MassMutual Will Offer $1 Billion In Free Life Insurance To Poor Parents
Massachusetts Mutual Life Insurance Company, Springfield, Mass., is setting up a free life insurance program to protect the ability of children of low-income workers to attend college.
Under the program, which it calls LifeBridge, MassMutual says it will award up to 20,000 term life policies with $50,000 death benefits to qualified working parents, for a total face value of $1 billion. MassMutual says it will pay the premiums for each policy for up to 10 years.
If an insured parent dies during the 10-year term, MassMutual will pay the death benefit to a trust established for the children named as beneficiaries. The trust will use the cash solely to pay for tuition, books and other school expenses.
MassMutual expects the program to last for five years. It will be available through four nonprofit groups in Connecticut, Massachusetts, New Jersey and North Carolina initially and expanded to the rest of the nation next year, MassMutual says.
Robert J. OConnell, chairman, president and CEO of MassMutual, says LifeBridge grew out of conversations he had with several company executives earlier this year.
“I challenged a couple of our people to see if we could come up with a program to make life insurance available” to poor working parents, he explains.
OConnell points to an American Council of Life Insurers survey that found that low-income parents worry more about the need for life insurance than any other economic group, but also have the least amount of it.
Offering free insurance to those who cant afford it “reinforces the idea that life insurance is an extraordinarily valuable asset,” he says.
He estimates the program will cost the company “many millions of dollars” by the time the last policy expires.
MassMutual is offering the insurance to healthy parents or guardians of children between the ages of 18 and 39. Applicants must be their households primary financial providers, show they have been working steadily for at least two years and qualify for the federal earned income tax credit.
“We are very proud of the program, and the industry should be proud,” OConnell says. “At a time when there is far too much preoccupation with companies that dont act responsibly, I think this will bring a little more attention to those that do.”
Jack Dolan, a spokesman for ACLI in Washington, says LifeBridge “seems like its getting coverage to people who need it. Its innovative and exciting.”
Local offices of the Urban League, YMCA, Habitat for Humanity, Big Brothers Big Sisters and Boys and Girls Clubs will distribute applications for the insurance.
Maidine Fails, president of the Urban League of Central Carolinas in Charlotte, N.C., says she expects LifeBridge will attract much interest.
“This is targeted to people who work very hard and often have barely enough money to meet basic needs and to whom insurance coverage is kind of a luxury,” Fails says.
Laura Green, executive director of Nutmeg Big Brothers Big Sisters in Hartford, also thinks it will be well received. “Life insurance is an opportunity unavailable to many people who are devoted to their children.”
Henry Thomas, president and CEO of the Urban League of Springfield, Mass., says his office has been receiving “a steady stream of calls” from interested parents since MassMutual announced the program.
When the program is introduced nationally, the League also intends to publicize the insurance as part of its African-American Achievement project, which is aimed at advancing college education for African-Americans and sponsored by Eli Lilly and Company, Indianapolis, Thomas notes.
Reproduced from National Underwriter Life & Health/Financial Services Edition, September 23, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.