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

                                 _____________

                                   FORM 10-Q

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


For the Quarter Ended March 31, 1998         Commission File No. 33-62895
-------------------------------------------------------------------------

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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) been subject to such filing requirements
for the past 90 days.

                              Yes X    No 
                                  -       -  

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

                                      Shares Outstanding
              Class                   at March 31, 1998    
              -----                   ------------------   
<S>                                   <C> 
     common stock,                           50,000     
     $50 par value
</TABLE> 
<PAGE>
 
                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
                  --------------------------------------------
                                   FORM 10-Q
                     FOR THE QUARTER ENDED MARCH 31, 1998

                               TABLE OF CONTENTS

                                                                      Page
                                                                      ----

PART I.   FINANCIAL INFORMATION

Item 1.   Unaudited Financial Statements
<TABLE>
<CAPTION>
<S>                                                     <C> 
          Statements of Financial 
          Position as of March 31, 1998 
          and December 31, 1997                         . . . . . . . .  2
 
          Statements of Operations    
          and Unassigned Deficit 
          for the Three Months Ended      
          March 31, 1998 and 1997                       . . . . . . . .  3
 
          Statements of Cash Flows
          for the Three Months Ended
          March 31, 1998 and 1997                       . . . . . . . .  4
 
          Statements of Stockholder's Equity
          for the Three Months Ended
          March 31, 1998 and 1997                       . . . . . . . .  5
 
          Condensed Notes to Financial
          Statements                                    . . . . . . . .  6
 
Item 2.   Management's Discussion
          and Analysis                                  . . . . . . . .  7
 

PART II   OTHER INFORMATION

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

</TABLE>
SIGNATURES

        
<PAGE>
 
                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                        STATEMENTS OF FINANCIAL POSITION


<TABLE>
<CAPTION>
                                                                       (Unaudited)
                                                                         March 31    December 31
                                                                           1998          1997
                                                                      ------------------------------                    
<S>                                                                     <C>          <C>
                                                                               (In Millions)
 
ASSETS
  Bonds                                                                   $1,138.1      $1,092.7
  Preferred stocks                                                            21.2          17.2
  Common stocks                                                                2.5           2.3
  Investment in affiliates                                                    80.9          79.1
  Mortgage loans on real estate                                              281.6         273.9
  Real estate                                                                 39.8          39.9
  Policy loans                                                               113.8         106.8
  Cash and temporary cash investments                                         17.9         143.2
  Premiums due and deferred                                                   33.0          33.8
  Investment income due and accrued                                           28.1          24.7
  Other general account assets                                                89.3          16.8
  Assets held in separate accounts                                         5,378.9       4,691.1
                                                                      ------------------------------                    
                                                     TOTAL ASSETS         $7,225.1      $6,521.5
                                                                      ==============================
 
OBLIGATIONS AND STOCKHOLDER'S EQUITY
 
OBLIGATIONS
  Policy reserves                                                         $1,279.7      $1,124.3
  Federal income and other taxes payable                                      30.8          36.1
  Other accrued expenses                                                     189.6         335.1
  Asset valuation reserve                                                     19.9          18.6
  Obligations related to separate accounts                                 5,373.2       4,685.7
                                                                      ------------------------------                    
                                                TOTAL OBLIGATIONS          6,893.2       6,199.8
 
STOCKHOLDER'S EQUITY
  Common Stock, $50 par value; authorized 50,000
    shares; issued and outstanding 50,000 shares                               2.5           2.5
  Paid-in capital                                                            377.5         377.5
  Unassigned deficit                                                         (48.1)        (58.3)
                                                                      ------------------------------                    
 
                                       TOTAL STOCKHOLDER'S EQUITY            331.9         321.7
                                                                      ------------------------------                    
 
                       TOTAL OBLIGATIONS AND STOCKHOLDER'S EQUITY         $7,225.1      $6,521.5
                                                                      ==============================
</TABLE>



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

                STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT


                                                               (Unaudited)
                                                            Three months ended
                                                                 March 31
                                                          ---------------------
                                                              1998       1997
                                                              ----       ----
                                                               (IN MILLIONS)

INCOME
 Premiums                                                     $345.1    $184.0
 Net investment income                                          29.7      20.1
 Other, net                                                    114.9      81.0
                                                          ---------------------
                                                               489.7     285.1
 
BENEFITS AND EXPENSES
 Payments to policyholders and beneficiaries                    71.8      57.6
 Additions to reserves to provide for future
  payments to policyholders and beneficiaries                  335.5     157.1
 Expenses of providing service to
  policyholders and obtaining new
  insurance                                                     57.6      48.8
 State and miscellaneous taxes                                   8.2       4.8
                                                          ---------------------
                                                               473.1     268.3
                                                          ---------------------
 
           GAIN FROM OPERATIONS BEFORE
          FEDERAL INCOME TAXES AND NET
         REALIZED CAPITAL GAINS (LOSSES)                        16.6      16.8
 
Federal income taxes                                             7.8       9.4
                                                          ---------------------
        GAIN FROM OPERATIONS BEFORE NET
          REALIZED CAPITAL GAINS (LOSSES)                        8.8       7.4
 
Net realized capital gains (losses)                             (0.5)      0.2
                                                          ---------------------
                                  NET GAIN                       8.3       7.6
 
Unassigned deficit at beginning of period                      (58.3)    (96.9)
Net unrealized capital gains (losses) and
  other adjustments                                              2.8       1.0
Other reserves and adjustments                                (  0.9)   (  0.8)
                                                          ---------------------
 
    UNASSIGNED DEFICIT AT END OF PERIOD                       $(48.1)   $(89.1)
                                                          =====================



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

                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                 (Unaudited)
                                                                              Three months ended
                                                                                   March 31
                                                                           ------------------------
                                                                               1998       1997
                                                                               ----       ----
                                                                                 (In millions)
<S>                                                                        <C>           <C> 
Cash flows from operating activities:
 Insurance premiums                                                           $ 465.2    $ 187.7
 Net investment income                                                           26.2       19.1
 Benefits to policyholders and beneficiaries                                    (75.0)     (66.3)
 Dividends paid to policyholders                                                 (5.1)      (4.9)
 Insurance expenses and taxes                                                   (81.5)     (80.9)
 Net transfers to separate accounts                                            (192.5)    (144.3)
 Other, net                                                                       9.5       68.9
                                                                           ------------------------
                  NET CASH PROVIDED FROM (USED IN) OPERATIONS                   146.8      (20.7)
                                                                           ------------------------
 
Cash flows used in investing activities:
 Bond purchases                                                                (120.6)     (59.6)
 Bond sales                                                                      31.2       41.3
 Bond maturities and scheduled redemptions                                       50.8        8.3
 Bond prepayments                                                                 0.0       12.1
 Stock purchases                                                                 (5.5)      (7.5)
 Proceeds from stock sales                                                        1.4        3.0
 Real estate purchases                                                           (0.2)      (0.2)
 Real estate sales                                                               (0.1)       0.0
 Mortgage loans issued                                                          (20.2)     (31.8)
 Mortgage loan repayments                                                        13.4        8.9
 Other, net                                                                    (222.3)      19.5
                                                                           ------------------------
                        NET CASH USED IN INVESTING ACTIVITIES                  (272.1)      (6.0)
                                                                           ------------------------
 
                               DECREASE IN CASH AND TEMPORARY
                                             CASH INVESTMENTS                  (125.3)     (26.7)
Cash and temporary cash investments at beginning of year                        143.2       31.9
                                                                           ------------------------
 
                          CASH AND TEMPORARY CASH INVESTMENTS
                                         AT THE END OF PERIOD                 $  17.9    $   5.2
                                                                           ========================
</TABLE>



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

                      STATEMENTS OF STOCKHOLDER'S EQUITY
 
<TABLE>
<CAPTION>
                                                     Common     Paid-in     Unassigned
                                                     Stock      Capital      Deficit      Total
                                                  -----------------------------------------------
                                                                 (in millions)
<S>                                               <C>           <C>         <C>          <C> 
For the three months ended March 31, 1997
(unaudited)
Balance at January 1, 1997                          $2.5        $377.5      $(96.9)      $283.1
1997 Transactions:
 Net gain                                                                      7.6          7.6
 Net unrealized capital gains and other
  adjustments                                                                  1.0          1.0
 Other reserves and adjustments                                              ( 0.8)       ( 0.8)
                                                  -----------------------------------------------
Balance at March 31, 1997                           $2.5        $377.5      $(89.1)      $290.9
                                                  ===============================================
 
For the three months ended March 31, 1998
(unaudited)
Balance at January 1, 1998                          $2.5        $377.5      $(58.3)      $321.7
1998 Transactions:
 Net gain                                                                      8.3          8.3
 Net unrealized capital gains and other
  adjustments                                                                  2.8          2.8
 Other reserves and adjustments                                               (0.9)        (0.9)
                                                  -----------------------------------------------
Balance at March 31, 1998                           $2.5        $377.5      $(48.1)      $331.9
                                                  ===============================================
</TABLE> 


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

CONDENSED NOTES TO FINANCIAL STATEMENTS
(unaudited)


NOTE 1--BASIS OF PRESENTATION

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

In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three months period ended March 31, 1998 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1998.


 
<PAGE>
 
Management Discussion and Analysis of Financial Condition and Results of
Operations

   Financial Condition

   As of March 31, 1998, total assets grew by 10.8% to $7,225.1 million, from
$6,521.5 million at December 31, 1997.  This increase is principally due to the
growth in the separate accounts where assets increased by 14.7% during 1998 from
$4,691.1 million at December 31, 1997, to $5,378.9 million at March 31, 1998.
Total obligations grew by 11.2% to $6,893.2 million from $6,199.8 million at
December 31, 1997. As with assets, most of this growth was in the separate
accounts, which grew by 14.7% during 1998, from $4,685.7 million at December 31,
1997, to $5,373.2 million at March 31, 1998.  Separate account assets and
liabilities consist primarily of the fund balances associated with variable life
and annuity business. The asset holdings include fixed income, equity growth,
total return real estate, and international mutual funds, with liabilities
representing amounts due to policyholders. Total stockholder's equity grew by
3.2% from $321.7 million at December 31, 1997, to $331.9 million at March 31,
1998.

   Investments

   The Company continues to address industry wide issues of asset quality and
liquidity that have emerged in recent years. JHVLICO's bond portfolio is highly
diversified. It maintains  diversity by geographic region, industry group, and
limiting the size of  individual investments relative to the total portfolio. In
recent years, the Company invested new money predominately in long-term
investment grade corporate bonds as a means of lowering the relative proportion
of assets invested in commercial mortgages. As a result, the Company's holdings
in investment (NAIC SVO classes 1 and 2) and medium (NAIC SVO class 3) grade
bonds are 89.5% and 7.4%, respectively, of total general account bonds at March
31, 1998. The corresponding percentages at December 31, 1997 were 90.2% and
7.5%, respectively.  Most of the medium grade bonds are private placements that
provide long-term financing for medium size companies. These bonds typically are
protected by individually negotiated financial covenants and/or collateral.  At
March 31, 1998, the balance (NAIC SVO classes 4, 5, and 6) of 3.1% of total
general account bonds consists of lower grade bonds and bonds in default.  Bonds
in default represent 0.3% of total general account bonds.

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

   The Company has outstanding commitments to purchase long-term bonds and issue
real estate mortgages totaling $51.4 million and $49.5 million, respectively at
March 31, 1998. The corresponding amounts at December 31, 1997 were $168.6
million and $28.3 million, respectively. The Company monitors the
creditworthiness of borrowers under long-term bond commitments and requires
collateral as deemed necessary.  The majority of these commitments expire in
1998.

   Reserves and Obligations

   The Company's obligations principally consist of aggregate reserves for life
policies and contracts of $1,279.7 million in the general account and
obligations of $5,373.2 million in the separate accounts at March 31, 1998.  The
corresponding amounts at December 31, 1997 were $1,124.3 million and $4,685.7
million, respectively. These liabilities are computed in accordance with
commonly accepted actuarial standards and are based on actuarial assumptions
which are in accordance with, or more conservative than, those called for in
state regulations. All reserves meet the requirements of the insurance laws of
the Commonwealth of Massachusetts. Intensive asset adequacy testing was
performed in 1997 for the vast majority of reserves. During 1997, the Company
refined certain assumptions inherent in the calculation of reserves related to
AIDS claims under individual life policies resulting in a $6.4 million increase
in stockholder's equity at December 31, 1997. During the first quarter of 1998,
there was no refinement of reserves. Adequacy testing is done annually and
generally performed in the fourth quarter.

   The Company's investment reserves include the Asset Valuation Reserve ("AVR")
required by the NAIC and state insurance regulatory authorities. The AVR is
included in the Company's obligations. At March 31, 1998, and December 31, 1997,
the AVR was $19.9 million and $18.6 million, respectively. Since 1995, there
have been no voluntary contributions made to the AVR.  Management believes the
Company's level of reserve is adequate.

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

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

   The Interest Maintenance Reserve ("IMR") captures realized capital gains and
losses (net of taxes) on fixed income investments (primarily bonds and mortgage
loans) resulting from changes in interest rate levels.  These amounts are not
reflected in the Company's capital account and are amortized into net investment
income over the estimated remaining lives of the investments disposed.  At March
31, 1998 and December 31, 1997 the balance of the IMR was $8.8 million and $7.8
million, respectively. The impact of the IMR on the surplus of the Company
depends upon the amount of future interest related capital gains and losses on
fixed income investments.

   Results of Operations

    For the quarter ending March 31, 1998, the net gain from operations was $8.3
million, $0.7 million higher than the same period during 1997.

For the quarter ending March 31, 1998, total revenues increased by 71.8% or
$204.6 million to $489.7 million as compared to the same period in 1997. For the
quarter ending March 31, 1998, premiums, net of premium ceded to reinsurers,
increased by 87.6% or $161.1 million to $345.1 million as compared to the same
period during 1997. Of this increase, $130.0 million was due to sales of
corporate owned life insurance. For the quarter ending March 31, 1998, net
investment income increased by 47.8% or $9.6 million to $29.7 million as
compared to the same period during 1997. This increase can be attributed to an
increase in gross income on long-term bonds for the three month period ending
March 31, 1998 of $7.6 million. This increase was the result of an increased
asset base. For the quarter ending March 31, 1998, other income increased by
41.9% or $33.9 million to $114.9 million as compared to the same period in 1997.
This increase was primarily attributable to the increase in commission and
expense allowances and reserve adjustments on reinsurance ceded.

For the quarter ending March 31, 1998 total benefits and expenses increased by
76.3% or $204.8 million to $473.1 million as compared to the same period during
1997. For the quarter ending March 31, 1998, benefit payments and additions to
reserves increased by 89.7% or $192.6 million to $407.3 million as compared to
the same period during 1997. For the quarter ending March 31, 1998, insurance
expenses increased by 18.0% or $8.8 million to $57.6 million as compared to the
same period during 1997.

   Liquidity and Capital Resources

   The Company's liquidity resources at March 31, 1998 include cash and short-
term investments of $17.9 million, public bonds of $611.7 million, and
investment grade private placement bonds of $450.5 million.  The corresponding
amounts at December 31, 1997 were $143.2 million, $561.2 million, and $461.7
million, respectively.  In addition, the Company's separate accounts are highly
liquid and are available to meet most outflow needs for variable life insurance.

   Management believes the liquidity resources above of $1,080.1 million as of
March 31, 1998, strongly position the Company to meet all its obligations to
policyholders and others.  Generally, the Company's financing needs are met by
means of funds provided by normal operations.  As of March 31, 1998 and year end
1997, the Company had no outstanding borrowings from sources outside its
affiliated group.

   Total surplus, or stockholder's equity, including the AVR, is $351.8 million
as of March 31, 1998 compared to $340.3 million as of December 31, 1997. The
current statutory accounting treatment of deferred acquisition cost ("DAC")
taxes results in an understatement of the Company's surplus, which will persist
during periods of growth in new business written.  These taxes result from
federal income tax law that approximates acquisition expenses and then spreads
the corresponding tax deduction over a period of years.  The result is a DAC tax
which is collected immediately and subsequently returned through tax deduction
in later years.

   Since it began its operations, the Company has received a total of $381.8
million in capital contributions from John Hancock, of which $377.5 million is
credited to paid-in capital and $2.5 million is credited to capital stock as of
March 31, 1998.  In 1993, $1.8 million of capital was returned to John Hancock.
To support the Company's operations, for the indefinite future, John Hancock is
committed to make additional capital contributions if necessary to ensure that
the Company maintains a positive net worth.  The Company's stockholder's equity,
net of unassigned deficit, was $331.9 million at March 31, 1998 and $321.7
million at December 31, 1997.

   In December 1992, the NAIC approved risk-based capital ("RBC") standards for
life insurance companies as well as a Model Act (the "RBC Model Act") to apply
such standards at the state level.  The RBC Model Act provides that life
insurance companies must submit an annual RBC report which compares a company's
total adjusted capital (statutory surplus plus AVR, voluntary investment
reserves, and one-half the apportioned dividend liability) with its risk-based
capital as calculated by an RBC formula, where the formula takes into account
the risk characteristics of the company's investments and products.  The formula
is to be used by insurance regulators as an early warning tool to identify
possible weakly capitalized companies for purposes of initiating further
regulatory action. The formula is not intended as a means to rank insurers. The
RBC Model Act gives state insurance commissioners explicit regulatory authority
to require various actions by, or take various actions against, insurance
companies whose total adjusted capital does not meet the RBC standards.  The RBC
Model Act imposes broad confidentiality requirements on those engaged in the
insurance business (including insurers, agents, brokers and others) as to the
use and publication of RBC data.  As of March 31 1998, the Company's total
adjusted capital as defined by the NAIC was well in excess of RBC standards.
<PAGE>
 
   Year 2000 Impact

The Company relies on John Hancock, its parent company, for information
processing services.  John Hancock has developed a plan to modify or replace
significant portions of its computer information and automated technologies so
that its systems, including those relied upon by the Company, will function
properly with respect to the dates in the year 2000 and thereafter.  The
Company, along with John Hancock, presently believes that with modifications to
existing systems and conversions to new technologies, the year 2000 will not
pose significant operational problems for the computer systems upon which the
Company relies.  However, if certain modifications and conversions are not made,
or are not completed timely, the year 2000 issue could have an adverse impact on
the operations of the Company.

John Hancock as early as 1994 had begun assessing, modifying and converting the
software related to its significant systems and has initiated formal
communications with significant business partners and customers to determine the
extent to which interface systems are vulnerable to those third parties' failure
to remediate their own year 2000 issues.  While John Hancock is developing
alternative third party processing arrangements as it deems appropriate, there
is no guarantee that the systems of other companies on which John Hancock's
systems rely will be converted timely or will not have an adverse effect on John
Hancock's systems, including those upon which the Company relies.

John Hancock expects the project to be substantially complete by early 1999.
This completion target was derived utilizing numerous assumptions of future
events, including availability of certain resources and other factors.  However,
there can be no guarantee that this completion target will be achieved, that the
steps taken will be sufficient, or that actual results may differ materially
from those anticipated.
<PAGE>
 
PART II.  OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits
 
               27.  Financial Data Sheet

          (b)  Reports on Form 8-K

               None



                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

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

Date:  May 14, 1998           /s/ Thomas J. Lee
       ------------           ----------------------------
                              Vice President


Date:  May 14, 1998           /s/ Patrick F. Smith
       ------------           ----------------------------
                              Controller