              ============            ======================================================
</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.

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.


                                       41
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

ITEM 4. CONTROLS and PROCEDURES

      Our Chief Executive Officer and Controller have concluded, based on their
evaluation within 90 days of the filing date of this report, that our disclosure
controls and procedures are effective for gathering, analyzing and disclosing
the information we are required to disclose in our reports filed under the
Securities Exchange Act of 1934. There have been no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of the previously mentioned evaluation.

PART II  OTHER INFORMATION

ITEM 6. EXHIBITS and REPORTS on FORM 8-K

(a) Exhibits

NONE

b) Reports on Form 8-K.

      On August 14, 2002, the Company filed a Current Report on Form 8-K, dated
August 14, 2002, reporting under Item 9 thereof the Company's two signed forms
of Certification as required by Section 906 of the Sarbanes-Oxley Act of 2002
for the quarter ended June 30, 2002.

      On August 21, 2002, the Company filed a Current Report on Form 8-K, dated
August 21, 2002, reporting under Item 5 thereof a change in the Company's
counterparty and insurer financial strength ratings and the counterparty and
insurer financial strength ratings of the Company's parent, John Hancock Life
Insurance Company, as evaluated by Standard & Poor's Ratings Services as of
August 20, 2002.


                                       42
<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/ MICHAEL A. BELL
                                 -----------------------------------------------
November 14, 2002                Michael A. Bell
                                 Chairman and Chief Executive Officer


                                 By: /s/ EARL W. BAUCOM
                                 -----------------------------------------------
November 14, 2002                Earl W. Baucom
                                 Controller
                                 (Principal Accounting Officer)


                                       43
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                                 CERTIFICATIONS
                                 --------------

I, Michael A. Bell, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of John Hancock
      Variable Life Insurance Company;
2.    Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;
3.    Based on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      quarterly report;
4.    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:
      a)    designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared;
      b)    evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and
      c)    presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;
5.    The registrant's other certifying officers and I have disclosed, based on
      our most recent evaluation, to the registrant's auditors and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent function):
      a)    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and
      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and
6.    The registrant's other certifying officers and I have indicated in this
      quarterly report whether or not there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.

Date: November 14, 2002


By: /s/ MICHAEL A. BELL
-----------------------
Michael A. Bell
Chairman and Chief Executive Officer


                                       44
<PAGE>

                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                                 CERTIFICATIONS
                                 --------------

I, Earl W. Baucom, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of John Hancock
      Variable Life Insurance Company;
2.    Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;
3.    Based on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      quarterly report;
4.    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:
      a)    designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared;
      b)    evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and
      c)    presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;
5.    The registrant's other certifying officers and I have disclosed, based on
      our most recent evaluation, to the registrant's auditors and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent function):
      a)    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and
      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and
6.    The registrant's other certifying officers and I have indicated in this
      quarterly report whether or not there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.

Date: November 14, 2002


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


                                       45