MassMutual Expands Two Flexible-Premium Deferred Variable Annuities
MassMutual Expands Two Flexible-Premium Deferred Variable Annuities.
Asset Allocation Program and Certain Guarantees Enhanced.
(Springfield, Mass.) - Massachusetts Mutual Life Insurance Company (MassMutual) today announced several new enhancements within its MassMutual Transitions SelectSM and MassMutual EvolutionSM flexible-premium deferred variable annuities. Expanded asset allocation, guaranteed living/income and death benefit features are now available where approved, subject to state availability. Guarantees are contingent upon the claims-paying ability of the issuing company.
These developments follow a recent introduction of two new retirement income products – all aimed at offering increased flexibility for consumers.
“Amid a rising cost of living, market volatility, fewer pensions and the risk of outliving savings – now more than ever, today’s pre-retirees need greater control, options and perhaps even some assurance as they prepare for retirement,” said Richard LaVoice, national sales manager for MassMutual’s Retirement Income division. “We’re here to help you get there with a range of flexible, needs-based solutions designed for long-term investing followed by sustainable retirement income. Enhancements to asset allocation, guaranteed living and death benefit features within these two annuities add flexibility, confidence and income protection for investors and beneficiaries.”
Custom Allocation Choice
MassMutual Transitions Select and MassMutual Evolution now offer Custom Allocation Choice within new and existing contracts for investors seeking diversification, but with greater flexibility to invest in certain investment choices within set parameters rather than a prearranged model lineup. With Custom Allocation Choice, investors’ assets automatically rebalance each quarter according to the program’s parameters. While an asset allocation program seeks to provide consistent return over time, there is no assurance investors will not lose money or experience some volatility.
Both MassMutual Transitions Select and MassMutual Evolution now also offer two new optional benefits, both available at an additional charge and prior to age 76 (based on the “annuitant” or recipient designated for annuity income payouts): MassMutual Guaranteed Income Plus 5SM [current/maximum annual charge (deducted quarterly in arrears): 0.65%/1.50% of the guaranteed minimum income benefit value (GMIB value)] or MassMutual Guaranteed Income Plus 6SM (0.80%/1.50%). Each is designed for retirement income today (through withdrawals) or tomorrow (via fixed or variable annuity income payments). Available within new contracts only, both replace the GMIB rider previously sold and are backed by the financial strength of MassMutual and its reputation for its ability to pay claims.
Guaranteed Income Plus 5 and Guaranteed Income Plus 6 provide a GMIB value which is a minimum annuity income payment amount. The GMIB value is equal to purchase payments made during the first two contract years adjusted for any withdrawals and increased by a compound annual interest rate of five or six percent for Guaranteed Income Plus 5 and 6, respectively. From the second contract anniversary prior to age 76 (based on the annuitant), the benefit may be reset to equal current contract anniversary value for greater income potential accompanied by a new 10-year wait before electing an annuity payout. The maximum GMIB value for Guaranteed Income Plus 5 is 200% of purchase payments in the first two years or from the most recent reset, adjusted for withdrawals, while Guaranteed Income Plus 6 maximum is 250%.
Withdrawals equal to interest earned on the GMIB value can start immediately. These withdrawals reduce the GMIB value dollar for dollar, while any withdrawal exceeding this amount will trigger a proportionate reduction of the GMIB value and the maximum GMIB value. Withdrawals from a tax-deferred investment may be subject to a contingent deferred sales charge (CDSC). Liquidated earnings are subject to ordinary income tax and, if taken before age 59½, a 10% federal income tax penalty.
If an investor’s benefit exceeds their contract value, it may be applied to a fixed or variable annuity income payment option beginning 10 years after purchase or last reset, provided the annuitant is 60 to 85 years old. Separately, annuity payments can be received sooner or later subject to terms and current value of the contract.
Either benefit can be elected, but only at contract issue; however, both may be canceled anytime. Participation in available Asset Allocation Programs – Directed Allocation Models or Custom Allocation Choice – is required. However, for Guaranteed Income Plus 6, Directed Allocation Model E is unavailable and 20% or more must be allocated to fixed income via Custom Allocation.
Basic Death Benefit
MassMutual has also modified its standard death benefit within new MassMutual Transitions Select and MassMutual Evolution contracts going forward. If contract owners die during their annuity’s asset accumulation phase, the new standard death benefit backed by MassMutual and available under age 76 (based on the “owner” or purchaser of these two contracts), guarantees beneficiaries the greater of either contract value or purchase payments, less any withdrawal adjustment and applicable charges. Alternative death benefits are available for added cost (both annuities) or credit (MassMutual Transitions Select annuity only).
MassMutual Transitions Select may be appealing as an added retirement investment tool with efficient accumulation potential given its relatively low total annual costs according to data as of August 21 2007 from VARDS, a product information source for variable annuities. Alternatively, MassMutual Evolution can encourage long-term savings, but may appeal to investors nearing retirement who want income now or later. MassMutual also offers no-CDSC, simplified, fixed-deferred, and immediate annuities; and a bundled investment advisory program and IRA with mutual fund model portfolios and a multi-premium lifetime income annuity.
A variable annuity is a long-term investment where all interest, dividends and capital gains accumulate tax-deferred. Variable annuities contain both investment and insurance components and have fees and charges, including mortality and expense, administrative and underlying fund expenses. Taxable withdrawals are subject to ordinary income tax and if taken prior to age 59½, a federal income tax penalty may apply. Variable annuities do not provide any additional tax advantage when used to fund a qualified plan. Investors should consider buying a variable annuity to fund a qualified plan for the annuity’s additional features such as lifetime income payments and death benefit protection. Variable annuities are subject to market risk where the investment return and principal value of an investment will vary so that units, when redeemed, may be worth more or less than their original cost. Guarantees are contingent upon the claims-paying ability of the issuing company.
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