MassMutual Analysis: Whole Life Insurance Can Help Supply Retirement Income, Preserve...

MassMutual Analysis: Whole Life Insurance Can Help Supply Retirement Income,
Preserve Equity Portfolios During Bear Markets

SPRINGFIELD, Mass., Aug. 27 /PRNewswire/ -- Retirees who are able to
supplement their retirement income during economic downturns by tapping the
cash values of their whole life insurance policies could have a secret weapon
to keep their plans on track during future recessions, according to planning
scenarios studied by Massachusetts Mutual Life Insurance Co. (MassMutual).

By drawing on the cash values of their whole life insurance policies -- and
avoiding the sale of equities from their retirement accounts in a depressed
market -- retirees could end up with more cash and a larger net legacy to
their families at death, while still meeting their retirement income needs,
according to MassMutual's analysis.

"With this strategy, retirees don't have to settle for liquidating assets in a
down market or cutting back on their lifestyle choices," said Melissa Millan,
senior vice president, MassMutual. "A retirement income strategy incorporating
whole life insurance and an equity-based portfolio can tame a bear market by
creating the flexibility needed to respond to changing economic conditions."

Dave Janca, a 48-year old small business owner in Orchard Park, NY, is using
whole life insurance as a foundation for his larger retirement plan.

"It's nice to know you can access the cash if you need it as you grow older.
Investments and other assets like your house may fluctuate, but the value of
whole life insurance is predictable, it grows and it's there if you need it,"
he said.

Whole life insurance provides an income tax-free death benefit that can
protect a policyholder's
income during working years, and ultimately assure a legacy to his or her
family. A whole life insurance policy also provides guaranteed policy cash
values and the potential for additional cash value funded with policy
dividends (1). The policy cash values can provide a stable source of income
that is not impacted by short-term market volatility such as that experienced
during the current recession.

That recent volatility has trapped many retirees in a vicious cycle: they have
been forced to supplement their reduced income from their equity-based
retirement accounts by selling stocks, even though the market has been
depressed. But that means their portfolios need to perform even better, in
order to both replace the withdrawals and to continue to produce income.
Furthermore, portfolio distributions are taxed as ordinary income at rates as
high as 35 percent, depending on the retiree's tax bracket.

The process can eventually reduce savings dramatically, deplete them entirely
and/or leave very little for heirs.

By contrast, retirees who purchased whole life insurance policies to provide a
death benefit can better manage their retirement income distributions. By
avoiding taking distributions from their retirement accounts during and
following a negative market cycle, the account can more readily rebound from
the downturn over time, according to MassMutual's analysis.

During the down and rebuilding years when retirees are not drawing income from
their retirement accounts, they can supplement their income by tapping the
cash value of their whole life insurance policies. This supplemental cash is
income tax-free (2).

The strategy has the further benefit of preserving a retiree's ability to
leave a legacy to loved ones when they die through the life insurance policy's
death benefit.

"As people prepare future retirement income plans, they should be aware of
this strategy and its effectiveness in taking the sting out of market
downturns," said Millan. "Whole life insurance can help level off what
otherwise could be a very bumpy ride."

The recession has depleted retirement plans for many Americans; but whole life
insurance has proven to be a solid safety net for the Jancas.

"Some people view life insurance as separate from their retirement plan - just
for emergencies or catastrophic situations. I consider it as part of my
long-term retirement plan. I think it's a mistake to not have a broader
approach," he said.

"I want to give myself as many options as possible for stable asset growth to
be used either for retirement income or cash access as I grow older and
retire," continued Janca.

As part of the company's commitment to bringing national attention to the
importance of planning and saving for retirement, MassMutual is the exclusive
national underwriter of Retirement Revolution: The New Reality((R)), a
nationally broadcast special to premiere on September 15, 2009 on PBS. The
program will feature deeply personal stories, new glimmers of hope and
dramatic changes people are making to help achieve their definition of a
successful retirement. The New Reality is the second installment of the
Retirement Revolution((R)) series, which debuted last spring.

To hear how others have benefited from life insurance and to learn more about
retirement income strategies involving whole life insurance, visit
massmutual.com/life.

About MassMutual
Founded in 1851, MassMutual is a leading mutual life insurance company that is
run for the benefit of its members and participating policyholders. The
company has a long history of financial strength and strong performance, and
although dividends are not guaranteed, MassMutual has paid dividends to
eligible participating policyholders every year since the 1860s. With whole
life insurance as its foundation, MassMutual provides products to help meet
the financial needs of clients, such as life insurance, disability income
insurance, long term care insurance, retirement/401(k) plan services, and
annuities. In addition, the company's strong and growing network of financial
professionals helps clients make good financial decisions for the long-term.

MassMutual Financial Group is a marketing name for Massachusetts Mutual Life
Insurance Company (MassMutual) and its affiliated companies and sales
representatives. MassMutual is headquartered in Springfield, Massachusetts and
its major affiliates include: Babson Capital Management LLC; Baring Asset
Management Limited; Cornerstone Real Estate Advisers LLC; The First Mercantile
Trust Company; MassMutual International LLC; MML Investors Services, Inc.,
member FINRA and SIPC; OppenheimerFunds, Inc.; and The MassMutual Trust
Company, FSB.

(1) Dividends are not guaranteed.
(2) Distributions 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 distribution are taxable to the extent of gain and are subject to a 10%
tax penalty.
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.

CONTACT:
Paula Tremblay
413.744.0885
ptremblay@massmutual.com

SOURCE MassMutual

Paula Tremblay of MassMutual, +1-413-744-0885 ptremblay@massmutual.com