Has Hell Frozen Over? Mass Mutual Rolls out an FIA

I went to see Guns N’ Roses a few years ago when the name of their tour was “Not in This Lifetime.” It was supposed to be the last tour G&R ever did and a surprise to all that they decided to get back together (thus the cute name to the tour). Before that was the Eagles “When Hell Freezes Over” tour.

Well, I don’t know if Hell has frozen over, but I do know that Mass Mutual recently rolled out a Fixed Indexed Annuity (FIA) product.

Why am I making an analogy to Hell freezing over? Because most mutual insurance companies have said for years that indexed products (FIAs and IULs) are garbage and that they’d never offer one.

As I stated in the title to this newsletter, Mass Mutual recently came out with their own FIA and as you can guess, my review of it below is not going to be kind.

The best way to get a feel for whether this product is any good is to do a comparison. I’ll compare the Mass FIA to what I call the “Best FIA IMOs Won’t Tell You About.”

To sign up for more information on the Best FIA IMOs Won’t Tell You About, click on the following link: http://best-fia-imos-wont-offer.com

Specification Comparison

Annual point-to-point S&P 500 cap rate

Mass                     2.65% under $100k premium 5%
Mass                     3.15% $100k or more premium
Best FIA               5.4%

Uncapped crediting strategies

Mass                                     NONE
Best FIA               4 across 3 different indices

Guaranteed Living Withdrawal Benefit (GLWB) Roll-up Rate

Mass                    7% simple roll-up for 7-years
Best FIA               9% simple roll-up for 10-years
Best FIA               4% compound with interest stacked for 15-years

Guaranteed Income for life payment bands for GLWB

Mass             4.00% (age 59½-64), 5.00% (age 65-69), 5.5% (ages 70-75), and 5.75% at age 75+
Best FIA       4.4% age 59, 4.9% age 64, 5% age 65, 5.4% age 69, 5.9% age 74, 6% age 75, 6.5% age 80.

Let’s look at an example for a client age 57 who funds $100,000 in both products.

Income at age 65

Mass                     $7,450
Best FIA               $8,600 (13.4% more)

Income at age 70

Mass                     $8,568
Best FIA               $10,450 (18% more)

Income at age 75

Mass                     $8,568
Best FIA               $11,400 (25% more)

Income at age 70 using the Best FIA with their 45% no-cap/stacking option $13,024 (this is a conservative hypothetical where I assumed zero returns in the first 2 years)

Features the Best FIA IMOs Won’t Tell You About that the Mass product doesn’t have?

-Flexible premiums (can pay in new premiums after issue)
-Lowest surrender schedule
-Bail out cap
-Optional return of premium rider
-Trail fee commission option (at 1% annually)

Question….why would any advisor in their right mind sell the Mass Mutual FIA?

Answer….See my book Bad Advisors: How to Identify Them; How to Avoid Them. To download this book for free in an e-format, click on the following link:


                An equally good question is why would Mass Mutual put out such an inferior FIA?

Answer…because they have a built in sales force that will push it (and their agents might be getting tired of losing sales to competitors who can offer FIAs).

My view of the Mass annuity is that it represents what’s wrong in our industry. The industry should be putting out client centered products, not ones that make insurance companies the most money. And my personal opinion is that companies like Mass and NYL should stick to what they know best and that’s NOT indexed products.

Roccy DeFrancesco, JD