Overview of the Whole Life Legacy Product Portfolio
Participating whole life insurance from MassMutual® offers a combination of features and benefits that differentiates it from most other financial products. Consider what MassMutual whole life insurance offers your clients:
Permanent Life Insurance Protection
Whole life is designed to provide lifetime protection with guaranteed level premiums.
Over time, the policy builds cash value, which is guaranteed to increase each year and will never decline in value due to market conditions.
Policyowners are eligible to receive annual dividends, which are not guaranteed. You may receive dividends in cash, use them to reduce your out-of-pocket premiums or increase your life insurance protection and cash value.
Income Tax Advantages
Whole life insurance provides valuable income tax advantages that include:
- An income tax-free death benefit.
- Tax-deferred cash value accumulation.
- Tax-advantaged access to cash values.1
MassMutual whole life insurance offers optional benefits through policy riders2 designed to help your clients:
- Get the coverage they need, with a premium they can afford.
- Guarantee they can purchase additional life insurance in the future.
- Keep their coverage in place if they become disabled and are unable to pay premiums.
- Use their policy to help pay for long term care.
In addition, certain Legacy policies allow face amount increases. This feature supports term conversions and Guaranteed Insurability Rider (GIR) option increases within the original policy.
MassMutual’s Whole Life Legacy (Legacy Series) portfolio offers a number of policies to meet the needs of a variety of prospects.
Whole Life Legacy 100SM
Whole Life Legacy 100 (Legacy 100) is our lowest premium whole life policy, with level premiums payable to age 100. Face amount increases are available with Legacy 100.
Whole Life Legacy 65SM
Whole Life Legacy 65 (Legacy 65) offers level premiums payable to age 65, after which the policy is guaranteed to be paid up. Face amount increases are available with Legacy 65.
Whole Life Legacy 10/12/15/20 PaySM
Whole Life Legacy (Legacy) 10/12/15/20 Pay policies have premiums payable for 10, 12, 15, or 20 years. In general, these policies build cash value more quickly than Legacy Series policies with longer premium paying periods.
Legacy 10 Pay policy premiums exceed the TAMRA 7-pay premium limits and are Modified Endowment Contracts. For additional information refer to The Income Taxation of Life Insurance (LI1012).
MassMutual Whole Life 10-Pay On Coverpath
New 7702 Product Available on Coverpath Only – July 2021 Reprice: A repriced version of MassMutual Whole Life 10 will be made available on July 1, 2021 and will replace the product launched on June 20, 2020 for policies submitted through Coverpath. Any Coverpath applications submitted on or after this date will receive the new, repriced version of the product.
Differences between the repriced version of the MassMutual Whole Life 10 Pay product as compared to the version of the product that launched in June of 2020 are as follows:
- Premiums for the repriced version are significantly higher.
- In general, the higher premiums will not cause policies to become Modified Endowment Contracts (MECs) because of changes to Internal Revenue Code Section 7702 that affect MEC/7-Pay limits. This is the first product MassMutual has launched that is designed to comply with these changes.
- Guaranteed cash values per dollar of face amount will increase significantly.
- Non-guaranteed dividends and non-guaranteed internal rates of return (IRR) on cash value are expected to increase significantly.
- Non-guaranteed internal rates of return on death benefit are expected to be lower, especially in earlier policy years, but are expected to become similar, and in some cases surpass IRRs on the current version in later policy years.
- The adjustable loan rate will have a floor of 3.00%, whereas the current product has a floor of 5.00%.
Please note that the June 20, 2020 version of Whole Life Legacy 10 Pay will remain unchanged and available beyond July 1, 2021 and until that product is repriced in November of 2021.
Whole Life Legacy High Early Cash ValueSM
Whole Life Legacy High Early Cash Value (Legacy HECV) was designed for businesses to use in connection with selective benefit programs for key employees and executives.
Premiums for Legacy HECV are payable to age 85. Face amount increases are available with Legacy HECV.
- 1Distributions under the policy (including cash dividends and partial/full surrenders) are not subject to taxation up to the amount paid into the policy (cost basis). If the policy is a Modified Endowment Contract, policy loans and/or distributions are taxable to the extent of gain and are subject to a 10% tax penalty if the policyowner in under age 59½. Access to cash values through borrowing or partial surrenders will reduce the policy’s cash value and death benefit, increase the chance the policy will lapse, and may result in a tax liability if the policy terminates before the death of the insured.
- 2Riders are available at an additional cost or the policyowner will incur an additional charge when the rider is exercised.
Whole Life Legacy Series products are level premium, participating life insurance policies that provide a level, guaranteed face amount and guaranteed cash value accumulation for the lifetime of the insured. Learn more about how each policy differs in the chart that follows:
Qualified — ages 17 to 90
Qualified — ages 17 to 60
Qualified — ages 17 to 75
- Waiver of Premium Rider (WP)
- Additional Life Insurance Rider (ALIR)#
- Planned Additional Life Insurance Rider (PALIR)#
- Life Insurance Supplement Rider (LISR)#+
- LTCAccess Rider (LTCR)**
- Renewable Term Rider (RTR)**
- Guaranteed Insurability Rider (GIR)
- Transfer of Insureds Rider (TIR)
- Accelerated Death Benefit Rider (ABR)
- Yearly Term Purchase Rider (YTP)
- Ultra Preferred Non-Tobacco
- Select Preferred Non-Tobacco
- Select Preferred Tobacco
- Cash (CS)
- Reduce Premiums (RP) — excess to cash (RPC), excess to paid-up additions (RPD)
- Paid-up additions (PD)
- Accumulation (DA)
- LISR/Flex (FLX)
- One-year Term (also see YTP rider)† — excess to cash (TCS), excess to paid-up additions (TPD), excess to reduce premium and then to cash (TRP)
- Reduce Loan (RN)†
- Reduce Loan Interest (RI)†
Face Amount Increases:
Attained age face amount increases are available on Whole Life Legacy 100, Legacy 65, and Legacy HECV policies. The ability to increase coverage is a relatively unique feature for participating whole life insurance, and face amounts may be increased without new evidence of insurability in the case of term conversions or Guaranteed Insurability Rider (GIR) option increases. Here are some important details about face amount increases:
- Face amount increases are accomplished by issuing additional insurance coverage segments, each with a distinct issue age (age nearest on effective date of increase), risk class and premium.
- Each coverage segment will have its own set of dividends that varies by issue age and duration. Dividends will be prorated based on the face amount up to and after the date of the increase.
- Increases must be requested in writing.
- Increases become effective on the date the Home Office approves the application. The contestable and suicide periods begin again (for the new segment only) on the effective date of the increase.
- Revised or additional policy specifications will be provided to the policyowner for attachment to the policy.
- First-year commission is paid on increases. The producer may be different from the original writing producer.
- Only one policy fee is charged, regardless of the number of coverage segments on a given policy.
- Increases may be done up to the policy anniversary date nearest the insured’s:
- 90th birthday on Legacy 100.
- 60th birthday on Legacy 65.
- 75th birthday on Legacy HECV.
- If an increase causes the total coverage amount to cross into a new policy size band, all coverage segments will be moved to that band.
- If new evidence of insurability is provided, all segments will be affected by a risk class improvement, but only the new segment will be affected by a worse risk class.
- Increase amounts under $50,000 can only be classified as Non-Tobacco or Tobacco.
- The minimum increase amount is $25,000. Term conversions or GIR option increases between $1,000 and $25,000 will require a new Legacy 100 policy to be issued. For qualified Legacy 100 policies only, the minimum increase amount is $10,000.
- If the policy has waiver of premium, the increase must also have waiver of premium.
Face Amount Decreases:
The face amount may be decreased at any time. Here are some details about face amount decreases:
- Decreases must be requested in writing and become effective on the date the Home Office approves the request. If the face amount is changed, we will send the owner any revised or additional policy specifications for attachment to the policy.
- MEC testing and overloan testing will occur before any face decrease becomes effective. The amount of cash value to be released and the new premium will also be calculated.
- The base policy face amount remaining after any decrease cannot be less than the minimum face amount of the policy. All riders continue to be subject to stated minimums.
- Decreases in face amount are first taken from the most recent increase(s), if any.
- Dividends are calculated pro rata on active segments using the face amount of those segments at the time the dividend is paid.
- The total base face amount after a decrease will determine the policy face amount band.
MEC Considerations for Face Amount Decreases
Federal tax law identifies a Modified Endowment Contract (MEC) as a life insurance policy with premium payments that have exceeded certain limits. Once classified as a MEC, a policy will always be a MEC. Partial surrenders and loans from a MEC are taxed as gain first and may be subject to a 10 percent tax penalty if the policyowner is under age 59½.
A face amount decrease may result in a retroactive reduction in the MEC limit, causing previously paid premiums to exceed the reduced MEC limit. Limited payment products, such as Legacy 12, 15 and 20 Pay are more vulnerable to becoming MECs because their annual premium requirements are quite large and often approach the MEC limit. For this reason, a face amount reduction on these policies is more likely to result in the policy becoming a MEC, especially when the policy has ALIR or PALIR attached.
Dividends and Dividend Options
Dividends vary based on gender, risk class, face amount band, issue age, duration and tax-qualified status. Dividends are not guaranteed. Dividend options currently available include:
- Cash (CS)
- Paid-Up Additions (PD)
- Accumulation (DA)
- Reduce Premiums Excess to Cash (RPC)
- Reduce Premiums Excess to Paid-Up Additions (RPD)
- LISR/Flex (FLX)
- One-year Term — excess to cash (TCS), excess to reduce premiums (TRP), excess to paid-up additions (TPD)
- Reduce Loan (RN)
- Reduce Loan Interest (RI)
Alternate Payment Option (APO):
The Alternate Payment Option, or APO, is a strategy to reduce or eliminate out-of-pocket premiums while maintaining a policy’s status as an active premium-paying contract. Under APO, dividends and, if necessary, partial surrenders of accumulated paid-up additions (PUAs) are used to pay premiums. It’s important to note that a dividend schedule change may increase or decrease the number of out-of-pocket premiums required to keep the policy in force.
Under a full APO, the policy must be on annual billing mode and must have sufficient dividends, plus cash value from paid-up additions to carry the policy for a full year.
Under a partial APO, a portion of the premium is paid in cash and the balance is paid from dividends and cash value of paid-up additions. A policy on partial APO can be billed annually, semi-annually or quarterly but cannot be paid monthly (preauthorized check, or PAC). The policy will be removed from APO if it does not have sufficient funds for the APO portion of the premium payment.
APO with LISR and ALIR
For a policy that has LISR, only a full APO is available. APO will negatively impact the performance of LISR and could result in a permanent reduction in the LISR coverage. Under this strategy, any LISR payment will be set to zero, and we recommend that any ALIR payment be set to zero.
Even if a policy is being paid under an APO strategy, clients can still make out-of-pocket premium or rider payments (other than for LISR). APO is not available with group-billed policies.
1035 Exchanges and 1035 Exchanges with Loans:
1035 exchanges are permitted as well as 1035 exchanges with loans. 1035 exchange amounts can be applied toward base premium (including RTR, GIR and WP), ALIR and/or LISR purchase payments.
1035 funds received will be applied to base policy, ALIR and LISR premiums as directed. The ALIR and LISR expense charges will be deducted from amounts applied to ALIR and LISR premiums.
If the policy being surrendered has a loan, the loan may be carried over to the new policy with the 1035 exchange, under the following conditions:
- The minimum net cash amount received by MassMutual in connection with the 1035 exchange must be equal to or greater than $10,000.
- The amount of the loan transferred to MassMutual will be applied as an unscheduled Additional Life Insurance Rider (ALIR) payment, which may require additional evidence of insurability.
- The new policy, with the loan, must illustrate that it will not lapse based on current illustration assumptions.
- Producers must submit all 1035- related paperwork.
Note — If a policy with a loan is exchanged and the loan does not qualify for carry-over, the amount of the loan will be taxable to the extent of gain in the policy being exchanged.
The following riders are available with Legacy Series policies:
- Renewable Term Rider (RTR)4
- Guaranteed Insurability Rider (GIR)
- Accelerated Death Benefit for Terminal Illness Rider (ABR)
- Transfer of Insured Rider (TIR)
- Yearly Term Purchase Rider (YTP)
Some riders, such as the RTR, LISR and ALIR or PALIR, may require or allow premium payments beyond the base policy premium paying period.
Rider specifications and features outlined here only apply to Legacy Series policies. Some riders are not available in all states.
- 3For qualified LISR cases, contact the Home Office for approval and illustrations.
- 4Not available for qualified cases.
Waiver of Premium (WP)
The Waiver of Premium Rider (WP) provides that premiums for the base policy and all riders (excluding any ALIR or PALIR premium) will be waived if the insured becomes totally disabled, as defined in the rider. If the insured qualifies for the WP benefit, the policy cash value growth and dividend payments will be the same as if policyowner were paying premiums out of pocket.
- Rates vary by issue age, gender, risk class and band.
- Rider rates per $1,000 of face amount vary depending on if the rider coverage is for the base policy, RTR or GIR.
- For LISR, rider rates are per $100 of LISR premium.
- Premiums are payable to attained age 65 with the last premium due at attained age 64, or for the base policy premium payment period, if earlier.
- Available at or after issue.
- Rider terminates at age 65 (or at the end of the premium payment period, if sooner).
- Available on rated policies:
- No higher than Table F.
- Flat extra not greater than $10 per $1,000.
- May be rated 1.5, 2 or 3 times the standard rate.
- Rating may be permanent or temporary.
- The maximum limit is $8 million of total face amount for issue ages 0–49, and $5 million of total face amount for issue ages 50–59, but cannot exceed the Company retention limit.
- The maximum limit includes the base face amount, plus the LISR target amount, plus the RTR face amount.
- No face amount increase will be allowed if it pushes the sum of these over the limit.
- A new policy without the WP must be issued for any face amount that exceeds the maximum limit.
- Benefits may be paid beginning at attained age 5.
- The “own occupation” period of total disability is 60 months. The insured’s occupation is the insured’s usual work, employment, business or profession at the time total disability began.
- There is a six-month waiting period, after which premiums will be waived from the beginning of the waiting period.
- If the disability began prior to age 60, premiums will be waived during the continuance of disability.
- If disability began on or after the policy anniversary nearest age 60 but prior to the policy anniversary nearest age 65, premiums will be waived as long as the insured remains disabled, or until the policy anniversary nearest age 70 (if earlier).
- If LISR is attached, the greater of the LISR planned premium or recommended premium will be waived.
- If GIR options are exercised during disability, premiums are waived on the new coverage.
Additional Life Insurance (ALIR)
The Additional Life Insurance Rider (ALIR) allows the policyowner to purchase additional participating paid-up whole life insurance, also called paid-up additions (PUAs). ALIR increases the policy’s death benefit and accelerates cash value growth. Policyowners often choose to make Scheduled ALIR Payments in order to accumulate additional PUAs that they can later surrender and use the cash value to pay premiums.
Specific durations for Scheduled Payments can be set at issue, up to a maximum of age 90. For example, policyowners can apply to pay their Scheduled Payment for 10 years, which could result in less financial underwriting for larger cases. The amount and/or duration of Scheduled Payments can be increased, subject to satisfactory evidence of insurability and the maximum duration up to attained age 90.
There are limits on the amount of ALIR premium that we will accept at issue that are based on the whole life policy premium. For details regarding the current ALIR premium limits see the ALIR Fieldnet page. ALIR is available at or after issue. ALIR purchase payments may be increased, decreased or skipped and caught up within limits, and may be Scheduled or Unscheduled. ALIR premiums can result in the policy becoming a MEC.
- 0–90 for both Scheduled and Unscheduled Payments.
- Can be attached at or anytime after issue.
- For Legacy 15 Pay policies, only unscheduled ALIR is available to accommodate 1035 exchanges.
- Available with table ratings OR flat extras.
- Flat extras are converted to table ratings.
- Multiple ratings (table and flat extra together) are not allowed.
- ALIR is available with the LTCR. However, the ALIR face amount cannot be accelerated as rider benefits.
Premium Expense Charge:
- An expense charge of 7.5% is deducted from each ALIR premium payment.
- Billing frequency must be the same as the base policy.
- If money from a 1035 exchange is used for the first Scheduled ALIR payment, the billing frequency must be annual in the first year.
- Beginning with the next anniversary, ALIR will be changed automatically to match the policy’s billing frequency.
The Scheduled Payment is the amount elected in the application. The Scheduled Payment reflects the same modal factor as the base policy for any premium frequency other than annual. The Scheduled Payment will be the amount billed on each premium due date.
- The minimum initial Scheduled Payment amount is $300 annually ($153.51 semi-annually, $77.67 quarterly, $26.10 monthly).
- After the first coverage year, there is no minimum amount required.
- During the first policy year, or any time after the policy anniversary that the insured attains age 65, the Scheduled Payment will be reduced if an ALIR payment is less than the Scheduled Payment. The new Scheduled Payment amount will be equal to the lower payment made.
- After the first policy year and up to and including the policy anniversary upon which the insured attains age 65, the Scheduled Annual Payment for each year will be set to the lesser of:
- The Scheduled Annual Payment in effect on the day just prior to the policy anniversary date, or
- The highest amount of total rider payments made, less any applicable modal charges, in any one of the last three policy years.
Payments for an amount greater than the Scheduled Payment will be accepted without written request or evidence of insurability if all of the following conditions are met:
- The attained age of the insured is less than 65.
- The rider payment is made after the third policy year.
- The rider payment is made on a policy anniversary date.
- The increase in the Scheduled Payment over the prior year does not exceed the lesser of:
- 10% of the Scheduled Payment, or
- 10% of the total rider payments made in the prior policy year, less any applicable modal charges, and then modified to reflect the premium frequency in effect for the policy.
Total increases in the Scheduled Annual Payment obtained without evidence of insurability from the rider issue date may not exceed 100% of the initial Scheduled Annual Payment in effect when the rider was issued. For example, if the Scheduled Annual Payment is $1,000 at the time the rider is issued, the Scheduled Annual Payment may be increased by 10% each year up to $2,000 in total but not more, assuming the Scheduled Annual Payment has not decreased.
If the above conditions are not met, evidence of insurability is required to increase the Scheduled Payment amount.
Scheduled Payments will be used to purchase paid-up additions effective on the policy anniversary.
In addition to the Scheduled Payment, an Unscheduled “catch-up” Payment may be made without written request or evidence of insurability if all of the following conditions are met:
- The attained age of the insured is less than 65.
- The Unscheduled Payment is made after the third policy year.
- The Unscheduled Payment is made on the policy anniversary date.
- The Unscheduled Payment does not exceed the greater of:
- The difference between the total Scheduled Annual Payments for each of the prior two years (or if less, 200% of the lowest Scheduled Annual Payment in the prior two policy years) and the total payments made over the same period (payments adjusted for modal charges), or
- The difference between the Scheduled Annual Payment in effect for the last policy year (or if less, the Scheduled Annual Payment as of the policy anniversary date) and the total payments made over the same period (payments adjusted for modal charges).
An Unscheduled Payment will be used to purchase additional PUAs as of the effective date of the payment.
Order of Rider Payments:
Rider payments made on a policy anniversary date will be applied in the following order:
- | Scheduled Payment.
- | Unscheduled Payment without evidence of insurability.
- | Increase in Scheduled Payment without evidence of insurability.
- | Unscheduled Payment with evidence of insurability.
ALIR Premium Payment Examples:
In this example, the Scheduled Annual Premium is $10,000. ALIR premiums were paid for the first two years then skipped in years 3 and 4. The fifth ALIR payment may be increased to $30,000 without evidence of insurability to catch up the missed two year’s payments.
|Stop and Go (Catch-up) Example:|
|Policy year||ALIR Payment|
|A $30,000 ALIR payment can be made without underwriting.|
In the next example, the Scheduled Annual Payment is set at $10,000 when the policy is issued. After three years, the Scheduled Annual Payment is increased 10% each year over the previous Scheduled Annual Payment. The last payment can only be $20,000 because the maximum cumulative increase is limited to no more than 100% of the initial ALIR payment, which in this example is $10,000.
|Scheduled Payment Increase Example:|
|Policy year||ALIR Payment|
|Maximum ALIR payment without underwriting.|
- The ALIR dividend option will default to that of the base policy.
- If the base policy dividend option is FLEX (LISR), the ALIR dividend option will be paid-up additions.
- ALIR PUAs may be surrendered for their cash value at any time while the policy is in force.
- A partial surrender can be requested as a specific dollar amount or as a percent of the ALIR cash value.
- The minimum cash value that can be surrendered is $100.
- There is no fee to process a partial surrender and currently no limit on the amount of surrenders that can be made.
The rider will terminate if:
- The base policy terminates for any reason.
- The base policy is no longer in full force (Extended Term or Reduced Paid-Up).
- The face amount of all ALIR PUAs is surrendered.
- ALIR payments are not waived under the WP rider.
Automatic Premium Loan:
- ALIR payments cannot be made via the automatic premium loan provision.
Planned Additional Life Insurance (PALIR)
PALIR is a version of ALIR that provides additional flexibility. All of the provisions of ALIR apply to PALIR, except as outlined below.
Unlike ALIR, PALIR Premium Payments are not required to coincide with the base policy Premium Payments. PALIR premiums may be paid anytime during the policy year, over a specific number of years. The maximum PALIR payments allowed during the first two policy years will be the amount we approve at issue. Beginning in policy years three and later, the maximum PALIR payments allowed will be the greater of the total PALIR payments received during either of the previous two policy years. The catch-up provision and flexibility of scheduled ALIR are not available with PALIR.
- 0 – 90, PALIR premiums may be paid through age 90.
- PALIR is not available with Legacy 15 Pay policies.
- The minimum PALIR annual premium that may be applied for is $300.
- A maximum of three PALIR Premium Payments can be made during a policy year.
- The minimum PALIR payment we will accept is $25.
- This rider is only available at issue and is not available on policies with table ratings or flat extras.
- A policyowner who is paying PALIR premiums may apply to increase PALIR premiums or the payment duration after issue.
- When issued together, there are limits that apply to combined PALIR and ALIR premiums.
- PALIR has the same premium expense charge as ALIR — 7.5%.
Life Insurance Supplement (LISR)
The Life Insurance Supplement Rider (LISR) allows clients to get the coverage they need at a price they can afford by providing a level death benefit composed of one-year term insurance and paid-up additions. This is called the Target Face Amount (TFA). For policies that do not have the LTCR, LISR is available at or after issue. For policies with the LTCR, LISR is not available after issue. The LISR is funded with a combination of LISR premium payments and dividends. Since both the LISR term charges and dividends are not guaranteed, LISR premiums are not guaranteed. Each year, the mix of one-year term and paid-up additions (PUAs) changes — as the PUA face amount increases, the term decreases by the same amount, keeping the TFA level. At the crossover date, the paid-up additions balance equals the TFA, the term amount is zero and LISR is fully paid. LISR premiums may continue to be paid after the crossover date, subject to certain limitations.
The crossover target date can be selected by the policyowner and must be less than or equal to the insured’s attained age 100. A dividend reduction or increase in the LISR term rates may result in an increase in the crossover age, an increase in the LISR premium, or a decrease in TFA.
A whole life policy with the LISR will generally compete with a universal life insurance policy based on both premium and cash value accumulation. In addition, the term portion of the LISR may be converted to permanent insurance without evidence of insurability for up to 10 years, depending upon the issue age of the insured.
PUAs purchased by the base policy and LISR PUA dividends, LISR premium payments and, if applicable, a LISR lump sum purchase payment are all included in the LISR TFA. ALIR PUAs are not included in the LISR TFA.
- 0 – 90 with Whole Life Legacy 100
- 0 – 60 with Whole Life Legacy 65
- 0 – 75 with Whole Life Legacy 10, 12, 15 and 20 Pay
- 0 – 75 with Whole Life Legacy HECV
- LISR is not available with Legacy 15 Pay policies.
- LISR can be attached at or after issue, on policies that do not have the LTCR.
- If after issue, it must be attached on a policy anniversary.
- Minimum base face amount to attach LISR is $50,000.
- Available in the non-qualified market. For qualified LISR cases, contact the Home Office for approval and illustrations.
- Policy must have adjustable loan rate.
- Available with table ratings OR flat extras.
- Flat extras are converted to table ratings.
- Multiple ratings (table and flat extra together) are not allowed.
Premium Expense Charge:
- An expense charge is deducted from each LISR premium payment.
- Currently the expense charge is 8%, guaranteed not to exceed 10%.
- Billing frequency must be the same as the base policy.
- First-year lump sum payments, such as 1035 exchange payments, are allowed.
- The lump sum plus the modal LISR premiums cannot exceed the maximum LISR premium for the year.
Target Face Amount:
- The LISR Target Face Amount (TFA) (death benefit) equals the combination of:
- One-year term insurance.
- LISR premium payment PUAs.
- Base policy dividend PUAs.
- LISR dividend PUAs.
- Minimum initial TFA is $50,000.
- Maximum TFA is 300% of the base policy face amount, subject to underwriting and reinsurance.
- The lowest level modal LISR premium, payable for that year and all future years of the LISR premium paying period, which will result in a base and LISR PUA balance that is equal to the TFA on the crossover target date.
- The recommended premium is based on the current dividend schedule and the current LISR term rate.
- The policyowner is not required to pay the recommended premium, but failure to do so will very likely result in a permanent reduction in death benefit.
- While LISR premiums are being paid, the policy dividend option must be LISR/Flex.
- If the dividend option is changed, the rider becomes reduced paid in full.
- Once LISR is fully paid or reduced paid in full, any other dividend option may be elected.
- LISR has current and guaranteed maximum term rates.
- Current rates are used to determine the yearly term charges.
- Current rates may be decreased or increased at any time to reflect changes in mortality and expenses, but will never exceed the guaranteed rates.
- Current and guaranteed rates vary by issue age, duration, gender and risk class of the insured.
- The term portion of LISR may be converted in part or in total during the conversion period.
- The conversion period is the lesser of 10 years from the LISR effective date or to the insured’s attained age 65, if earlier.
- LISR may be converted to a non-qualified permanent policy with a level face amount, or to an increase segment on the base whole life policy.
- The LISR TFA will be reduced by the amount of term converted.
- During the LISR premium paying period, if a disability occurs and the base policy premiums are waived, the LISR premiums are waived.
- If the recommended premium is higher than the billed premium, the recommended premium will be waived.
- Changes to the LISR target payment period, crossover period and increases to the TFA are not allowed while premiums are being waived.
The 60-day letter is designed to provide the policyowner with advance notification of the options available on each policy anniversary.
The letter will be produced approximately 60 days prior to each policy anniversary explaining various options of LISR and the process to take advantage of these options. The letter will provide the policyowner with information regarding one or more of the following:
- Recommended premium
- Minimum premium
- Current billed premium
- Premium paying period
- Crossover target date
- Product message notes
The letter will not be produced for policies on disability.
Automatic Premium Loan:
- LISR premiums cannot be paid via automatic premium loan provision.
LTCAccessSM Rider (LTCR)
The LTCAccess Rider (LTCR) allows policyowners to accelerate the payment of a portion of their policy death benefit during their lifetime to help pay for covered long term care services. Accelerating benefits under the LTCR will reduce the policy’s death benefit and the cash surrender value. The LTCR is available for an affordable additional premium.
The rider provides coverage for both home and facility care, on a reimbursement-type basis. It allows policyowners to accelerate the payment of both a portion of their base policy face amount and, if elected, the face amount of paid-up additions purchased by base policy dividends. Dividends are not guaranteed.
The LTCR adds a valuable living benefit to a Legacy Series policy, and it is an additional reason for your clients to own MassMutual whole life insurance.
- The LTCR is only available with new sales of Legacy Series policies and must be elected at issue.
- In states other than New York, producers must hold Life & Health licenses and must complete any statutory training required to sell long term care insurance in the jurisdiction.
- All producers must complete a MassMutual LTCR training module prior to soliciting a sale with the rider.
- The Additional Life Insurance Rider (ALIR) is available with the LTCR. However, ALIR face amounts cannot be accelerated as rider benefits.
- The LTCR is available with the Life Insurance Supplement Rider (LISR). However, no portion of LISR death benefit (term or PUAs) can be accelerated as LTCR benefits.
- The benefits of the LTCAccess Rider available through a Legacy policy could be appropriate for a policyowner who needs life insurance protection and is also looking for the flexibility to access the policy’s death benefit to pay for long term care needs. If their only purpose for purchasing the policy with LTCAccess Rider is to pay for long term care expenses, they should consider other options.
- A Legacy Series policy with the LTCR will not qualify for state long term care Partnership Programs.
- The LTCR is not available for sale in qualified plans.
- The rider is available for issue ages 18–79, or maximum issue age for the base product, if less.
- For issue ages 64 and older, a cognitive assessment via telephone interview will be required.
- The LTCR is issued on a gender-distinct basis in all states except Montana, where it is issued unisex.
How the Rider Works:
Policyowners may elect to make up to 90 percent of their policy face amount available for acceleration as rider benefits. This is their Base Benefit Pool. The portion that is not available for acceleration is their Residual Face Amount, which must be at least $25,000.
The initial Maximum Monthly Benefit amount for the rider is determined by choosing a Selected Benefit Period of 2, 3, 4, 5, 6 or 10 years. The Base Benefit Pool divided by the Selected Benefit Period (in months) equals the initial Maximum Monthly Benefit (MMB). The MMB is the most that the policyowner can accelerate as LTCR benefits in a given month. The minimum MMB is $3,000, and the maximum at issue is $30,000.
Policyowners who elect to use their dividends to purchase paid-up additions (PUAs) may choose to make the face amount of these additions available for acceleration. This is called the Dividends Benefit Pool, and it can be accelerated once the Base Benefit Pool has been exhausted. The Dividend Benefit Pool is not available on policies with LISR. There is a charge against each dividend applied to purchase PUAs that are included in the Dividends Benefit Pool. The Base Benefit Pool plus the Dividends Benefit Pool (if any) represents the Total Benefit Pool. If paid-up additions that are in the Dividends Benefit Pool are surrendered, they will no longer be available for acceleration as LTCR benefits.
Policyowners may elect the Maximum Monthly Benefit Increase Option (MMBIO), which increases the MMB each year by a flat amount equal to 4% of the MMB at issue. MMBIO increases begin on the insured’s attained age 61 policy anniversary (or on the first anniversary for issue ages 61 and older) and continue for 25 years. MMBIO increases will continue even if the policyowner is receiving LTCR benefits.
Premiums and Charges:
The premiums for the LTCR are scheduled to be level and have the same premium payment period as the basic whole life policy. The rider premium rates and dividend charges are guaranteed for the first policy year.
Impact of LTCR Benefit Payments on the Policy:
When an accelerated benefit payment is made, both the death benefit and the cash value of the policy will be reduced. This is accomplished by applying a lien against the total policy death benefit equal to the face amount that has been accelerated as benefits. A corresponding lien is also placed against the policy cash value that is equal to the cash value associated with the face amount accelerated. There is no interest expense or other charges associated with the LTCR liens on the face amount or cash value.
There will also be an Annual Premium Credit based on the face amount that has been accelerated as benefits. This will reduce the amount of premium that the policyowner needs to pay each year. The Annual Premium Credit is equal to the premiums associated with the face amount that has been accelerated, excluding any substandard (table or flat extra) base policy premiums.
Since the policy face amount is not actually reduced when benefit payments are made, the policyowner continues to earn dividends for the full base policy and PUA face amounts, even if LTCR benefits have been paid.
The policyowner may borrow against the policy cash value that is not subject to an LTCR cash value lien at any time.
Care Coordination Services
MassMutual will provide Care Coordination services at no cost to a policyowner with the LTCR. Care Coordination is an additional benefit designed to help relieve some level of stress for the insured and their family when it comes to initiating and maintaining various care services.
A Care Coordinator will:
- Assist in developing a plan of care.
- Coordinate appropriate services.
- Monitor ongoing delivery of such services.
Care Coordination services may begin prior to satisfying the 90-day Elimination or Waiting Period. The cost of these services will be billed directly to MassMutual and will not reduce the LTCR Benefit Pool. The insured is not required to use Care Coordination services in order to receive LTC benefits under the rider.
Impact of Policy Loans on LTCR Benefit Payments
If there is an outstanding loan on the policy, and LTCR benefits are being paid, a portion of each claim payment will be applied to reduce the loan. The loan reduction amount will be a pro rata allocation of the total outstanding loan based on the cash value associated with the face amount being accelerated.
Reduced Paid-Up Policy with LTCR
Reduced Paid-Up (RPU) is the only non-forfeiture option available for a policy with the LTCR. Reduced Paid-up LTCR benefits may continue to be available.
The Base Benefit Amount will be reduced in the same proportion as the reduction in the base policy face amount (excluding any Paid-up Additions). Any Paid-up Additions that were available for acceleration will be added to the Base Benefit Amount. If Accelerated Benefit Payments were made from the Base Benefit Amount prior to lapse, they will be deducted from the new Base Benefit Amount for the RPU policy.
If the policy had a loan, and the loan is not carried over to the paid-up policy, the Base Benefit Amount will be further reduced based on the amount of paid-up insurance that could be purchased by the amount of the loan.
The Maximum Monthly Benefit (and any annual increases from the MMBIO) will be reduced by the same proportion as the ratio of the base policy value at the time of lapse to the net single premium for the base policy face amount just prior to lapse.
The Residual Face Amount will equal the RPU face amount less the new Base Benefit Pool. The Dividends Benefit Pool will be set to zero, and any future paid-up additions purchased with policy dividends will not be available for acceleration as LTCR benefits. The Maximum Lifetime Rider Benefit will be equal to the new Base Benefit Pool.
If you have a policyowner with the LTCR who wants to lapse to a reduced paid-up policy, you should provide them with an inforce illustration showing the impact of the lapse to RPU on both the policy and LTCR benefits.
Income Taxation of LTCR Benefits:
The income taxation of the LTCR is based on Section 101(g) of the Internal Revenue Code dealing with the acceleration of a life insurance death benefit to pay expenses for long term care services received by the insured.
- Amounts accelerated as benefits under the LTCR are generally income tax free, provided the policyowner is the insured or the insured’s spouse. If this is not the case, the amounts accelerated may be treated as a withdrawal for tax purposes. Policyowners should consult with their tax advisor for further advice on this matter.
- Benefit payments received under the LTCR may be taxable if the policyowner receives benefit payments under other long term care insurance coverage for the same services.
- The rider is not a qualified LTC contract under Section 7702B, and rider premiums are not income tax deductible.
- LTCR premiums paid are added to the cost basis and included for Section 7702 and MEC testing.
- Dividend amounts applied to pay LTCR premiums will be treated as policyowner dividends retained to pay premiums (i.e., no current tax effect).
- For non-MEC policies, when amounts are accelerated as benefits, the cost basis of the policy is reduced proportionally by the cost basis associated with the face amount accelerated under the rider.
- Section 1035 exchanges are permitted from or to another policy, even if the other policy does not include LTC rider/coverage.
- Premium amounts paid by the LTC Premium Credit or waived by the WP Rider are not added to cost basis or included for 7702 and MEC testing.
Renewable Term (RTR)
The Renewable Term Rider (RTR) provides level term insurance that is renewable annually to the insured’s age 95. Premiums are expected to be level for the first 10 years, then increase annually. The premiums will never exceed the guaranteed maximum premiums in the rider. The RTR is designed to provide affordable term life insurance protection with the option to convert to permanent coverage for a limited period of time.
A whole life policy with the RTR attached offers clients flexibility and choices for the future as their needs and their financial situations change. The RTR can be continued as term insurance, converted to permanent insurance, or dropped from the base policy. The RTR helps clients “grow into” permanent insurance with guaranteed insurability when they purchase a whole life policy with the RTR attached and undergo periodic conversions of the term rider.
- 18 – 60 Whole Life Legacy 65
- 18 – 75 Whole Life Legacy 100, Legacy
- 10, 12, 15 and 20 Pay, Legacy HECV
- Available only at issue.
- Available only in the non-qualified market.
Minimum and Maximum Rider Size:
- RTR minimum face amount is $100,000.
- RTR maximum face amount is 20 times the base policy face amount, subject to reinsurance and retention limits.
- The minimum face amount of a whole life policy to which the RTR can be attached is $25,000 ($100,000 for Whole Life Legacy HECV and Legacy 10 Pay).
- Billing frequency must be the same as the base policy.
- Premiums are payable to attained age 95.
- The RTR has both current and guaranteed maximum premiums.
- The current premiums are the rates paid by the policyowner. They are not guaranteed and can be changed in any policy year, but can never exceed the guaranteed premium.
- The current rates are level for 10 years, then increase annually. The guaranteed rates increase annually in all years.
- The rider is rated the same as the base policy with Table Ratings through P and permanent or temporary flat extra premiums.
- Permanent substandard extra premiums, as well as flat extras, are payable to attained age 65 or for 20 years, if later (not to exceed age 100).
- If a disability occurs and the base policy premiums are waived, the RTR premiums are waived.
- If a policy is on waiver of premium at the time of conversion, the RTR will be eligible for conversion.
- Premiums on the new permanent policy will be waived during the period of disability.
- The RTR may be converted in full or part on an original age basis during the first five policy years.
- The RTR may be converted for the earlier of the first 10 policy years or to age 65, but not less than two policy years.
- Partial RTR conversions must leave at least $50,000 of the rider in force.
- A term policy or rider can be converted to a whole life policy with the RTR attached.
- However, the maximum RTR on the new policy may not be more than the base policy face amount.
Guaranteed Insurability Rider (GIR)
The Guaranteed Insurability Rider (GIR) guarantees policyowners the right to purchase a specified amount of additional insurance without evidence of insurability at certain election option dates. The new insurance can be an increase to the face amount on an existing whole life type policy, a new universal life policy or a new variable universal life policy.5
If the option is not exercised during an option period, the right to purchase new insurance for this option period is lost. However, the missed option will not affect the right to purchase additional insurance on subsequent option dates.
The GIR is an excellent way to lock in insurability on policies for children or young adults. Option dates provide opportunities for producers to contact their clients on a regular basis for a review of their insurance plans. Substitute option dates reinforce the idea that clients’ needs for life insurance can be tied to their life events.
- GIR may be attached at or after policy issue.
- If the rider is attached after policy issue and not on a policy anniversary, the date of attachment will be the rider issue date, and option dates will correspond to the rider issue date.
- The risk class must be the same or better than the original class for after-issue attachment.
- GIR is not available with table ratings.
- GIR is available with non-medical flat extras up to $50 per $1,000.
- When a new policy is issued, the new policy will carry the same rating as the original.
- If the flat extra is temporary and has expired, the new policy will be standard.
- GIR is not available if the policy’s waiver of premium is rated.
GIR Face Amount Limits:
The GIR face amount is the amount of additional life insurance available at each option date.
- Minimum GIR face amount is $25,000.
- Maximum GIR face amount is the lesser of:
- Two times the base face amount (not less than $25,000), or
- The GIR terminates 30 days after the policy anniversary at the insured’s attained age 46.
- GIR premiums vary by issue age and gender.
- The GIR has a level premium from the issue date of the rider through the insured’s attained age 45, not to exceed the base policy premium payment period.
- GIR premium is added to the base policy’s premium, along with any other rider premiums.
Regular Option Dates:
The GIR provides regular option dates on the policy anniversaries nearest the insured’s ages 25, 28, 31, 34, 37, 40, 43 and 46 (see below), if they are subsequent to the attachment date of the rider.
Regular options can be exercised during the regular option period, from 30 days prior to 30 days after the regular option date.
|Age at Issue||Number of Option Dates||Age on Option Anniversary Date|
|Regular options can be exercised during the regular option period, from 30 days prior to 30 days after the regular option date.|
Substitute Option Dates:
- The policyowner may request a substitute option date within 91 days after:
- The insured’s marriage.
- The birth of an insured’s child.
- The legal adoption of a child by the insured.
- To exercise an option, these events must occur after the effective date of the rider.
- The special exercise of an elective option will use up the next available regular option. For example, if the insured gets married at 26 and chooses to exercise the substitute option, the regular option at attained age 28 is no longer available, and the next regular option would be attained age 31.
- If the birth involves twins or triplets, or if multiple children are adopted at the same time, the option amount will be based on the amount available on a regular option date multiplied by the number of children, not to exceed three.
- If a disability occurs and the base policy premiums are waived, the GIR premiums are waived.
- If a policyowner is on disability at the time of regular option dates, the GIR will still be eligible for exercise.
- Premiums on the new policy will be waived during the period of disability.
- 5To offer or sell MassMutual and subsidiary company variable products, a producer must be a registered representative of MML Investors Services, or a broker/dealer that holds a selling agreement with MML Strategic Distributors, LLC.
Transfer of Insured Rider
The Transfer of Insured Rider (TIR) allows the owner to substitute a new insured for the current insured under the policy. There must be an insurable interest between the owner and the new insured. The new insured cannot be older than 75 and evidence of insurability must be provided.
There is no cost for this rider. However, there is a fee to exercise it. It is automatically included at issue in approved states.
Exercising the TIR results in a policy exchange that does not qualify as an IRC Section 1035 exchange. As a result, the cash value of the policy being exchanged will be taxable to the extent of any gain.
Accelerated Death Benefit for Terminal Illness Rider
The Accelerated Death Benefit for Terminal Illness Rider (ABR) allows the policyowner to receive an advance of the policy death benefit if the insured has a terminal illness, expected to result in death within 12 months (in most states). The proceeds may be used for any purpose, including to pay medical and living expenses of the insured. In most instances, more funds will be available through this rider than through a loan or surrender.
There is no cost for this rider. However, the benefit amount will be reduced by any applicable interest charge and processing fee. In approved states, the ABR is automatically included at issue.
Yearly Term Purchase Rider (YTP)
When the one-year term dividend option is selected, the Yearly Term Purchase Rider (YTP) is automatically attached to a whole life policy. At the beginning of each policy year, all or part of the base policy dividend (including any dividend paid on paid-up additions) for the previous year is used to purchase one-year term insurance.
If the dividend is sufficient, the amount of term insurance purchased is equal to the policy’s guaranteed cash value at the end of the year. Any excess dividend is applied to the secondary dividend option specified.
If the dividend is not sufficient to purchase one-year term for the full guaranteed cash value, the amount of term insurance will be the amount the dividend can purchase.
The YTP has the same issue age limits and ratings as the base policy. It can be attached at or after issue, subject to underwriting.
The term coverage purchased by the YTP is not convertible.
Products and riders are available only in approved states. State variations will apply.
Whole Life Legacy Series policies ((MMWL-2018 and ICC18-MMWL in certain states, including North Carolina)/ (MMWLA-2018 and ICC18-MMWLA in certain states, including North Carolina)), and MassMutual Whole Life series policies on the Coverpath platform (Policy Forms: WL-2018 and ICC18WL in certain states, including North Carolina) are level-premium, participating, permanent life insurance policies issued by Massachusetts Mutual Life Insurance Company, Springfield, MA 01111-0001.