Clients Scared of Volatility? MassMutual Has Something New for That

What You Need to Know

Some life insurers are emphasizing efforts to minimize sales of new life and annuity benefits guarantees.
A new MassMutual variable annuity supplies guaranteed cash flow through an optional lifetime withdrawal benefit.
Clients can increase the withdrawal amount by waiting longer to begin receiving withdrawals.

Massachusetts Mutual Life Insurance Company has come to stormy investment market waters with a product that offers stability.

MassMutual today introduced the MassMutual Envision Variable Annuity contract.

An optional MassMutual RetirePay rider can provide guaranteed lifetime withdrawal benefits.

Paul LaPiana, MassMutual’s head of product, said the new annuity and the benefit guarantee rider can help retirees supplement Social Security benefits with an additional source of predictable income.

“Retirement years can be filled with uncertainty,” LaPiana said. “Securing retirement income predictability with multiple guaranteed retirement income stream options can bring peace of mind and optimism.”

The Guarantee

MassMutual is promising to provide “an annual lifetime benefit amount” for clients who buy the new annuity with the RetirePay rider, and who allocate assets in a specified way. Guarantee users must choose from a relatively short list of sub-accounts. Some are managed by Fidelity, Invesco, Delaware Ivy, Janus Henderson and Pimco. Many are managed by MassMutual’s own asset management arm.

If a guarantee user meets the rider conditions, the annual lifetime benefit amount “will never lose value due to negative market performance,” MassMutual said in the product launch announcement

MassMutual has designed the contract for sale through agents who earn sales commissions.

The Charges

A summary prospectus for product indicates that, with an initial investment of $100,000, the annual base contract charge would be 1.31% of assets, and the annual cost of the investment options could range from 0.52% to 1.65%.

The total annual cost could range from $1,612 per year, with the cheapest funds and no RetirePay rider, up to $3,489 per year, with the most expensive funds and all available options.

Single-life asset withdrawal rates could range from 3.75% per year, for a 59.5-year-old who begins collecting immediately, to 7.7%, for a 77-year-old annuity holder who has owned the annuity for at least 10 years.

The RetirePay rider now costs 1.45% for a single life. MassMutual said it can increase the charge to a maximum of 2.5%.