MassMutual is one of our top 10 best life insurance companies. In the following review of MassMutual, we will address the pros and cons of the company, including its history, ratings, strengths, policies, and benefits.
Review of MassMutual Life Insurance
Although this review is primarily focused on MassMutual Whole Life Insurance, when reviewing any life insurance company it is important to get an idea of that company’s history to see where they have come from and where they are going.
If you are a current policyholder and came here by way of a search for MassMutual contact information, you can go here to visit the company’s contact us page.
MassMutual Financial Group was founded in 1851. That means that as of 2017, MassMutual has been around for 166 years. The company focuses on insurance and financial services, providing tools and resources for insurance, retirement, investment and planning, including a comprehensive suite for businesses.
Mass Mutual’s life insurance division is known as Massachusetts Mutual Life Insurance Company.
In 2017, Massachusetts Mutual Life Insurance is #77 on the 2017 Fortune 500 list.
Participating Mutual Company
MassMutual is a mutual company. A mutual company is owned by the policyholders and has no shareholders. Therefore, the company’s allegiance is to the policyholders.
MassMutual’s policyholders participate in the financial success of the company. Participating members share in any annual dividends paid out by MassMutual to participating whole life insurance policyholders.
Excellent Client Interface
The company’s website is very user friendly. Policyholders can login to the client portal and view up to date account information, including current cash value levels, how much you can borrower and your current policy death benefit.
Massmutual practices a non-direct recognition approach to policy loans.
Non-Direct recognition means that MassMutual continues to pay the same dividend and interest on the cash value in your policy, even if the cash is being used as collateral for a life insurance loan.
The benefit to non-direct recognition it is in the fact that your cash value is still accumulating interest and dividends, while simultaneously being used somewhere else. In essence, your money is being put to work two places at once.
MassMutual has superb financial ratings. The company has a commitment to providing its policyholders with the utmost assurance in its continued performance and financial viability.
The following Mass Mutual Financial Strength Ratings are as June 2017:
- A.M. Best Company: A++ (Superior; top category of 15);
- Fitch Ratings: AA+ (Very Strong; second category of 21);
- Moody’s Investors Service: Aa2 (Excellent; third category of 21);
- Standard & Poor’s: AA+ (Very Strong, second category of 21).
- Comdex Rating: 98
Ratings are for MassMutual (Springfield, MA 01111) and its subsidiaries, C.M. Life Insurance Company and MML Bay State Life Insurance Company (Enfield, CT 06082). Ratings are subject to change.
In addition, although not accredited with the BBB, Massachusetts Mutual Life Insurance Company has an A+ rating with the BBB.
Lastly, in 2016, MassMutual ranked #76 on the annual Fortune 500 list.
Mass Mutual Insurance Products
- Disability Income Insurance
- Life Insurance
- Long Term Care
- Group Life Insurance
- Wealth Management and Trust Services
Our primary focus is on MassMutual’s life insurance, primarily whole life.
MassMutual Life Insurance Policies
No matter what side of the term life vs whole life insurance argument you are on, MassMutual has a policy for you. That is one of the many benefits of MassMutual, the company’s wide range of options and riders.
Whole Life Insurance
MassMutual whole life insurance is one of the best options in the marketplace. Life insurance is an asset that allows the owner of the policy to do some pretty spectacular things.
One of the ways we encourage our clients to maximize their whole life insurance policy is to use the cash value as collateral for a life insurance loan to purchase other income producing cash flow assets, such as real estate and other investment opportunities.
Using your policy to finance your investment opportunities is one of the primary principles of the infinite banking concept® and can create an amazing wealth building strategy.
Another benefit of whole life insurance is that you can put a seemingly unlimited amount of money into your policy, based on your policy’s death benefit. However, you need to be careful of overfunding whole life insurance and creating a Modified Endowment Contract. You can avoid “MEC’ing” your policy by contacting Mass Mutual and confirming how much additional premiums you can pay into your policy without going over the allowed limited under IRC 7702A.
Let’s take a look at some of the additional benefits of MassMutual’s dividend paying whole life insurance.
Guaranteed Level Coverage
You whole life premium payments are locked in. As a result, you do not have to worry about paying higher premiums down the road. The younger you lock in the more affordable you coverage will be. It is also a great reason to consider whole life insurance for children.
Guaranteed Death Benefit
Your death benefit face amount is guaranteed. No matter how long you live your policy is guaranteed to pay out as long as any premium payments due are paid. And with a properly designed permanent policy from MassMutual, your death benefit can grow over your lifetime so you beneficiary receives an ever increasing payout on your life insurance policy.
Guaranteed Cash Value Accumulation
Your policy cash value grows each year and will never decline in value due to stock market fluctuations. Having a stable “home base” that offers a guaranteed year in and year out return is a great way to build wealth and avoid the headache and pain that comes from stock market corrections that can easily decimate your entire life savings.
Although not guaranteed, MassMutual has paid participating policyowners life insurance dividends every year since 1860.
Dividends can be used for many things, including cash out, leaving with the company for interest, paying premiums, or our favorite, purchasing paid up additions.
Purchasing paid up additions add to the cash value and death benefit. This allows for greater cash value, which in turn allows for greater dividend payments, which can be used to purchase more paid up additions, and on and on. And your death benefit will continue to increase as you age, making it more and more valuable as you get closer to that inevitable day.
MassMutual’s dividend payout is one of the best in the industry. Mass Mutual’s 2017 dividend rate is 6.70%, with a total dividend payout to participating policyowners of $1.6 billion. You can view a more comprehensive look at MassMutual’s dividend history by going here.
Different Whole Life Policies to Choose From
You can choose to set your policy up as ordinary whole life insurance to age 100. However, depending on your goals, 10 pay whole life and 20 pay limited pay life insurance may offer some advantages to your traditional whole life policy.
One of the primary advantages to limited pay life insurance is that you no longer have to pay into your policy once the contracted payment duration has been met. However, with the use of certain riders, your policy cash value and death benefit will continue to grow each and every year. That way you don’t have the financial commitment to pay your premium but your policy continues to work on your behalf.
MassMutual offers the following whole life insurance policy options:
Whole Life Legacy 10 Pay – lifetime coverage that is paid up in 10 years.
Whole Life Legacy 20 Pay – lifetime coverage that is paid up in 20 years.
Whole Life Legacy 100 – lifetime coverage that is paid up at age 100.
Whole Life Legacy 65 – lifetime coverage that is paid up at age 65.
Which Mass Mutual whole life policy is best for me?
Determining which whole life policy to choose depends on what your financial goals are.
For example, premiums due on Whole Life Legacy 10 Pay will be higher than on the Whole Life Legacy 100. So should you get the policy with the cheaper premiums?
Yes, the Whole Life Legacy to 100 is going to be a lower premium, but think about the long term. With the Whole Life Legacy 10 Pay, in 10 years you will no longer need to make premium payments. This can free your cash up (i.e. create cash flow) for use in other venture or allow you to purchase another policy if that happens to be the best option for you.
Another similar example is the Whole Life Legacy 65 policy, which allows you to be paid up at age 65. Since age 65 is commonly the age of retirement, this policy allows you to have a paid up policy (that continues to build cash value and grow your death benefit) at age 65, when most people need to cut back on their expenses. And since whole life offers excellent supplemental retirement income, you will have a paid up policy ready upon entering retirement.
Whole Life Insurance Riders
Paid Up Additions – A fantastic addition to any whole life policy is paid up additions or PUA. With paid up additions you can design your policy to allow additional paid up life insurance purchases.
Note, due to many tax advantages of permanent coverage, the government does not allow for an endless piling in of your money into your policy. Instead, there is a limit to how much cash you can put into your policy at a given time so as to avoid creating a modified endowment contract or MEC.
But know that there are safeguards in place to protect the policyowner from overfunding their whole life insurance policy, such as the company alerting the policyholder if the policy is in danger of becoming a MEC. Just make sure you pay attention to company correspondence if you think you might be flirting with that line!
Alternatively, you can work directly with your agent or MassMutual to find out how much additional premium you can contribute monthly or annually into your policy.
And unlike a 401K or IRA, your contribution limits are going to be a lot higher based on how large your policy’s death benefit is. This is one method the wealthy use to store away as much money in a tax favored environment as possible.
Guaranteed Insurability – you can add a guaranteed insurability rider to your whole life policy in order to allow you to take out additional life insurance coverage with no proof of insurability at certain specified times. This rider is highly recommended when considering life insurance for children. It allows you or your child (or grandchild) to purchase additional life insurance down the road without having to answer any questions or take a medical exam. There is really no better way to protect your or your child’s future “insurability” than to add the guaranteed insurability rider to your policy.
Note, the benefits of this rider are only offered to to applicants 25 years and younger. The increased coverage maxes out at $1,000,000. For insureds ages 24 and younger, there are 8 option dates where coverage can be added. Additionally, the insured may accelerate an option for marriage or becoming a parent.
Term Rider – adding a term rider to your policy allows for additional death benefit protection but with a lower cost than trying to get the same death benefit entirely with whole life insurance. Additionally, a term rider can be used to design your policy for maximum high cash value growth. Overtime the term rider will drop off as the whole life policy death benefit and cash value grow, more than compensating for the loss of the term life.
MassMutual Whole Life Insurance Quotes
The following sample whole life insurance quotes are based on 40 year old male with a preferred best rate class. Rates are for example purposes and must be qualified for.
The illustration is based on Whole Life Legacy 10 Pay with Life Insurance Supplement Rider.
In the above whole life insurance quote illustration the policyowner wanted to pay $12,000 into the policy annually. He wanted high cash value growth vs a large initial death benefit.
As a result, we designed his cash value life insurance policy in such a way that the cash would accumulate quickly.
The policy is designed so that the premium paid is only a small fraction and the remaining contributions are paid up additions, via the life insurance supplement rider.
We mention this because the “whole life insurance is not a good investment” pundits make stupid generalizations about whole life, such as high commissions and low cash value growth. In reality, the commissions to the agent on a policy like this are very low in comparison to the total premium paid. In addition, the cash value growth is dynamic, and the guaranteed cash value equals the premiums paid into the policy in year 10, with the non guaranteed cash value between years 6 and 7.
Benefits of Whole life insurance
There are many benefits of whole life insurance which we have addressed elsewhere. A few areas you should consider are:
- Business Succession Planning
- Key Person Insurance
- Executive Bonus Plans
- Deferred Compensation Plans
- Avoid Probate
- Infinite Banking
Tax Benefits of Life Insurance
Before we venture into the specific policies available through Mass Mutual, we want to touch on the tax benefits and incentives associated with life insurance found in various parts of the internal revenue code, including IRC section 7702.
Income Tax Free Death Benefit
The life insurance death benefit is not taxable. If your estate receives the benefit of the life insurance and your estate exceeds the federal estate tax exemption amount then the estate can be taxed. However, life insurance death benefits are typically not taxable.
Tax Deferred Cash Value Growth
If you choose permanent life insurance that accumulates cash value, the cash value growth is tax deferred. If you take out cash via a withdrawal, the cash accumulation above your basis in the policy will be taxed. However, policy loans are income tax free.
Term Life Insurance
MassMutual offers convertible term life insurance. Term life insurance protects the insured’s life for a period of time, i.e. the term. Terms available range from 10 years up to 30 years.
The term life policy from MassMutual comes with the option to convert to permanent life insurance.
If you choose to convert the term policy to a permanent policy, there is no need to provide evidence of insurability. That means you do not have to answer any health questions or take an exam. And you have maximum flexibility since you can choose to convert all or a portion of the face amount.
Guaranteed Acceptance Life Insurance
Guaranteed acceptance life insurance from MassMutual is available for ages 50-75. No medical exam or health questions are required. Guaranteed acceptance whole life insurance is used primarily to cover final expenses and burial costs for those who cannot qualify for ordinary life insurance. As a result, the premiums are much higher than with a typical policy requiring a life insurance medical exam.
Mass Mutual Review Conclusion
As an industry leader and innovator, MassMutual sets a high standard that is tough to beat. The company consistently delivers to its policyholders with excellent dividends and products. With its high ratings and financial strength, MassMutual is poised to continue to stand out as one of the highest rated best life insurance companies in the U.S.
Have questions or would you like to see an illustration of MassMutual or of many other top cash value life insurance companies? Give us a call today for a free life insurance consultation with an advanced markets professional.