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Payout Options | | Like all annuity contracts, the Contract offers a range of Payout Options, which provide payments for your lifetime or for a fixed period. After payments begin, you cannot change the Payout Option or any fixed period you selected. The standard Payout Options are listed below.
• Fixed Period Payout
• Life Payout
• Life Payout with Payments for at Least a Fixed Period
• Joint and One-half Survivor Payout
Please see the Payout Options section on page [ ] for more information.
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Death Benefit | | A Death Benefit is payable under the Contract if you die before the Annuity Payout Initiation Date. If the Owner is a non-natural person, such as a trust or a corporation, then a Death Benefit is payable under the Contract if an Annuitant dies before the Annuity Payout Initiation Date.
The Death Benefit Value is the greater of: (1) the Account Value as of the applicable date; or (2) your Purchase Payment(s) reduced proportionally for all withdrawals, but not including amounts applied to pay Early Withdrawal Charges.
Please see the Death Benefit section on page [ ] for more information.
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Tax Deferral | | The Contract is generally tax deferred, which means that you are not taxed on the earnings in your Contract until the money is paid to you. Contracts owned by non-natural owners, such as trusts and corporations, are subject to special rules.
A tax-qualified retirement plan such as an IRA also provides tax deferral. Buying the Contract within a tax-qualified retirement plan does not give you any extra tax benefits. There should be reasons other than tax deferral for buying the Contract within a tax-qualified retirement plan.
Please see the Federal Tax Considerations section on page [ ] for more information.
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Right to Cancel | | If you purchase a Contract, you may cancel it within 20 days after you receive it. If you purchase a Contract to replace an existing annuity contract or insurance policy, you have 30 days to cancel the Contract. The right to cancel period may be longer in some states. In many states, you will bear the risk of investment gain or loss before cancellation.
Please see the Right to Cancel (Free Look) section on page [ ] for more information.
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Risk FactorsDeath Benefit (See “Death Benefit” section on page 59 for more details)
A Death Benefit is payable under the Contract if there is an applicable death before the Annuity Payout Initiation Date. I
The Death Benefit value is the greater of: (1) the Account Value as of the applicable date; or (2) the Return of Premium Guarantee, which will be equal to your Purchase Payment(s) reduced proportionally for all withdrawals, but not including amounts deducted to pay Early Withdrawal Charges.
Tax Deferral (See “Federal Tax Considerations” section on page 68 for more details)
The Contract involves certain risksis generally tax deferred, which means that you are not taxed on the earnings in your Contract until the money is paid to you. If a non-tax-qualified Contract is owned by a non-natural person, such as a partnership, limited liability company, or corporation, it is subject to special rules and generally will not qualify for tax deferral. These special rules may also apply to a non-tax-qualified Contract owned by certain irrevocable trusts that have charitable or other non-natural beneficiaries.
A tax-qualified retirement plan such as an IRA also provides tax deferral. Buying the Contract within a tax-qualified retirement plan does not give you any extra tax benefits. There should be reasons other than tax deferral for buying the Contract within a tax-qualified retirement plan.
Right to Cancel (See “Right to Cancel (Free Look)” section on page 64 for more details)
If you purchase a Contract, you may cancel it within 20 days after you receive it. If you purchase a Contract to replace an existing annuity contract or insurance policy, you have 30 days to cancel the Contract. The right to cancel period may be longer in some states. If you cancel your Contract, you will receive a refund. The amount of the refund will depend on where you live. In some states, the refund amount is equal to the Purchase Payments. In that case, no adjustment will be made for the Daily Value Percentage and no Early Withdrawal Charges will apply to the amount refunded. In other states, the refund amount is equal to the Account Value on the day that we receive a cancellation request. In this case, you would bear the risk of changes in Indexed Strategy values before cancellation because an adjustment will be made for the Daily Value Percentage, but no Early Withdrawal Charges will apply to the amount refunded. Unless required by state law, we do not refund any Early Withdrawal Charges assessed during the free look period that relate to a withdrawal taken before you cancel the Contract. See the Right to Cancel (Free Look) section for more information about your cancellation rights and the State Variations section of this prospectus for more information about state variations that apply to cancellation rights.
There may be tax consequences if you cancel the Contract. You should seek advice on tax questions based on your particular circumstances from a tax advisor.
RISK FACTORS
You should understand the risks associated with the Contract before purchasingyou purchase it. You should carefully consider your income needs and risk tolerance to determine whether the Contract or a particular Indexed Strategy is appropriate for you. The level of risk you bear and your Contract’s potential investment performance will differ depending on the Crediting Strategies you choose.
Loss of Principal Related to Indexed Strategies
Loss Due to Poor Index Performance
There is a significant risk of loss of principal and prior earnings due to the fall of an Index if you allocate your Account Value to an Indexed Strategy. Such a loss may be substantial. This risk exists because, at the end of that Term, you can lose up to 10% of the money allocated to a -10% Floor Strategy, 90% of the money allocated to a 10% Buffer Strategy, or 80% of the money allocated to a 20% Buffer Strategy. If you allocate money to one or more Indexed Strategies over multiple Terms, you may lose money each Term, which may result in a cumulative loss that is greater than 90% for a 10% Buffer Strategy, greater than 80% for a 20% Buffer strategy, or greater than 10% for a -10% Floor Strategy of your principal and any prior earnings.
The S&P 500 1-Year -10% Floor with Cap Indexed Strategy will always be available. At the end of a Term, we may stop offering any other Indexed Strategy. Consequently, any other Indexed Strategy described in this prospectus may not be available after the end of the initial Term. The S&P 500 5-year 10% Buffer with Upside Participation Rate Indexed Strategy, and the S&P 500 5-year 20% Buffer with Cap Indexed Strategy will only be available for Terms beginning in the first Contract Year. We have the right to replace the Index associated with an Indexed Strategy under certain circumstances.
In the future, we may offer a new Strategy with a Floor that is more or less negative than -10%, or that has a Buffer of more or less than 10%. However, we will not offer a new Buffer Strategy that offers less protection against loss than a 5% Buffer, or a Floor Strategy that offers less protection against loss than a -20% Floor.
The risk of loss of principal will be greater if you allocate money to a Strategy with a lower Floor or less of a Buffer. In the worst case scenario, if we could eliminate all of the current Indexed Strategies and offer only new Indexed Strategies with more negative Floors, or lesser Buffers subject to the limits noted above, then your risk of loss of principal would increase unless you allocate all of your money to the Declared Rate Strategy and you may earn a return that is lower than the return your investments would have earned if they had been invested in the other Indexed Strategies that are
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currently available. In addition, a reduction in the number of Indexed Strategies that are available may reduce your opportunity to increase your Account Value. If you choose to Surrender the Contract because of changes in the number and/or type of available Indexed Strategies, your Surrender may be subject to withdrawal charges, Daily Value Percentage adjustments, taxes, and tax penalties. If you purchase another retirement contract, it may have different features, fees, and risks than this Contract.
Loss Due to Negative Daily Value Percentage Adjustment
If, before the end of the Term, you were to take a withdrawal or Surrender the Contract, annuitize, or elect a Performance Lock, or if we were to pay the Death Benefit, the Daily Value Percentage calculation may cause the value of a Strategy to be even less than 90% of the money allocated to a -10% Floor Strategy, or even less than 10% for money allocated to a 10% Buffer Strategy, or even less than 20% for money allocated to a 20% Buffer Strategy. In extreme circumstances, the total loss for an Indexed Strategy before the end of a Term could be 100% due to the Daily Value Percentage, meaning that you would suffer a complete loss of your principal and any prior earnings in a Strategy if, before the end of the Term, you were to take a withdrawal or Surrender the Contract, annuitize, or elect a Performance Lock, or if we were to pay the Death Benefit.
Loss of Principal Related to Early Withdrawal Charge
There is also a risk of loss of principal and prior earnings if you take a withdrawal from your Contract or Surrender it during the first five Contract Years and an Early Withdrawal Charge applies. This risk exists for each Crediting Strategy, including the Declared Rate Strategy. An Early Withdrawal Charge will reduce the value of the Strategy. This reduction may exceed any prior earnings.
Long-Term Nature of Contract
The Contract is a deferred annuity, which means the Annuity Payout Benefit will begin on a future date. We designed the Contract to be a long-term investment that you can use to help build a retirement nest egg and provide income for retirement. The limitations, adjustments and charges included in the Contract reflect its long-term nature.
The Contract and its Indexed Strategies may not be appropriate for investors who plan to take withdrawals (including automated withdrawals and required minimum distributions) during the first five Contract Years, because of the assessment of Early Withdrawal Charges, or who plan to take withdrawals during Indexed Strategy Terms, because of the application of the Daily Value Percentage.
Limits on Strategy Value at End of Term
Any increase in the value of an Indexed Strategy at the end of a Term is based on the value of the underlying Index at the final Market Close of the Term.
If the Index rises for the Term and a Cap applies, then the Strategy value at the end of the Term can never be more than the Investment Base increased by the Cap for that Term even if the Index has risen by more than the Cap.
If the Index rises for the Term and an Upside Participation Rate applies, then the Strategy value at the end of the Term will be the Investment Base increased by your share of the rise in the Index. Your share of any rise in the Index is equal to the Upside Participation Rate for that Term multiplied by the rise in the Index.
If the Index rises for the Term of a Trigger Strategy, then the Strategy value at the end of the Term will be the Investment Base increased by the Trigger Rate for that Term even if the Index has risen by more than the Trigger Rate.
Due to these limitations, in many cases the return on money allocated to an Indexed Strategy with a Cap or Trigger Rate will not fully reflect the corresponding rise in the Index for the Term and the return on money allocated to an Indexed Strategy with an Upside Participation Rate that is less than 100% will never reflect the entire corresponding rise in the Index for the Term.
Index Changes Over the Course of Term
At the end of a Term, unless you have made a Performance Lock election, we measure the Index change by comparing the Index value on the first day of the Term to the Index value on the last day of the Term. This means that if the Index value is lower on the last day of the Term, you may experience negative or flat performance even if the Index rose through some, or most, of the Term.
The Contract offers you the opportunity to allocate funds to Indexed Strategies for one year or five-year Terms. For Indexed Strategies with five-year Terms, changes in Strategy value as a direct result of Index performance will only be measured on the first day and the last day of a five-year period and not annually.
Limits on Strategy Value Before End of Term
Before the end of a Term, we calculate the value of an Indexed Strategy using a Daily Value Percentage that is not tied directly to the underlying Index. The purpose of this calculation is to shift any potential investment loss on the Company’s general account assets that support the indexed option guarantees from the Company to you when paying amounts removed prematurely from an Indexed Strategy. The Daily Value Percentage is applied when you take a withdrawal, or Surrender your Contract, annuitize it, elect a Performance Lock, or if we pay the Death Benefit on a date other than the end of a Term. The Daily Value Percentage includes the prices of hypothetical options. Such option prices will vary from day to day.
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Any Strategy value before the end of a Term will almost always be less, perhaps significantly less, than the value suggested by the rise or fall of the Index. You will bear the risk that the Daily Value Percentage may decrease the Strategy value before the end of a Term. In extreme circumstances, the total loss for an Indexed Strategy before the end of a Term could be 100%, meaning that you would suffer a complete loss of your principal and any prior earnings if you were to take a withdrawal Surrender the Contract, annuitize it, or elect a Performance Lock, or if we were to pay the Death Benefit.
The Daily Value Percentage includes deductions for the Amortized Option Cost and the Trading Cost, which means that any Strategy value before the end of a Term will almost always be less, perhaps significantly less, than the value suggested by the rise or fall of the Index. Because the Amortized Option Cost is a decreasing value, its negative impact on Strategy values will be more pronounced at the start of a Term than at the end of that Term. In addition, even if the Index rises, the Strategy value may be less than the Investment Base due to these deductions.
Strategy values are used to calculate the amount locked in upon election of a Performance Lock, amount available for withdrawals, the amount payable upon Surrender, applied to the Annuity Payout Benefit, or payable as the Death Benefit. Accordingly, the Amortized Option Cost and Trading Cost will have a negative effect on such amounts taken before the end of a Term.
For more information on how we determine the prices of hypothetical options, see the Option Prices section of this Prospectus.
No Increases in Value After Performance Lock
If you make a Performance Lock election, the Daily Value Percentage will be locked for the balance of the Term. This means that you will experience flat performance through the balance of the Term even if the Net Option Value increases, you will not benefit from the continued decline in the Daily Value Percentage, and your ending Strategy value will not be based on the ending Index value on the last day of the Term.
You may access Daily Value Percentage information for the Indexed Strategies as of the previous day’s Market Close by calling 1-800-789-6771 or by accessing your account online at www.massmutualascend.com. Before electing a Performance Lock, you should consult with a financial advisor.
A Performance Lock election is not effective until the second market close after the receipt of your request so you will not be able to determine the Daily Value Percentage that will be locked in. You bear the risk that the Daily Value Percentage that is locked in will be lower than the Daily Value Percentage you last obtained, and lower than the potential Strategy value you would receive at the end of the Term. If you exercise the Performance Lock feature at a time when the Strategy value has declined, you will lock in any loss, which could be significant.
Limits on Reallocations
You can only reallocate money among Crediting Strategies at the end of a Term. If you want to take money out of a Crediting Strategy during a Term, you must take a withdrawal or Surrender your Contract. If you choose to take a withdrawal or Surrender the Contract, your withdrawal or Surrender could result in significant loss due to Early Withdrawal Charges, Daily Value Percentage adjustments, taxes, and tax penalties. A withdrawal before the end of a Term will proportionally reduce the Investment Base for an Indexed Strategy and the Return of Premium Guarantee for the Death Benefit, and this proportional reduction could be larger than the dollar amount of the withdrawal.
Effect of Surrenders
If you Surrender your Contract at any time during the first five Contract Years and an Early Withdrawal Charge applies, the amount payable will reflect a deduction for the charge. All or some portion of a withdrawal may be subject to federal and state income taxes and, if taken before age 591/2, may be subject to a 10% federal penalty tax. If you Surrender your Contract at the end of a Term, the amount payable will reflect any rise or fall of the applicable Indexes for the Term, applicable Positive Return Factor percentages and Negative Return Factor percentages and any Early Withdrawal Charge. If you Surrender your Contract before the end of a Term, the amount payable will reflect the applicable Daily Value Percentage, which could significantly reduce the amount you receive upon Surrender, and any Early Withdrawal Charge.
Effect of All Withdrawals
If you take a withdrawal at any time, we will reduce your Account Value by an amount equal to that withdrawal. If you take a withdrawal during the first five Contract Years and an Early Withdrawal Charge applies, we will also reduce your Account Value by the amount of the Early Withdrawal Charge. A reduction in the Account Value will reduce the amount payable upon Surrender, applied to the Annuity Payout Benefit, or payable as the Death Benefit. In addition, a withdrawal will proportionally reduce the Return of Premium Guarantee for the Death Benefit, and this proportional reduction could be larger than the dollar amount of the withdrawal.
Each withdrawal from an Indexed Strategy, including withdrawals available under the Free Withdrawal Allowance, withdrawals that qualify for a waiver of the Early Withdrawal Charge, withdrawals under an automatic withdrawal program and withdrawals to satisfy a required distribution, will reduce the Strategy value by the dollar amount of the withdrawal and any related Early Withdrawal Charge. If taken from an Indexed Strategy before the end of a Term, the reduction in Strategy value is determined by the Daily Value Percentage on the date of the withdrawal, or on the locked Daily Value Percentage if you have made a Performance Lock election. Unless you have made a Performance Lock election (which, except for withdrawals, freezes the Strategy value until the end of the Term), a withdrawal before the end of the Term should almost always result in a greater reduction in Strategy value than if the withdrawal had happened at the end of the Term under otherwise identical circumstances. The Investment Base used to calculate the Strategy value through the end of that Term will be reduced in proportion to the reduction in Strategy Value. This means the dollar amount of the proportional reduction in the Investment Base will be more, maybe significantly more, than the dollar amount of the withdrawal and the Early Withdrawal Charge if the Strategy value immediately before the withdrawal is less than the Investment Base. A reduction in the Investment Base will limit the effect of any rise or fall in the Index for the remainder of the Term.
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All or some portion of a withdrawal may be subject to federal and state income taxes and, if taken before age 591⁄2, may be subject to a 10% federal penalty tax. For a further discussion of the tax treatment of withdrawals and Surrenders, please see the Federal Tax Considerations section on page 68.
Early Withdrawal Charges will reduce Indexed Strategy values and may result in losses that exceed the Floor or reduce the protection of the Buffer.
Timing and Effect of Withdrawals Before End of Term
Before taking a withdrawal you should consider the dates on which the Term(s) of your Indexed Strategies end relative to the timing of that withdrawal.
If you take a withdrawal from an Indexed Strategy before the end of a Term, we will immediately reduce the Investment Base for that Indexed Strategy.
The reduction will be proportional to the reduction in the Strategy value, which means that the proportional reduction in the Investment Base could be larger than the dollar amount of the withdrawal.
Reductions to the Investment Base will have a negative effect on any increases in the Indexed Strategy value for the remainder of that Term, but will reduce any decreases in the Indexed Strategy value for the remainder of that Term.
Once the Investment Base for an Indexed Strategy is reduced due to a withdrawal before the end of a Term, it will not increase at any time during the remainder of that Term.
Each withdrawal from an Indexed Strategy before the end of a Term, including withdrawals available under the Free Withdrawal Allowance, withdrawals that qualify for a waiver of the Early Withdrawal Charge, withdrawals under an automatic withdrawal program and withdrawals to satisfy a required distribution, will proportionally reduce the Investment Base.
In order for you to avoid the application of the Daily Value Percentage in calculating the value of an Indexed Strategy, you need to schedule withdrawals to coincide with Term end dates. The Contract is intended for long-term investment purposes and the Contract and its Indexed Strategies may not be appropriate for investors who plan to take withdrawals (including automated withdrawals and required minimum distributions) during the first five Contract Years, because of the assessment of Early Withdrawal Charges, or who plan to take withdrawals during Indexed Strategy Terms, because of the application of the Daily Value Percentage.
No Ability to Determine Contract Values in Advance
We will process any withdrawal request at the first Market Close after receipt of your Request in Good Order. This means you will not be able to determine in advance the amount of the proportional reduction in the Investment Base due to the withdrawal. Likewise, you will not be able to determine in advance the amount payable upon Surrender, to be applied to the Annuity Payout Benefit or payable as the Death Benefit.
A Performance Lock election is effective on the second Market Close after receipt of your Request in Good Order. This means you will not be able to determine in advance the locked Daily Value Percentage that will be applicable to the Indexed Strategy at the time you make a Performance Lock election. The Daily Value Percentage may be higher or lower at the time the Performance Lock election becomes effective than it was when you submitted your Request in Good Order.
Changes in Positive Return Factors and Trading Cost
We set the Positive Return Factor percentage for each new Term of an Indexed Strategy. The Positive Return Factor percentage for a new Term of an Indexed Strategy may be lower than its Positive Return Factor percentage for the current Term. A Cap may be as low as 1%. A Trigger Rate may be as low as 1%. An Upside Participation Rate may be as low as 5%. You risk the possibility that the Positive Return Factor percentage for a new Term may be lower than you would find acceptable.
You bear the risk of any negative effect on the Daily Value Percentage and Indexed Strategy values of an increase in the Trading Cost.
Changes in Declared Rates
We set a Declared Rate for each new one-year Term of the Declared Rate Strategy. The Declared Rate will never be less than the guaranteed minimum interest rate set out in the Declared Rate Strategy endorsement included in your Contract. The guaranteed minimum interest rate set out in the endorsement will always be greater than 0% and will be at least equal to the minimum interest rate required for fixed annuity contracts by state Standard Nonforfeiture Law that is in effect on the date that the Contract is issued. You risk the possibility that the Declared Rate for a new Term may be lower than you would find acceptable.
Unavailable Indexed Strategies
At the end of a Term, we may stop offering any Indexed Strategy other than the S&P 500 1-year -10% Floor with Cap Indexed Strategy. Consequently, any other Indexed Strategy you selected may not be available after the end of a Term. In such an event, the Company will amend the prospectus. At least 30 days before the end of each Term, we will send you a written notice with information about the Indexed Strategies that will be available for the next Term.
We may establish minimum and maximum amounts or percentages that may be applied to a given Indexed Strategy. This means that an Indexed Strategy you selected may not be available after the end of a Term because the amount to be applied to that Strategy is less than the minimum we
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set for the new Term. Likewise, the amount to be applied to an Indexed Strategy may be limited by the maximum we set for the new Term, and the amount over that maximum would be reallocated. At least 30 days before the end of each Term, we will send you a written notice with information about any maximum or minimum that will apply for the next Term. No minimum or maximum shall apply to the Declared Rate Strategy or the S&P 500 1-year -10% Floor with Cap Indexed Strategy. If funds cannot be applied to a Strategy due to the minimum or maximum we set for the next Term and you do not request a reallocation of those funds, we will apply the funds to the Declared Rate Strategy.
In these cases, the funds that we allocate to the Declared Rate Strategy may earn a return that is lower than the return those funds would have earned if they had been applied to the Indexed Strategy you selected.
If you choose to Surrender your Contract because a certain Indexed Strategy is no longer available, you may be subject to an Early Withdrawal Charge. There may be tax consequences if you Surrender your Contract. You should seek advice on tax questions based on your particular circumstances from a tax advisor.
The S&P 500 5-year 10% Buffer with Upside Participation Rate Indexed Strategy and the S&P 500 5-year 20% Buffer with Cap Indexed Strategy are not available for Terms that begin after the first Contract Year. At the end of a Term for the S&P 5-Year 10% Buffer with Upside Participation Rate Indexed Strategy, if you do not reallocate, then we will apply the ending value of that Indexed Strategy to a new Term of the S&P 500 1-year 10% Buffer with Cap Indexed Strategy. If the S&P 500 1-year 10% Buffer with Cap Indexed Strategy is not available, then we will apply the ending value as set forth below for a 1-year Strategy. At the end of a Term for the S&P 5-Year 20% Buffer with Cap Indexed Strategy, if you do not reallocate, then we will apply the ending value of that Indexed Strategy to a new Term of the S&P 500 1-year 20% Buffer with Cap Indexed Strategy. If the S&P 500 1-year 20% Buffer with Cap Indexed Strategy is not available, then we will apply the ending value as set forth below for a 1-year Strategy.
If funds are allocated to a 1-year Indexed Strategy that will not be available for the next Term and you do not request a reallocation of those funds, we will apply the ending value of that Indexed Strategy as follows:
| 1) | to another Indexed Strategy that uses the same index as the prior Indexed Strategy, has protection against loss that is equal to or greater than that offered by the prior Indexed Strategy, and has a Term that is no longer than the prior Indexed Strategy; or |
| 2) | to the Declared Rate Strategy. |
Replacement of an Index
We have the right to replace an Index if it is discontinued, we are no longer able to use it, its calculation changes substantially, we determine that hedging instruments are difficult to acquire, or the cost of hedging becomes excessive. We may do so at the end of a Term or during a Term. If we replace an Index, we will provide notice to you and amend the prospectus. If we replace an Index during a Term, we will calculate any rise or fall in the Index using the old Index up until the replacement date. After the replacement date, we will calculate any rise or fall in the Index using the new Index but with a modified start of Term value for the new Index. The modified start of Term value for the new Index will reflect the rise or fall in the Index for the old Index from the start of the Term to the replacement date. The performance of the new Index may not be as good as the performance of the old Index. As a result, funds allocated to an Indexed Strategy may earn a return that is lower than the return they would have earned or experience losses greater than the losses they would have experienced if there had been no replacement.
Involuntary Termination of Contract
If your Account Value on any anniversary of the initial Strategy Application Date is below the minimum value of $5,000 for any reason, we may terminate your Contract on that anniversary. If your Contract has Terms that end on the same date because you made only one Purchase Payment, any involuntary termination will occur on that date. If your Contract has Terms that end on different dates because you made more than one Purchase Payment, any involuntary termination will occur on one of those dates, which will be the end of one Term but not the end of the other Terms. In this case, the Surrender Value payable upon termination of your Contract will reflect the Daily Value Percentages used to calculate the values of Indexed Strategies with Terms that are not ending on the termination date.
No Direct Investment in S&P 500 Index
When you allocate money to an Indexed Strategy that uses the S&P 500 Index, you will not be investing in that Index, or in any stock included in that Index. The S&P 500 Index is calculated without taking into account dividends paid on stocks that make up the S&P 500 Index. In addition, because the performance of an S&P 500 Indexed Strategy is linked to the performance of the S&P 500 Index and not the performance of the stocks included in the Index, your return may be less than that of a direct investment in such stocks. In addition, due to the same limitations, your return may be less than that of a direct investment in a fund that tracks the S&P 500 Index.
No Direct Investment in SPDR Gold Shares ETF. When you allocate money to an Indexed Strategy that uses the SPDR Gold Shares ETF, you will not be investing in that exchange-traded fund or in gold. In addition, because the performance of the SPDR Gold Shares ETF is linked to the performance of the share price of the ETF, which is determined by trading on the exchange, and not the performance of its investment portfolio, its underlying index or the components of that index, your return may be less than that of a direct investment in the securities or other assets held by the fund or a direct investment in the components of the fund’s underlying index. In addition, due to the same limitations, your return may be less than that of a direct investment in the fund.
No Direct Investment in an iShares ETF
When you allocate money to an Indexed Strategy that uses the iShares MSCI EAFE ETF or iShares U.S. Real Estate ETF, you will not be investing
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in that exchange-traded fund, the securities or other assets held by the fund, in any underlying index tracked by the fund, or in the securities or other assets held by such underlying index. In addition, because the performance of an iShares ETF is linked to the performance of the share price of the ETF, which is determined by trading on the exchange, and not the performance of its investment portfolio, its underlying index or the components of that index, your return may be less than that of a direct investment in the securities or other assets held by the fund or a direct investment in the components of the fund’s underlying index. In addition, due to the same limitations, your return may be less than that of a direct investment in the fund.
No Direct Investment in First Trust Barclays Edge Index
When you allocate money to an Indexed Strategy that uses the First Trust Barclays Edge Index, you will not be investing in that Index, or in any stock or bonds included in that Index. The First Trust Barclays Edge Index is calculated assuming that dividends paid on stocks that make up the First Trust Barclays Edge Index are reinvested. In addition, because the performance of the First Trust Barclays Edge Indexed Strategy is linked to the performance of the First Trust Barclays Edge Index and not the performance of the stocks and bonds included in the Index, your return may be less than that of a direct investment in such stocks and bonds. In addition, due to the same limitations, your return may be less than that of a direct investment in a fund that tracks the First Trust Barclays Edge Index.
Divergence of Performance
The performance of an Indexed Strategy will diverge from the performance of the underlying Index because changes in the value of an Indexed Strategy at the end of a Term are subject to Positive Return Factors and Negative Return Factors, or the Index change required to qualify for the Trigger Rate and because changes in the value of an Indexed Strategy before the end of a Term are based on the Daily Value Percentage.
Market Risk Related to Indexes
Money allocated to an Indexed Strategy that uses the S&P 500 Index or the First Trust Barclays Edge Index is subject to the risk that the market value of the underlying securities that comprise the applicable Index may decline over a Term. Likewise, money allocated to an Indexed Strategy that uses the iShares MSCI EAFE ETF, the iShares U.S. Real Estate ETF, or the SPDR Gold Shares ETF is subject to the risk that the fund’s share price may decline over a Term. The level of the S&P 500 Index and the First Trust Barclays Edge Index and the share prices of the iShares MSCI EAFE ETF, the iShares U.S. Real Estate ETF, and the SPDR Gold Shares ETF may be volatile. Any such market loss in an amount limited by the Floor or Buffer will be reflected in the Indexed Strategy value. For example, for a Floor Strategy with a floor of -10%, the Indexed Strategy value will be reduced at the end of the Term by the fall in the Index, not to exceed -10%. For a 10% Buffer Strategy, the Indexed Strategy value will be reduced by any amount by which the fall in the Index at the end of the Term exceeds the 10% Buffer. For a 20% Buffer Strategy, the Indexed Strategy value will be reduced by any amount by which the fall in the Index at the end of the Term exceeds the 20% Buffer. For each type of Indexed Strategy, this risk applies even if you do not take a withdrawal before the end of a Term.
Geopolitical conflicts could also create economic disruption, including increased market volatility, and presents economic uncertainty. The full impact and duration of these events are difficult to determine in advance. Any such impact could adversely affect the performance of the securities that comprise the Indexes and may lead to losses on your investment in the Indexed Strategies.
The historical performance of an Index does not guarantee future results.
S&P 500 Index. The S&P 500® Index is designed to reflect the large-cap sector of the U.S. equity market and, due to its composition, it also represents the U.S. equity market in general. Any positive change in the S&P 500 Index over a Term will be lower than the total return on an investment in the stocks that comprise the S&P 500 Index because such total return will reflect dividend payments on those stocks and the S&P 500 Index will not reflect those dividend payments. More information about the S&P 500 Index is set out in the Indexes section of this prospectus.
The S&P 500 Index is subject to multiple principal investment risks, such as those related to its investments in large-capitalization companies. The S&P 500 Index tracks a subset of the U.S. stock market, which could cause the S&P 500 Index to perform differently from the overall stock market. In general, large-capitalization companies may be unable to respond quickly to new competitive challenges and may not be able to attain the high growth rate of successful smaller companies. In addition, the S&P 500 Index may, at times, become focused in stocks of a particular market sector, which would subject the S&P 500 Index to proportionately higher exposure to the risks of that sector.
iShares MSCI EAFE ETF. The iShares MSCI EAFE ETF is an exchange traded fund that seeks to track the investment results of an index composed of large- and mid-capitalization developed market equities, excluding the U.S. and Canada (MSCI EAFE Index). This underlying index includes stocks from Europe, Australia, Asia and the Far East. It may include large- or mid-capitalization companies. The share price of the iShares MSCI EAFE ETF is tied to the performance of large- and mid-capitalization developed market equites, excluding the U.S. and Canada. The share price may not replicate the performance of the fund, its underlying index, or the components of that index. More information about the iShares MSCI EAFE ETF is set out in the Indexes section of this prospectus. To learn more about the iShares MSCI EAFE ETF, visit iShares.com and search ticker symbol EFA.
The fund is subject to several principal investment risks, such as those related to its investments in large-capitalization and mid-capitalization foreign companies. In general, large-capitalization companies may be unable to respond quickly to new competitive challenges, and may not be able to attain the high growth rate of successful smaller companies. Generally, the securities of mid-capitalization companies may be more volatile and may involve more risk than the securities of larger companies. Mid-capitalization companies are also more likely to fail than larger companies. Securities issued by non-U.S. companies are subject to the risks related to investments in foreign markets (e.g., increased price volatility; changing currency
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exchange rates; and greater political, regulatory, and economic uncertainty). Because the fund is an ETF, it is also exposed to the risks associated with the operation of any ETF. The value of its shares, which are valued based on their trading prices in the secondary market, may change rapidly and unpredictably and may trade at premiums or discounts to the fund’s net asset value.
The principal investment risks of the fund are described in the fund’s prospectus, including the following risks: asset class risk, authorized participant concentration risk, concentration risk, currency risk, cyber security risk, equity securities risk, financials sector risk, geographic risk, index-related risk, issuer risk, large-capitalization companies risk, management risk, market risk, market trading risk, mid-capitalization companies risk, national closed market trading risk, non-U.S. securities risk, operational risk, passive investment risk, reliance on trading partners risk, risk of investing in developed countries, risk of investing in Japan, securities lending risk, structural risk, tracking error risk and valuation risk.
iShares U.S. Real Estate ETF. The iShares U.S. Real Estate ETF is an exchange traded fund that seeks to track the investment results of an index composed of U.S. equities in the real estate sector (Dow Jones U.S. Real Estate Index). This underlying index may include large-, mid- or small-capitalization companies. A significant portion of the underlying index is represented by real estate investment trusts (REITs), but the components are likely to change over time. The share price of the iShares U.S. Real Estate ETF is tied to the performance of the real estate sector. The share price may not replicate the performance of the fund, its underlying index, or the components of that index. More information about the iShares U.S. Real Estate ETF is set out in the Indexes section of this prospectus. To learn more about the iShares U.S. Real Estate ETF, visit iShares.com and search ticker symbol IYR.
The fund is subject to several principal investment risks, such as those related to its investments in large-, mid- and small-capitalization U.S. companies in the real estate sector. In general, large-capitalization companies may be unable to respond quickly to new competitive challenges, and may not be able to attain the high growth rate of successful smaller companies. Generally, the securities of smaller companies (including mid- and small-capitalization companies) may be more volatile and may involve more risk than the securities of larger companies. Smaller companies are also more likely to fail than larger companies. Companies that invest in real estate are highly sensitive to the risks of owning real estate, to general and local economic conditions and developments in the real estate market, and to changes in interest rates. Many companies that invest in real estate utilize leverage (and some may be highly leveraged), which increases investment risk, and could potentially magnify the fund’s losses. Because the fund is an ETF, it is also exposed to the risks associated with the operation of any ETF. The value of its shares, which are valued based on their trading prices in the secondary market, may change rapidly and unpredictably and may trade at premiums or discounts to the fund’s net asset value.
The principal investment risks of the fund are described in the fund’s prospectus, including the following risks: asset class risk, authorized participant concentration risk, concentration risk, cyber security risk, dividend risk, equity securities risk, index-related risk, issuer risk, large-capitalization companies risk, management risk, market risk, market trading risk, mid-capitalization companies risk, operational risk, passive investment risk, real estate investment risk, risk of investing in the United States, securities lending risk and tracking error risk.
SPDR Gold Shares ETF. The SPDR Gold Shares ETF represents units of beneficial interest in, and ownership of, the SPDR Gold Trust, an exchange traded fund that holds gold bullion. The investment objective of the trust is for the shares to reflect the performance of the price of gold bullion, less the trust’s expenses. The shares are designed to mirror as closely as possible the price of gold, and the value of the shares relates directly to the value of the gold held by the trust, less its liabilities. The price of gold has fluctuated widely over the past several years and the shares have experienced significant price fluctuations. The value of the gold held by the trust is determined using the London Bullion Market Association (LBMA) Gold Price PM. The Gold Shares trade on the NYSE Arca under the symbol GLD. For more information, visit www.spdrgoldshares.com.
The fund is subject to several principal investment risks related to the price of gold. The price of gold has fluctuated widely over the past several years and the shares have experienced significant price fluctuations. Several factors may affect the price of gold, including:
Global gold supply and demand, which is influenced by such factors as gold’s uses in jewelry, technology, and industrial applications, purchases made by investors in the form of bars, coins, and other gold products, forward selling by gold producers, purchases made by gold producers to unwind gold hedge positions, central bank purchases and sales, and production and cost levels in major gold producing countries such as China, the United States and Australia.
Global or regional political, economic, or financial events and situations, especially those unexpected in nature;
Investors’ expectations with respect to the rate of inflation;
Investment and trading activities of hedge funds and commodity funds; and
Other economic variables such as income growth, economic output, and monetary policies.
The principal investment risks of the fund are described in the fund’s prospectus, including the following risks: price risk, passive investment risk, trading market risk, risk of loss, damage, theft, or restriction on access, and risks related to the fund’s ETF structure.
First Trust Barclays Edge Index. The First Trust Barclays Edge Index is designed to combine capital strength and value equity investment methodologies with a mix of US Treasury futures indexes for the potential to provide stable returns over time. The First Trust Barclays Edge Index consists of an equity component that combines stocks from the Capital Strength Index and the Value Line® Dividend Index. The Capital Strength Index starts with the largest 500 companies in the NASDAQ US benchmark index and then reduces the selection universe by screening for
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companies that meet minimum criteria including cash and/or short-term investments on their balance sheets, low debt-to-market cap ratios and attractive return-on-equity. It then selects the top 50 names from this smaller universe based on low historical volatility. The Value Line Dividend Index starts with the universe of stocks published in its The Value Line Investment Survey publication and then selects those with a Value Line® Safety Rank of 1 or 2, with attractive dividends and market cap of one billion dollars or above. It then equally weights all stocks that meet those conditions (generally, around 160-200 stocks). The First Trust Barclays Edge Index then combines the stocks represented in The Capital Strength Index and the Value Line Dividend Index with an equal-weight assigned to each underlying index and rebalanced back to equal-weight on a monthly basis. Furthermore, since the index is on an excess return basis (i.e., it returns the index performance in excess of risk-free rates), the risk-free return is deducted from the equity underliers. The risk-free rate used in this calculation is the U.S. Fed Funds Rate published by the Federal Reserve of New York (ticker: FEDL01) for each day divided by 360 as outlined in the Index Rulebook. No such adjustment is needed to the US Treasury futures indexes as these securities returns are naturally on an excess return basis.
The Index uses an optimizer to evaluate its exposure to stocks and US Treasury futures indexes on a daily basis to target a 7% volatility level. This volatility control mechanism aims to target or limit the volatility of the index return over time by adjusting the exposure of the index constituents through a rules-based process called mean-variance optimization. The optimizer defines risk using both shorter and longer term measures of historical realized volatility. It then seeks to determine the allocations between the equity and US Treasury futures index that produce the highest expected return for the target volatility level, subject to constraints. Depending on the constraints of the optimizer at the time, the Index may or may not allocate to the US Treasury futures indexes. When the volatility measures are low, the index can have exposure greater than 100%. However, the optimizer is constrained such that the exposure can never be greater than 225%. Likewise, when volatility is high, the index exposure can be less than 100%. In addition, the First Trust Barclays Edge Index generally rebalances based on end-of-day values in the event there is a deviation in the index component weights of 10% or more, on an absolute basis, from the previous index rebalance value.
The performance of the First Trust Barclays Edge Index reflects the deduction of operating costs and rebalancing costs from the valuation of the underlying indexes. These costs, deducted as an annualized percentage on a daily basis, are fixed for the underlying indexes. The operating costs for the First Trust Barclays Edge Index range from 0.20% to 0.60%, and the rebalancing costs for the First Trust Barclays Edge Index range from 0.02% to 0.03%. The operating costs represent an estimate of the costs that would be incurred to buy and sell the index components. The rebalancing costs represent an estimate of the costs that would be incurred each time the Index rebalances due to changes in weightings of the Index components. The deduction of these costs occurs at the First Trust Barclays Edge Index level (i.e., the return on the First Trust Barclays Edge Index is reduced based on the applicable operating and rebalancing costs).
The principal risks of the First Trust Barclays Edge Index include:
DEBT SECURITIES RISK. Investments in debt securities subject the holder to the credit risk of the issuer. Credit risk refers to the possibility that the issuer or other obligor of a security will not be able or willing to make payments of interest and principal when due. Generally, the value of debt securities will change inversely with changes in interest rates. To the extent that interest rates rise, certain underlying obligations may be paid off substantially slower than originally anticipated and the value of those securities may fall sharply. During periods of falling interest rates, the income received by a portfolio may decline. If the principal on a debt security is prepaid before expected, the prepayments of principal may have to be reinvested in obligations paying interest at lower rates. Debt securities generally do not trade on a securities exchange making them generally less liquid and more difficult to value than common stock.
EQUITY SECURITIES RISK. Equity securities prices fluctuate for several reasons, including changes in investors’ perceptions of the financial condition of an issuer or the general condition of the relevant equity market, such as market volatility, or when political or economic events affecting an issuer occur. Common stock prices may be particularly sensitive to rising interest rates, as the cost of capital rises and borrowing costs increase. Equity securities may decline significantly in price over short or extended periods of time, and such declines may occur in the equity market as a whole, or they may occur in only a particular country, company, industry, or sector of the market.
INFLATION RISK. Inflation risk is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As inflation increases, the present value of a portfolio’s assets and distributions may decline.
INTEREST RATE RISK. Interest rate risk is the risk that the value of the debt securities in an underlying portfolio will decline because of rising market interest rates. Interest rate risk is generally lower for shorter term debt securities and higher for longer-term debt securities. A portfolio may be subject to a greater risk of rising interest rates than would normally be the case due to the current period of historically low rates and the effect of potential government fiscal policy initiatives and resulting market reaction to those initiatives. Higher market interest rates may reduce returns for the First Trust Barclays Edge Index. Duration is a reasonably accurate measure of a debt security’s price sensitivity to changes in interest rates and a common measure of interest rate risk. Duration measures a debt security’s expected life on a present value basis, taking into account the debt security’s yield, interest payments and final maturity. In general, duration represents the expected percentage change in the value of a security for an immediate 1% change in interest rates. For example, the price of a debt security with a three-year duration would be expected to drop by approximately 3% in response to a 1% increase in interest rates. Therefore, prices of debt securities with shorter durations tend to be less sensitive to interest rate changes than debt securities with longer durations. As the value of a debt security changes over time, so will its duration.
MARKET RISK. Securities are subject to market fluctuations caused by such factors as economic, political, regulatory or market developments, changes in interest rates and perceived trends in securities prices. In addition, local, regional, or global events such as war, acts of terrorism, spread
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of infectious diseases or other public health issues, recessions, or other events could have a significant negative impact on the market and investment portfolios. For example, the coronavirus disease 2019 (COVID-19) global pandemic and the aggressive responses taken by many governments, including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines or similar restrictions, had negative impacts, and in many cases severe impacts, on markets worldwide. As this global pandemic illustrated, such events may affect certain geographic regions, countries, sectors, and industries more significantly than others. These events also adversely affect the prices and liquidity of portfolio securities or other instruments and could result in disruptions in the trading markets.
REIT RISK. REITs typically own and operate income-producing real estate, such as residential or commercial buildings, or real-estate related assets, including mortgages. As a result, investments in REITs are subject to the risks associated with investing in real estate, which may include, but are not limited to: fluctuations in the value of underlying properties; defaults by borrowers or tenants; market saturation; changes in general and local operating expenses; and other economic, political or regulatory occurrences affecting companies in the real estate sector. REITs are also subject to the risk that the real estate market may experience an economic downturn generally, which may have a material effect on the real estate in which the REITs invest and their underlying portfolio securities. REITs may have also a relatively small market capitalization which may result in their shares experiencing less market liquidity and greater price volatility than larger companies. Increases in interest rates typically lower the present value of a REIT’s future earnings stream, and may make financing property purchases and improvements more costly. Because the market price of REIT stocks may change based upon investors’ collective perceptions of future earnings, the value of a portfolio that holds REITs will generally decline when investors anticipate or experience rising interest rates.
U.S. GOVERNMENT SECURITIES RISK. U.S. government securities are subject to interest rate risk but generally do not involve the credit risks associated with investments in other types of debt securities. As a result, the yields available from U.S. government securities are generally lower than the yields available from other debt securities. U.S. government securities are guaranteed only as to the timely payment of interest and the payment of principal when held to maturity. While securities issued or guaranteed by U.S. federal government agencies (such as Ginnie Mae) are backed by the full faith and credit of the U.S. Department of the Treasury, securities issued by government sponsored entities (such as Fannie Mae and Freddie Mac) are solely the obligation of the issuer and generally do not carry any guarantee from the U.S. government.
VOLATILITY CONTROL RISK. Volatility is a measure of the extent of variation in the returns of an asset over a period of time. The Index may reduce its exposure to one or more markets during periods of volatility in order to mitigate volatility in the value of the Index. During times when the Index reduces its market exposure in response to volatility, the Index will not fully participate in the growth in that market. Reducing market exposure during periods of volatility may mitigate the impact of short-term, significant market fluctuations in the Index’s return, but may also cause the Index to not fully participate in recoveries in those markets. There is no guarantee that any volatility control methodology will be successful.
Market Risk Related to Option Prices
Before the end of a Term, money allocated to an Indexed Strategy is subject to the risk that changes in the related option prices may have a negative effect on the value of the Indexed Strategy. This risk applies only if you take a withdrawal or surrender your Contract before the end of a Term.
Performance Lock Risk
If you make a Performance Lock election, you will no longer participate in the positive or negative performance of the Index over the remainder of the Term. This means the value of the Indexed Strategy cannot increase for the remainder of the Term, even if the Index rises over the remainder of the Term.
A Performance Lock election is effective on the second Market Close after receipt of your Request in Good Order. This means you will not be able to determine in advance the gain or loss applicable to the Indexed Strategy when electing a Performance Lock. The gain or loss may be higher or lower at the time the Performance Lock election goes effective than it was when you submitted your Request in Good Order.
Regulatory Risk
MassMutual Ascend Life is not an investment company. Neither MassMutual Ascend Life nor the separate account that we established in connection with the Contracts is registered as an investment company under the Investment Company Act of 1940. The protections provided to investors by that Act are not applicable to the Contract.
Reliance on Our Claims-Paying Ability
No company other than MassMutual Ascend Life has any legal responsibility to pay amounts owed under the Contract. You should look to the financial strength of MassMutual Ascend Life for its claims-paying ability.
Our general account assets fund the guarantees provided in the Contracts. The assets are subject to our general business operation liabilities and claims of our creditors and may lose value. We established a non-unitized separate account for the purpose of supporting our obligation to adjust the Indexed Strategy values based on the Daily Value Percentage or rise or fall of the Index. The assets in the non-unitized separate account are not chargeable with liabilities arising out of any other business that we conduct but may lose value. The non-unitized separate account differs from the unitized separate accounts that support our variable annuity contracts. As a result, unlike the owner of a traditional variable annuity who has a
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beneficial interest in, and participates in the performance of, the assets of the related unitized separate account, you do not have any interest in or claim on the assets in the non-unitized separate account and you will not participate in any way in the performance of assets held in that account.
Various factors, such as those listed below, could materially affect our business, financial condition, cash flows or future results and, in turn, our financial strength and claims-paying ability. A more complete discussion of these factors appears on pages A6-A10.
Financial losses including those resulting from the following events:
Adverse developments in financial markets and deterioration in global economic conditions
Unfavorable interest rate environments
Losses on our investment portfolio
Loss of market share due to intense competition
Ineffectiveness of risk management policies
Changes in applicable law and regulations
Inability to obtain or collect on reinsurance
A downgrade or potential downgrade in our financial strength ratings
Variations from actual experience and management’s estimates and assumptions that could result in inadequate reserves
Significant variations in the amount of capital we must hold to meet statutory capital requirements
Legal actions and regulatory proceedings
Difficulties with technology or data security
Failure to protect confidentiality of customer information
Failure to maintain effective and efficient information systems
Occurrence of catastrophic events, public health crises (e.g., the COVID-19 pandemic), terrorism or military actions
We continue to be subject to significant state solvency regulations that require us to reserve amounts to pay our contractual guarantees. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risks Primarily Related to MMALIC’s Financial Strength and Claims-Paying Ability,” and “Financial Statements”, and “Regulation” for additional financial information about the company and the state solvency regulations to which we are subject.
INDEXED STRATEGIES
The Indexed Strategies provide returns that are based, in part, upon changes in an Index. The Indexed Strategies do not earn interest at a fixed rate. Unlike a traditional variable annuity, the values of the Indexed Strategies are not based on the investment performance of underlying portfolios.
Unless you have made a Performance Lock election, any increase in the value of an Indexed Strategy at the end of a Term is based on the change in the applicable Index since the start of that Term and the applicable Positive Return Factor percentage for that Term. At the end of a Term, any decrease in the value of an Indexed Strategy is determined based on the fall in the applicable Index since the start of that Term and the applicable Negative Return Factor percentage.
If you have made a Performance Lock election, any increase or decrease in the value of an Indexed Strategy before the end of a Term is based on the calculated price of hypothetical options related to the possible future change in the applicable Index over the Term, the initial cost of those options, and the trading cost related to those options. The calculated price of those options takes into account the Cap or the Trigger Rate for the Term and the Floor, the Buffer, and the Index change required to qualify for the Trigger Rate.
If you have made a Performance Lock election, then beginning at the second Market Close following receipt of your election and continuing through the end of the Term, any increase or decrease in the value of an Indexed Strategy is locked in based on the Daily Value Percentage, which is the calculated price of hypothetical options related to the possible future change in the applicable Index over the Term, the initial cost of those options, and the trading cost related to those options, all as determined at that second Market Close.
Each Indexed Strategy has a Positive Return Factor percentage for each Term. We will set a new Positive Return Factor percentage for each Indexed Strategy prior to the start of each Term.
The applicable Negative Return Factor percentage for a Strategy will not change from Term to Term. For each Term of an Indexed Strategy with a Buffer that we currently offer, the Buffer is 10% or 20%. For each Term of the Indexed Strategies with a Floor that we currently offer, the Floor is -10%.
Each Term it is possible for you to lose a portion of the money you allocated to any Indexed Strategy at the end of a Term or if you take a withdrawal before the end of a Term. In extreme circumstances, it is possible for you to lose all of the money you allocated to any Indexed Strategy if you Surrender your Contract before the end of a Term.
Available Indexed Strategies
For this Contract, we currently offer twelve Indexed Strategies. Each of these Indexed Strategies uses one of five Indexes: S&P 500® Index, SPDR® Gold Shares ETF, iShares® MSCI EAFE ETF, iShares® U.S. Real Estate ETF, and First Trust Barclays Edge Index. Ten of these Indexed Strategies have one-year Terms and two have five-year Terms. The returns of each Index, except the First Trust Barclays Edge Index, do not reflect the
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reinvestment of dividends, which means that the Index return will be less than what would be received by an investing in the individual securities that make up the Index. The First Trust Barclays Edge Index deducts fees and costs when calculating Index performance, which also will reduce the Index return. The S&P 500 1-Year -10% Floor with Cap Indexed Strategy will always be available. In future Terms, we may stop offering any other Indexed Strategy, we may modify the Positive Return Factor percentage for any Indexed Strategy, and we may offer new Indexed Strategies.
| | | | | | | | |
Strategy | | Index | | Term | | Negative
Return
Factor | | Positive Return
Factor |
S&P 500 1-Year -10% Floor with Cap | | S&P 500® | | 1-year | | -10% Floor | | Cap |
S&P 500 1-Year 10% Buffer with Cap | | S&P 500 | | 1-year | | 10% Buffer | | Cap |
S&P 500 1-Year 10% Buffer with Dual Performance Trigger* | | S&P 500 | | 1-year | | 10% Buffer | | Trigger Rate |
S&P 500 1-year 10% Buffer with Performance Trigger* | | S&P 500 | | 1-year | | 10% Buffer | | Trigger Rate |
S&P 500 1-year 20% Buffer with Performance Trigger* | | S&P 500® | | 1-year | | 20% Buffer | | Trigger Rate |
S&P 500 1-Year 20% Buffer with Cap* | | S&P 500 | | 1-year | | 20% Buffer | | Cap |
S&P 500 5-Year 10% Buffer with Upside Participation Rate* | | S&P 500® | | 5-year | | 10% Buffer | | Upside Participation Rate |
S&P 500 5-Year 20% Buffer with Cap* | | S&P 500 | | 5-year | | 20% Buffer | | Cap |
SPDR Gold Shares 1-Year -10% Floor with Cap | | SPDR Gold Shares ETF | | 1-year | | -10% Floor | | Cap |
iShares U.S. Real Estate 1-Year -10% Floor with Cap | | iShares U.S. Real Estate ETF | | 1-year | | -10% Floor | | Cap |
iShares MSCI EAFE1-Year -10% Floor with Cap | | iShares MSCI EAFE ETF | | 1-year | | -10% Floor | | Cap |
First Trust Barclays Edge 1-Year 10% Buffer with Cap* | | First Trust Barclays Edge | | 1-year | | 10% Buffer | | Cap |
A Performance Lock election may be made for any Term or Terms of the S&P 500 Indexed Strategies (excluding the three Trigger Strategies) and the First Trust Barclays Edge Indexed Strategy. If you make a Performance Lock election for a given Term of an eligible Strategy, you may not change or revoke that election or make a second election for that same Term of that same Strategy.
| * | These 7 Strategies are not available for Contracts issued in Missouri or Nebraska until such time as state approval is received. |
Possible Changes in Indexed Strategies
The S&P 500 1-Year -10% Floor with Cap Indexed Strategy will always be available. At the end of a Term, we may stop offering any other Indexed Strategy. Consequently, any other Indexed Strategy listed above may not be available after the end of the initial Term. We have the right to replace the Index associated with an Indexed Strategy under certain circumstances.
In the future, we may offer new Indexed Strategies. Any new Buffer Strategy will offer protection against loss at least equal to a 5% Buffer. Any new Floor Strategy will offer protection against loss at least equal to a -20% Floor.
Indexed Strategies that may be available in the future may earn a return that is lower than the return your investments would have earned if they had been invested in the other Indexed Strategies that are currently available. In addition, any reduction in the available number of Indexed Strategies may reduce your opportunity to increase your Account Value.
Considerations in Choosing an Indexed Strategy
When choosing among Indexed Strategies, you should consider the characteristics and risk profiles of the Indexes, which are discussed in the Indexes section of this prospectus. You should also consider Term lengths. It is generally more difficult to predict Index performance over a longer Term. In addition, you cannot reallocate funds among Strategies before the end of a Term, and the only way to exit a Strategy before the end of a Term is to take a withdrawal or Surrender your Contract.
When choosing among Indexed Strategies that use the same Index, you should also consider how the Positive Return Factors may affect the potential return.
A Cap Strategy provides you with the opportunity to participate fully in any rise in the Index up to the Cap, but you will not participate in any rise in the Index in excess of the Cap.
An Upside Participation Rate Strategy provides you with the opportunity to share in any rise in the Index without a Cap, but your share of any rise is limited by the rate at which you participate in the rise and may be less than 100%.
A Performance Trigger Strategy provides you with the opportunity to receive the Trigger Rate when the change in the Index over the course of a Term is zero or positive, or in the case of the Dual Performance Trigger Strategy, is zero, positive, or negative up to the Buffer. However, you will not
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participate in any rise in the Index in excess of the Trigger Rate.If we assume the Upside Participation Rate is less than 100%, here is how the performance will compare for similar Indexed Strategies with a Cap, Upside Participation Rate, and Trigger Rate each with a 10% Buffer.
In any Term where the rise in the Index is less than the Cap, the Cap Strategy will always perform better than the corresponding Upside Participation Rate Strategy.
In any Term where the rise in the Index is more than the Cap, but less than the Cap divided by the Upside Participation Rate, the Cap Strategy will always perform better than the corresponding Upside Participation Rate Strategy.
In any Term where the rise in the Index is more than the Cap and equal to the Cap divided by the Upside Participation Rate, the Cap Strategy and Upside Participation rate Strategy will perform the same.
In any Term where the rise in the Index is more than the Cap and is more than the Cap divided by the Upside Participation Rate, the Upside Participation Rate Strategy will always perform better than the Cap Strategy.
Any increase in the value of a Trigger Strategy will equal the Trigger Rate multiplied by the remaining Investment Base. This means that the performance of a Trigger Strategy will only perform better than other Strategies if the Trigger Rate is higher than the returns of the other Strategies after a Cap or Upside Participation Rate has been applied.
In any Term where the Index falls by more than 10%, the Cap Strategy, Upside Participation Rate Strategy, or Trigger Strategy will produce the same results at the end of the Term because they have the same 10% Buffer. However, before the end of the Term, due to different option pricing, they may have different Daily Value Percentages and returns.
In any Term where the Index falls by 10% or less, the Dual Performance Trigger Strategy will perform better than the Cap Strategy, Upside Participation Rate Strategy, and Performance Trigger Strategy because the return of the Dual Performance Trigger Strategy will be positive, in an amount equal to the Trigger Rate, while the Cap Strategy, Upside Participation Rate Strategy, and Performance Trigger Strategy will be zero at the end of the Term because there is no positive return and they have the same 10% Buffer.
When choosing among Indexed Strategies that use the same Index, you should also consider how Negative Return Factors may affect your potential risk of loss.
A Buffer Strategy protects you against losses up to the Buffer amount, but you are subject to any loss in excess of the Buffer.
A Floor Strategy limits your loss to the Floor amount, and you will be protected against any loss beyond the Floor.
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Examples. These examples are intended to help you understand the interplay between Positive Return Factors for Indexed Strategies with similar Terms in different market environments and how this interplay affects the comparative performance of Indexed Strategies that use the same Index. The example assumes that each strategy has downside protection in the form of a 10% Buffer.
| | | | | | | | | | |
| | | | | Return at end of Term | | |
Index rise
over Term | | 16% Cap | | 75% Upside
Participation Rate | | 11% Trigger
Rate for Performance
Trigger
Strategy | | 8% Trigger
Rate for Dual
Performance
Trigger
Strategy | | Explanation |
| | | | | |
| 4% | | 4% | | 3% | | 11% | | 8% | | The Cap Strategy has a better return than the Upside Participation Rate Strategy because the 4% rise in the Index is less than the 16% Cap while the Upside Participation Rate captures only 75% of the 4% rise in the Index. Positive Index changes can only produce positive returns for the Performance Trigger Strategy and the Dual Performance Trigger Strategy that amount to 11% and 8%, respectively. |
| | | | | |
| 14% | | 14% | | 10.5% | | 11% | | 8% | | The Cap Strategy has a better return than the Upside Participation Rate Strategy because the 14% rise in the Index is less than the 16% Cap, but more than 10.5% (the 14% rise in the Index multiplied by the 75% Upside Participation Rate). Positive Index changes can only produce positive returns for the Performance Trigger Strategy and the Dual Performance Trigger Strategy that amount to 11% and 8%, respectively. |
| | | | | |
| 16% | | 16% | | 12% | | 11% | | 8% | | The Cap Strategy has a better return than the Upside Participation Rate Strategy because the 16% rise in the Index is fully captured by the 16% Cap while the Upside Participation Rate captures only 75% of the 16% Index rise. Positive Index changes can only produce positive returns for the Performance Trigger Strategy and the Dual Performance Trigger Strategy that amount to 11% and 8%, respectively. |
| | | | | |
| 20% | | 16% | | 15% | | 11% | | 8% | | The Cap Strategy has a better return than the Upside Participation Rate Strategy because the Cap Strategy caps the 20% Index rise at 16% while the Upside Participation Rate captures only 75% of the 20% Index rise. Positive Index changes can only produce positive returns for the Performance Trigger Strategy and the Dual Performance Trigger Strategy that amount to 11% and 8%, respectively. |
| | | | | |
| 0% | | 0% | | 0% | | 11% | | 8% | | Performance Trigger Strategies and Dual Performance Trigger Strategies are the only Indexed Strategies that change in value when the Index Change is zero. The Performance Trigger Strategy outperforms the Dual Performance Trigger Strategy in this case because the Trigger Rate is higher for the Performance Trigger Strategy. |
| | | | | |
| -10% | | 0% | | 0% | | 0% | | 8% | | The Dual Performance Trigger Strategy provides a better return than all the other options because a positive Trigger Rate is credited when Index losses do not exceed the Buffer. |
| | | | | |
| -30% | | -20% | | -20% | | -20% | | -20% | | All Strategies have the same negative return because the Index loss exceeded the Buffer. |
See the “Examples: Impact of Withdrawals on Contract Values and Amounts Realized” section below for more information about the interplay between Positive Return Factors for Indexed Strategies with different Terms in different market environments. See the “Indexed Strategy Value at End of Term” section below for more examples for each type of Indexed Strategy.
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Term
Each Term of an Indexed Strategy will start and end on a Strategy Application Date. Each Term is either one year long or five years long. A new Term will start at the end of the preceding Term.
If you make only one Purchase Payment or you make all of your Purchase Payments before the initial Strategy Application Date, then each Term of each Indexed Strategy will end on the same date in any given year. If you make a Purchase Payment after the initial Strategy Application Date, then your Purchase Payments will be applied to the Indexed Strategies on different Strategy Application Dates. In this case, an Indexed Strategy may have Terms that end on different dates in any given year.
Examples. These examples show how a Contract with multiple Purchase Payments may have Terms that end on different dates.
You make your initial Purchase Payment on March 10 and another Purchase Payment on March 17. You allocate both payments to the same Indexed Strategy and both payments are applied on March 20. Each Term of that Indexed Strategy will start and end on March 20.
You make your initial Purchase Payment on May 2 and another Purchase Payment on June 14. You allocate both payments to the same Indexed Strategy. Your initial Purchase Payment is applied on May 6 and the other Purchase Payment is applied on June 20. That Indexed Strategy will have a Term that starts and ends on May 6 and another Term that starts and ends on June 20.
Investment Base
The value of an Indexed Strategy is calculated using the Investment Base. The Investment Base is not your Account Value, Surrender Value, Annuity Payout value, or Death Benefit value, but it is used to calculate those values.
The Investment Base is the amount applied to the Strategy at the start of the current Term, reduced proportionally for each withdrawal and related Early Withdrawal Charge during the current Term.
A withdrawal and the Related Early Withdrawal Charge reduce the Investment Base by an amount that is proportional to the reduction in the value of the Indexed Strategy due to the withdrawal and the charge. The reduction in the value of the Indexed Strategy will be based on the Daily Value Percentage of the Indexed Strategy (or the locked Daily Value Percentage if you have made a Performance Lock election). The Daily Value Percentage could be negative, which could result in significant loss, even if the Index has risen since the start of the Term.
If the Daily Value Percentage is positive and the Strategy value immediately before the withdrawal is greater than the Investment Base, then the reduction in the Investment Base will be less than the withdrawal and the related Early Withdrawal Charge.
If the Daily Value Percentage is negative and the Strategy value immediately before the withdrawal is less than the Investment Base, then the reduction in the Investment Base will be more than the withdrawal and the related Early Withdrawal Charge.
A reduction in the Investment Base for a Term will reduce the gain or loss from any future changes in the Index during that Term.
Here are the formulas that we use to calculate a reduction in the Investment Base for a withdrawal.
Withdrawal as a percentage of Strategy value = withdrawal and related charge / Strategy value before withdrawal
Reduction in Investment Base = Investment Base before withdrawal x withdrawal as a percentage of Strategy value
Investment Base after withdrawal = Investment Base before withdrawal – reduction in Investment Base
Indexed Strategy Value
At the end of a Term, unless you have made a Performance Lock election, the value of an Indexed Strategy is equal to:
the Investment Base at the end of the Term; plus
any increase for a rise in the Index for the Term (measured at the start and end of the Term, or for the Dual Performance Trigger Strategy, any fall in the Index that does not exceed the Buffer), adjusted for the applicable Positive Return Factor percentage; or minus
any decrease for a fall in the Index for the Term (measured at the start and end of the Term) adjusted for the applicable Negative Return Factor percentage.
In this formula, the Investment Base at the end of the Term is equal to the amount applied to the Strategy at the start of that Term, reduced proportionally for each withdrawal and related Early Withdrawal Charge that you took during that Term. After we calculate the Investment Base at the end of the Term, we calculate any increase or decrease for the Index performance over that Term. Any increase for the Term (or for the Dual Performance Trigger Strategy, any fall in the Index that does not exceed the Buffer) is subject to the applicable Positive Return Factor percentage for that Term. Any decrease for the Term is subject to the applicable Negative Return Factor percentage.
Examples. At the end of a Term, the Investment Base in an Index Strategy is $5,000. You take a $1,000 withdrawal and no Early Withdrawal Charge applies to the withdrawal.
Assume that the Index had increased by 20% at the end of the Term, and a Cap of 10%, an Upside Participation Rate of 50%, or a Trigger Rate of 10% was in place:
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| | |
| | At Final Market Close of Term |
Rise in Index | | +20% |
Increase as a Percentage | | +10% (10% Cap, or 50% Par Rate x 20%, or 10% Trigger Rate) |
Dollar Amount of Increase | | +$500 ($5,000 x 10%) |
Strategy value before Withdrawal | | $5,500 ($5,000 + $500) |
Withdrawal Amount | | $1,000 |
Strategy value at Term End | | $4,500 ($5,500 - $1,000) |
If in this example an Early Withdrawal Charge of 5% applied to the entire withdrawal amount and you requested a net amount of $1,000, your withdrawal amount would have been $1,053 ($1,000 / (1 – 0.05)), resulting in a Strategy value at Term End of $4,447 ($5,500 - $1,053).
Assume that the Index had decreased by 20% at the end of the Term, and either a Buffer of 10% or a 10% Floor was in place:
| | | | |
| | | At Final Market Close of Term |
| | | 10% Buffer | | -10% Floor |
Fall in Index | | -20% | | -20% |
Decrease as a Percentage | | -10% (20% fall minus 10% Buffer) | | -10% (-10% Floor) |
Dollar Amount of Decrease | | -$500 ($5,000 x -10%) | | -$500 ($5,000 x -10%) |
Strategy value before Withdrawal | | $4,500 ($5,000 - $500) | | $4,500 ($5,000 - $500) |
Withdrawal Amount | | $1,000 | | $1,000 |
Strategy value at Term End | | $3,500 ($4,500 - $1,000) | | $3,500 ($4,500 - $1,000) |
If in this example an Early Withdrawal Charge of 5% applied to the entire withdrawal amount and you requested a net amount of $1,000, your withdrawal amount would have been $1,053 ($1,000 / (1 – 0.05)), resulting in a Strategy value at Term End of $3,447 ($4,500 - $1,053) for the Buffer Strategy and the Floor Strategy.
On each day before the end of a Term, unless you have made a Performance Lock election, the value of an Indexed Strategy is equal to:
the Investment Base on that day; plus
any increase for a positive Daily Value Percentage; or minus
any decrease for a negative Daily Value Percentage.
In this formula, the Investment Base on each day before the end of the Term is equal to the amount applied to the Strategy at the start of that Term, reduced proportionally for each withdrawal and related Early Withdrawal Charge that you took on or before that day. After we calculate the Investment Base on that day, we calculate any increase for a positive Daily Value Percentage or any decrease for a negative Daily Value Percentage.
A withdrawal and the related Early Withdrawal Charge reduce the value of an Indexed Strategy by an amount equal to the withdrawal and the charge.
Examples. You allocate $5,000 to an Indexed Strategy at the start of a Term. This means the Investment Base at the start of the Term is $5,000. You take a $1,000 withdrawal and no Early Withdrawal Charge applies to the withdrawal.
Assume that the Daily Value Percentage is 5% on the withdrawal date.
The increase for the Daily Value Percentage is equal to $250 ($5,000 x 5%).
The Strategy value on the withdrawal date is $5,250 ($5,000 + $250).
The Strategy value after the withdrawal is $4,250 ($5,250 - $1,000).
The withdrawal as a percentage of the Strategy value is 19.05% ($1,000 / $5,250).
The reduction in the Investment Base is $952 ($5,000 x 19.05%).
The Investment Base after the withdrawal is $4,048 ($5,000 - $952).
Because the Strategy value on the withdrawal date was more than the Investment Base, the reduction in the Investment Base is only $952, which is less than the $1000 withdrawal.
If in this example an Early Withdrawal Charge of 5% applied to the entire withdrawal amount and you requested a net amount of $1,000:
The increase for the Daily Value Percentage is equal to $250 ($5,000 x 5%).
The Strategy value on the withdrawal date is $5,250 ($5,000 + $250).
The total amount withdrawn is $1,053 ($1,000 / (1 – 0.05)).
The Strategy value after the withdrawal is $4,197 ($5,250 - $1,053).
The withdrawal as a percentage of the Strategy value is 20.05% ($1,053 / $5,250).
The reduction in the Investment Base is $1,003 ($5,000 x 20.05%).
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The Investment Base after the withdrawal is $3,997 ($5,000 - $1,003).
Because the Strategy value on the withdrawal date was more than the Investment Base, the reduction in the Investment Base was $1,003, which is less than the $1,053 withdrawal.
Assume that the Daily Value Percentage is -10% on the withdrawal date.
The reduction for the Daily Value Percentage is equal to $500 ($5,000 x -10%).
The Strategy value on the withdrawal date is $4,500 ($5,000 - $500).
The Strategy value after the withdrawal is $3,500 ($4,500 - $1,000).
The withdrawal as a percentage of the Strategy value is 22.22% ($1,000 / $4,500).
The reduction in the Investment Base is $1,111 ($5,000 x 22.22%).
The Investment Base after the withdrawal is $3,889 ($5,000 - $1,111).
Because the Strategy value on the withdrawal date was less than the Investment Base, the reduction in the Investment Base was $1,111, which is greater than the $1,000 withdrawal.
If in this example an Early Withdrawal Charge of 5% applied to the entire withdrawal amount and you requested a net amount of $1,000:
The reduction for the Daily Value Percentage is equal to $500 ($5,000 x 10%).
The Strategy value on the withdrawal date is $4,500 ($5,000 - $500).
The total amount withdrawn is $1,053 ($1,000 / (1 - 0.05)).
The Strategy value after the withdrawal is $3,447 ($4,500 - $1,053).
The withdrawal as a percentage of the Strategy value is 23.39% ($1,053 / $4,500).
The reduction in the Investment Base is $1,170 ($5,000 x 23.39%).
The Investment Base after the withdrawal is $3,830 ($5,000 - $1,170).
Because the Strategy value on the withdrawal date was less than the Investment Base, the reduction in the Investment Base was $1,170, which is greater than the $1,053 withdrawal.
Performance Lock
Performance Lock is an election to lock in the Daily Value Percentage for the remainder of a Term of an Indexed Strategy. You can make a Performance Lock election once per Term for each S&P 500 Strategy (excluding the three Trigger Strategies) and for each First Trust Barclays Edge Strategy.
You may make a Performance Lock election by a Request in Good Order. Once we receive your Request in Good Order, a Performance Lock election for a Term cannot be changed or revoked. You may access Daily Value Percentage information for the Indexed Strategies as of the previous day’s Market Close by calling 1-800-789-6771 or by accessing your account online at www.massmutualascend.com.
A Performance Lock election for a Term is effective on the second Market Close following our receipt of your Request in Good Order. After the second Market Close, the Strategy value before the end of the Term and the Strategy value at the end of the Term is based on the Daily Value Percentage as locked at that second Market Close. This means that the Daily Value Percentage as of that second Market Close will apply from that date on through the end of the Term.
Because a Performance Lock election is effective on the second Market Close following receipt of the election, you will not be able to determine in advance the locked Daily Value Percentage that will apply to the Indexed Strategy at the time you make a Performance Lock election. The locked Daily Value Percentage could be negative, even if it is positive on the day you request a Performance Lock. The locked Daily Value Percentage could be negative, which could result in significant loss, even if the Index has risen since the start of the Term. When you elect a Performance Lock, your ending Strategy value will not be based on the ending Index value on the last day of the Term, which means you will not benefit from any rise in the Index during the balance of the Term and may earn less than you would have if you had not made a Performance Lock election. If the Daily Value Percentage is negative, you could lock in a loss, and the loss could be significant. Before electing a Performance Lock, you should consult with a financial advisor.
Beginning on that second Market Close and continuing through the end of the Term, the value of an Indexed Strategy is equal to:
the Investment Base on that day; plus
any increase for a positive Daily Value Percentage, as locked on that second Market Close; or minus
any decrease for a negative Daily Value Percentage, as locked on that second Market Close.
After a Performance Lock election is effective, except for withdrawals and Early Withdrawal Charges, the value of a locked Strategy will not change until the start of the next Term.
A Performance Lock election does not affect the Investment Base, so the Indexed Strategy value will still change if the Investment Base is reduced by a withdrawal.
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If you make a Performance Lock election for the S&P 500 5-Year 10% Buffer with Upside Participation Rate Indexed Strategy before the last year of the Term, that Term will end on the next anniversary of the Term start date. If you take no action and do not send us a reallocation request by that anniversary, then we will apply the ending value of the S&P 500 5-Year 10% Buffer with Upside Participation Rate Indexed Strategy to a new Term of the S&P 500 1-Year 10% Buffer with Cap Indexed Strategy. If the S&P 500 1-year 10% Buffer with Cap Indexed Strategy is not available, then we will apply the ending value in accordance with the unavailable/ default allocation provisions for a 1-year Indexed Strategy.
If you make a Performance Lock election for the S&P 500 5-Year 20% Buffer with Cap Indexed Strategy before the last year of the Term, that Term will end on the next anniversary of the Term start date. If you take no action and do not send us a reallocation request by that anniversary, then we will apply the ending value of the S&P 500 5-Year 20% Buffer with Cap Indexed Strategy to a new Term of the S&P 500 1-Year 20% Buffer with Cap Indexed Strategy. If the S&P 500 1-year 20% Buffer with Cap Indexed Strategy is not available, then we will apply the ending value in accordance with the unavailable/ default allocation provisions for a 1-year Indexed Strategy.
Examples. You allocate $5,000 to an Indexed Strategy at the start of a Term. This means the Investment Base at the start of the Term is $5,000. You make a Performance Lock election, and on the second Market Close following receipt of that election the Daily Value Percentage is 5%.
Assume that you take no withdrawals.
The increase for the locked Daily Value Percentage is equal to $250 ($5,000 x 5%).
On the second Market Close following receipt of the Performance Lock election, the Strategy value is $5,250 ($5,000 + $250).
The Strategy value on each following day of the Term remains $5,250 because the Daily Value Percentage is locked. No further changes in the Daily Value Percentage are taken into account.
The ending Strategy value is $5,250. The normal calculation based on the percentage change in the Index over the 1-year Term does not apply.
Assume you take a $1,000 withdrawal after the Performance Lock election is effective, and no Early Withdrawal Charge applies to the withdrawal:
The increase for the locked Daily Value Percentage is equal to $250 ($5,000 x 5%).
On the second Market Close following receipt of the Performance Lock election, the Strategy value is $5,250 ($5,000 + $250).
Until the withdrawal, the Strategy value on each following day of the Term remains $5,250 because the Daily Value Percentage is locked. No further changes in the Net Option Value, Amortized Option Cost, or trading cost are taken into account.
Immediately, after the $1,000 withdrawal, the Strategy value is $4,250 ($5,250 – $1,000).
The withdrawal as a percentage of the Strategy value is 19.05% ($1,000 / $5,250)
The proportionate reduction in the Investment Base is $952 ($5,000 x 19.05%).
The Investment Base after the withdrawal is $4,048 ($5,000 – $952).
Because the Strategy value on the withdrawal date was more than the Investment Base, the reduction in the Investment Base was $952, which is less than the $1,000 withdrawal.
After the withdrawal, on each following day for the Term, the increase for the locked Daily Value Percentage is equal to $202 ($4,048 x 5%).
After the withdrawal, on each day of the Term, the Strategy value is $4,250 ($4,048 + $202). The Strategy value is the Investment Base after the withdrawal ($4,048) plus the increase for the locked Daily Value Percentage ($202).
The ending Strategy value is $4,250. The normal calculation based on the percentage change in the Index over the 1-year Term does not apply.
See the Indexed Strategy Value After Performance Lock section below for more examples.
INDEXES
The returns of each Index, except the First Trust Barclays Edge Index, do not reflect the reinvestment of dividends. Any allocation to an Indexed Strategy does not represent an investment in an Index or in any securities or other assets included in an Index.
S&P 500 Index
The S&P 500® Index is designed to reflect the large-cap sector of the U.S. equity market and, due to its composition, it also represents the U.S. equity market in general. It includes 500 leading companies and captures approximately 80% coverage of available market capitalization. The S&P 500 Index does not include dividends declared by any of the companies in this index. Consequently, any positive change in the Index over the Term will be lower than the total return on a direct investment in the stocks that comprise the S&P 500 Index.
The S&P 500 Index is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”), and has been licensed for use by MassMutual Ascend Life. Standard & Poor’s®, S&P®, S&P 500®, US 500, The 500, iBoxx®, iTraxx® and CDX® are trademarks of S&P Global, Inc. or its affiliates (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). MassMutual Ascend Life products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P or their respective affiliates, and none of such parties makes any representation regarding the advisability of investing in such products nor do they have any liability for any errors, omissions, or interruption of the S&P 500 Index.
For more information, visit www.US.SPIndices.com.
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SPDR Gold Shares ETF
The SPDR Gold Shares represent units of beneficial interest in, and ownership of, the SPDR Gold Trust, an exchange traded fund that holds gold bullion. The investment objective of the trust is for the shares to reflect the performance of the price of gold bullion, less the trust’s expenses. The shares are designed to mirror as closely as possible the price of gold, and the value of the shares relates directly to the value of the gold held by the trust, less its liabilities. The value of the gold held by the trust is determined using the London Bullion Market Association (LBMA) Gold Price PM.
The Gold Shares trade on the NYSE Arca under the symbol GLD. For more information, visit www.spdrgoldshares.com.
iShares MSCI EAFE ETF
The iShares MSCI EAFE ETF is an exchange traded fund that seeks to track the investment results of an index composed of large- and mid-capitalization developed market equities, excluding the U.S. and Canada (MSCI EAFE Index). This underlying index includes stocks from Europe, Australia, Asia and the Far East. It may include large or mid capitalization companies. The components of the underlying index, and the degree to which these components represent certain industries and/or countries, are likely to change over time. The fund’s adviser uses an indexing strategy that involves investing in a representative sample of securities that collectively has an investment profile similar to that of the underlying index. The fund’s performance will be reduced by its expenses and fees.
The fund’s shares trade on the NYSE Arca under the symbol EFA.
The iShares MSCI EAFE ETF is distributed by BlackRock Investments, LLC. iShares®, BLACKROCK®, and the corresponding logos are registered and unregistered trademarks of BlackRock, Inc. and its affiliates (“BlackRock”), and these trademarks have been licensed for certain purposes by MassMutual Ascend Life Insurance Company. MassMutual Ascend Life annuity products are not sponsored, endorsed, sold, or promoted by BlackRock, and purchasers of an annuity from MassMutual Ascend Life do not acquire any interest in the iShares MSCI EAFE ETF nor enter into any relationship of any kind with BlackRock. BlackRock makes no representation or warranty, express or implied, to the owners of any MassMutual Ascend Life annuity product or any member of the public regarding the advisability of purchasing an annuity, nor does it have any liability for any errors, omissions, interruptions or use of the iShares MSCI EAFE ETF or any data related thereto.
iShares U.S. Real Estate ETF
The iShares U.S. Real Estate ETF is an exchange traded fund that seeks to track the investment results of an index composed of U.S. equities in the real estate sector (Dow Jones U.S. Real Estate Index). This underlying index may include large-, mid- or small-capitalization companies. A significant portion of the underlying index is represented by real estate investment trusts (REITs), but the components are likely to change over time. The fund’s adviser uses an indexing strategy that involves investing in a representative sample of securities that collectively has an investment profile similar to that of the underlying index. The fund’s performance will be reduced by its expenses and fees.
The fund’s shares trade on the NYSE Arca under the symbol IYR.
The iShares U.S. Real Estate ETF is distributed by BlackRock Investments, LLC. iShares®, BLACKROCK®, and the corresponding logos are registered and unregistered trademarks of BlackRock, Inc. and its affiliates (“BlackRock”), and these trademarks have been licensed for certain purposes by MassMutual Ascend Life Insurance Company. MassMutual Ascend Life annuity products are not sponsored, endorsed, sold or promoted by BlackRock, and purchasers of an annuity from MassMutual Ascend Life do not acquire any interest in the iShares U.S. Real Estate ETF nor enter into any relationship of any kind with BlackRock. BlackRock makes no representation or warranty, express or implied, to the owners of any MassMutual Ascend Life annuity product or any member of the public regarding the advisability of purchasing an annuity, nor does it have any liability for any errors, omissions, interruptions or use of the iShares U.S. Real Estate ETF or any data related thereto.
First Trust Barclays Edge Index
The First Trust Barclays Edge Index is designed to combine capital strength and value equity investment methodologies with a mix of US Treasury futures indexes for the potential to provide stable returns over time.
The First Trust Barclays Edge Index consists of an equity component that combines stocks from the Capital Strength Index and the Value Line® Dividend Index. The Capital Strength Index starts with the largest 500 companies in the NASDAQ US benchmark index and then reduces the selection universe by screening for companies that meet minimum criteria including cash and/or short-term investments on their balance sheets, low debt-to-market cap ratios and attractive return-on-equity. It then selects the top 50 names from this smaller universe based on low historical volatility. The Value Line Dividend Index starts with the universe of stocks published in its The Value Line Investment Survey publication and then selects those with a Value Line® Safety Rank of 1 or 2, with attractive dividends and market cap of one billion dollars or above. It then equally weights all stocks that meet those conditions (generally, around 160-200 stocks). The First Trust Barclays Edge Index then combines the stocks represented in The Capital Strength Index and the Value Line Dividend Index with an equal-weight assigned to each underlying index and rebalanced back to equal-weight on a monthly basis. Furthermore, since the index is on an excess return basis (i.e., it returns the index performance in excess of risk-free rates), the risk-free return is deducted from the equity underliers. The risk-free rate used in this calculation is the U.S. Fed Funds Rate
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published by the Federal Reserve of New York (ticker: FEDL01) for each day divided by 360 as outlined in the Index Rulebook. No such adjustment is needed to the US Treasury futures indexes as these securities returns are naturally on an excess return basis.
The Index uses an optimizer to evaluate its exposure to stocks and US Treasury futures indexes on a daily basis to target a 7% volatility level. This volatility control mechanism aims to target or limit the volatility of the index return over time by adjusting the exposure of the index constituents through a rules-based process called mean-variance optimization. The optimizer defines risk using both shorter and longer term measures of historical realized volatility. It then seeks to determine the allocations between the equity and US Treasury futures index that produce the highest expected return for the target volatility level, subject to constraints. Depending on the constraints of the optimizer at the time, the Index may or may not allocate to the US Treasury futures indexes. When the volatility measures are low, the index can have exposure greater than 100%. However, the optimizer is constrained such that the exposure can never be greater than 225%. Likewise, when volatility is high, the index exposure can be less than 100%. In addition, the First Trust Barclays Edge Index generally rebalances based on end-of-day values in the event there is a deviation in the index component weights of 10% or more, on an absolute basis, from the previous index rebalance value. Note: The First Trust Barclays Edge Index Strategy is not available in Missouri or Nebraska until such time as state approval is received. For more information visit https://www.ftindexingsolutions.com.
The performance of the First Trust Barclays Edge Index reflects the deduction of operating costs and rebalancing costs from the valuation of the underlying indexes. These costs, deducted as an annualized percentage on a daily basis, are fixed for the underlying indexes. The operating costs for the First Trust Barclays Edge Index range from 0.20% to 0.60%, and the rebalancing costs for the First Trust Barclays Edge Index range from 0.02% to 0.03%. The operating costs represent an estimate of the costs that would be incurred to buy and sell the index components. The rebalancing costs represent an estimate of the costs that would be incurred each time the Index rebalances due to changes in weightings of the Index components. The deduction of these costs occurs at the First Trust Barclays Edge Index level (i.e., the return on the First Trust Barclays Edge Index is reduced based on the applicable operating and rebalancing costs).
The First Trust Barclays Edge Index is a custom index created for use in annuities issued by MassMutual Ascend Life Insurance Company. The Index sponsor and the Company have an exclusive agreement in place for this purpose but the Index sponsor could license the First Trust Barclays Edge Index for additional use at some point in the future once the exclusive time period is complete. The First Trust Barclays Edge Index has no performance history prior to April 14, 2023.
The First Trust Barclays Edge Index (“FTIS Index”) is a product of FT Indexing Solutions LLC (“FTIS”) and is administered and calculated by Bloomberg Index Services Limited and its affiliates (collectively, “BISL”). FIRST TRUST® is a trademark of First Trust Portfolios L.P. (collectively, with FTIS and their respective affiliates, “First Trust”). The foregoing index and trademark have been licensed for use for certain purposes by Barclays, Bloomberg, and MassMutual Ascend Life Insurance Company (“MassMutual Ascend”) in connection with the FTIS Index and MassMutual Ascend’s products.
The Capital Strength Index (“Nasdaq Index”) is a product of Nasdaq, Inc. (collectively, with its affiliates, “Nasdaq”). NASDAQ®. CAPTIAL STRENGTH INDEX ™, NQCAPST™, and NQCAPSTTTM are trademarks of Nasdaq. The foregoing index and trademarks have been licensed for use for certain purposes by FTIS and MassMutual Ascend in connection with the FTIS Index and MassMutual Ascend’s products.
The Value Line Dividend Index (“Value Line Index”) is a product of Value Line, Inc. (“Value Line”). VALUE LINE® and VALUE LINE DIVIDEND INDEX™ are trademarks or registered trademarks of Value Line. The foregoing index and trademarks have been licensed for use for certain purposes by FTIS and MassMutual Ascend in connection with the FTIS Index and MassMutual Ascend’s products. The FTIS Index is not sponsored, endorsed, recommended, sold, or promoted by Value Line and Value Line makes no representation regarding the advisability of investing in the FTIS Index.
BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. Bloomberg Finance L.P., BISL and their affiliates (“Bloomberg”) are not affiliated with First Trust or Barclays. Bloomberg’s relationship to First Trust and Barclays is only (1) in the licensing of the FIRST TRUST®, BARCLAYS®, and FIRST TRUST BARCLAYS EDGE INDEX™ trademarks and (2) to act as the administrator and calculation agent of the FTIS Index, which is the property of FTIS.
MassMutual Ascend’s products are not issued, sponsored, endorsed, sold, recommended, or promoted by First Trust, Bloomberg, Nasdaq, Value Line, or their respective affiliates (collectively, the “Companies”). The Companies have not passed on the legality or suitability of, or the accuracy or adequacy of descriptions and disclosures relating to MassMutual Ascend’s products. The Companies make no representation or warranty, express or implied, to the owners of any product based on the FTIS Index, Barclays Indices, Nasdaq Index, or Value Line Index, or to any member of the public regarding the advisability of investing in securities generally or in products based on the FTIS Index, Barclays Indices, Nasdaq Indices, or Value Line Index particularly, or the ability of the FTIS Index, Barclays Indices, Nasdaq Indices, or Value Line Index to track general stock market performance. The Companies’ only relationship to MassMutual Ascend is in the licensing of the certain trademarks, trade names, and service marks and the use of the FTIS Index, Barclays Indices, Nasdaq Indices, and Value Line Indices, which are determined, composed, and calculated without regard to MassMutual Ascend or MassMutual Ascend’s products. The Companies have no obligation to take the needs of MassMutual Ascend, or the owners of MassMutual Ascend’s products, or the sponsors or owners of products based on the FTIS Index, Barclays Indices, Nasdaq Index, or Value Line Index into consideration when determining, composing, or calculating the FTIS Index, Barclays Indices, Nasdaq Index, and Value Line Index. The Companies are not responsible for and have not participated in the determination or calculation of MassMutual Ascend’s products. There are no assurances from the Companies that products based on the FTIS Index, Barclays Indices, Nasdaq Index, or Value Line Index will accurately track index performance or provide positive investment returns. The Companies have no liability in connection with the administration, marketing, or trading
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of MassMutual Ascend’s products. The Companies are not investment advisors. Inclusion of a security or financial instrument within an index is not a recommendation by the Companies to buy, sell, or hold such security or financial instrument, nor is it considered to be investment advice.
THE COMPANIES DO NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS, COMPLETENESS, AND/OR UNINTERRUPTED CALCULATION OF MASSMUTUAL ASCEND’S PRODUCTS, FTIS INDEX, BARCLAYS INDICES, NASDAQ INDEX, VALUE LINE INDEX, OR ANY DATA INCLUDED THEREIN OR ANY COMMUNICATION WITH RESPECT THERETO, INCLUDING, ORAL, WRITTEN, OR ELECTRONIC COMMUNICATIONS. THE COMPANIES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS IN MASSMUTUAL ASCEND’S PRODUCTS, FTIS INDEX, BARCLAYS INDICES, NASDAQ INDEX, OR VALUE LINE INDEX. THE COMPANIES MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED BY MASSMUTUAL ASCEND OWNERS OF MASSMUTUAL ASCEND’S PRODUCTS OR OF PRODUCTS BASED ON THE FTIS INDEX, BARCLAYS INDICES, NASDAQ INDEX, OR VALUE LINE INDEX, OR BY ANY OTHER PERSON OR ENTITY FROM THE USE OF THE FTIS INDEX, BARCLAYS INDICES, NASDAQ INDEX, OR VALUE LINE INDEX, OR ANY DATA INCLUDED THEREIN. THE COMPANIES MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO MASSMUTUAL ASCEND’S PRODUCTS, FTIS INDEX, BARCLAYS INDICES, NASDAQ INDEX, VALUE LINE INDEX, OR ANY DATA INCLUDED THEREIN, WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE COMPANIES BE SUBJECT TO ANY DAMAGES OR HAVE ANY LIABILITY FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES OR LOSSES, INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME, OR GOODWILL, WHETHER ARISING FROM THEIR NEGLIGENCE OR OTHERWISE. EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN MASSMUTUAL ASCEND AND THE COMPANIES.
Neither Barclays Bank PLC (“BB PLC”) nor any of its affiliates (collectively ‘Barclays’) is the issuer or producer of MassMutual Ascend’s products and Barclays has no responsibilities, obligations, or duties to investors in MassMutual Ascend’s products. The Barclays US 2Y Treasury Futures Index, Barclays US 5Y Treasury Futures Index, Barclays US 10Y Treasury Futures Index, and Barclays Switch USD Signal Index (collectively, the “Indices”), together with any Barclays indices that are components of the Indices, are trademarks owned by Barclays and, together with any component indices and index data, are licensed for use by MassMutual Ascend as the issuer or producer of MassMutual Ascend’s products (the ‘Issuer’).
Barclays’ only relationship with the Issuer in respect of the Indices is the licensing of the Indices, which are administered, compiled, and published by BB PLC in its role as the index sponsor (the ‘Index Sponsor’) without regard to the Issuer or MassMutual Ascend’s products or investors in MassMutual Ascend’s products. Additionally, MassMutual Ascend as issuer or producer of MassMutual Ascend’s products may for itself execute transaction(s) with Barclays in or relating to the Indices in connection with MassMutual Ascend’s products. Investors acquire MassMutual Ascend’s products from MassMutual Ascend and investors neither acquire any interest in the Indices nor enter into any relationship of any kind whatsoever with Barclays upon making an investment in MassMutual Ascend’s products. MassMutual Ascend’s products are not sponsored, endorsed, sold, or promoted by Barclays and Barclays makes no representation regarding the advisability of MassMutual Ascend’s products or use of the Indices or any data included therein. Barclays shall not be liable in any way to the Issuer, investors or to other third parties in respect of the use or accuracy of the Indices or any data included therein.
Barclays Index Administration (“BINDA”), a distinct function within BB PLC, is responsible for day-to-day governance of BB PLC’s activities as Index Sponsor.
To protect the integrity of Barclays’ indices, BB PLC has in place a control framework designed to identify and remove and/or mitigate (as appropriate) conflicts of interest. Within the control framework, BINDA has the following specific responsibilities:
oversight of any third-party index calculation agent;
acting as approvals body for index lifecycle events (index launch, change and retirement); and
resolving unforeseen index calculation issues where discretion or interpretation may be required (for example: upon the occurrence of market disruption events).
To promote the independence of BINDA, the function is operationally separate from BB PLC’s sales, trading and structuring desks, investment managers, and other business units that have, or may be perceived to have, interests that may conflict with the independence or integrity of Barclays’ indices.
Notwithstanding the foregoing, potential conflicts of interest exist as a consequence of BB PLC providing indices alongside its other businesses. Please note the following in relation to Barclays’ indices.
BB PLC may act in multiple capacities with respect to a particular index including, but not limited to, functioning as index sponsor, index administrator, index owner and licensor.
Sales, trading, or structuring desks in BB PLC may launch products linked to the performance of an index. These products are typically hedged by BB PLC’s trading desks. In hedging an index, a trading desk may purchase or sell constituents of that index. These purchases or sales may affect the prices of the index constituents which could in turn affect the level of that index.
BB PLC may establish investment funds that track an index or otherwise use an index for portfolio or asset allocation decisions.
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The Index Sponsor is under no obligation to continue the administration, compilation and publication of the Indices of the level of the Indices. While the Index Sponsor currently employs the methodology ascribed to the Indices (and application of such methodology shall be conclusive and binding), no assurance can be given that market, regulatory, juridical, financial, fiscal or other circumstances (including, but not limited to, any changes to or any suspension or termination of or any other events affecting any constituent within the Index) will not arise that would, in the view of the Index Sponsor, necessitate an adjustment, modification or change of such methodology. In certain circumstances, the Index Sponsor may suspend or terminate the Indices. The Index Sponsor has appointed a third-party agent (the ‘Index Calculation Agent’) to calculate and maintain the Indices. While the Index Sponsor is responsible for the operation of the Indices, certain aspects have thus been outsourced to the Index Calculation Agent.
Barclays
| 1. | makes no representation or warranty, express or implied, to the Issuer or any member of the public regarding the advisability of investing in transactions generally or the ability of the Indices to track the performance of any market or underlying assets or data; and |
| 2. | has no obligation to take the needs of the Issuer into consideration in administering, compiling, or publishing the Indices. |
Barclays has no obligation or liability in connection with administration, marketing, or trading of MassMutual Ascend’s products.
The licensing agreement between FTIS and BB PLC is solely for the benefit of FTIS and Barclays and not for the benefit of the owners of MassMutual Ascend’s products, investors or other third parties.
BARCLAYS DOES NOT GUARANTEE, AND SHALL HAVE NO LIABILITY TO THE PURCHASERS AND TRADERS, AS THE CASE MAY BE, OF THE TRANSACTION OR TO THIRD PARTIES FOR THE QUALITY, ACCURACY AND/OR COMPLETENESS OF THE INDICES OR ANY DATA INCLUDED THEREIN OR FOR INTERRUPTIONS IN THE DELIVERY OF THE INDICES. BARCLAYS MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE INDICES INCLUDING, WITHOUT LIMITATION, THE INDICES OR ANY DATA INCLUDED THEREIN. IN NO EVENT SHALL BARCLAYS HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES, OR ANY LOST PROFITS, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES SAVE TO THE EXTENT THAT SUCH EXCLUSION OF LIABILITY IS PROHIBITED BY LAW.
None of the information supplied by Barclays and used in this publication may be reproduced in any manner without the prior written permission of Barclays Bank PLC, Barclays Bank PLC is registered in England No. 1026167. Registered office 1 Churchill Place London E14 5HP.
Index Values
For Indexed Strategies that use the S&P 500 Index or the First Trust Barclays Edge Index, the Index is the level of the S&P 500 Index or the First Trust Barclays Edge Index at the applicable Market Close. For Indexed Strategies that use the SPDR Gold Shares ETF, iShares MSCI EAFE ETF or the iShares U.S. Real Estate ETF, the Index is the applicable exchange-traded fund’s share price on the NYSE Arca at the applicable Market Close.
We will use consistent sources to obtain the values of an Index. We currently obtain the values for the S&P 500 Index and the SPDR Gold Shares ETF from S&P Dow Jones Indices LLC, the values for the iShares MSCI EAFE ETF and iShares U.S. Real Estate ETF from BlackRock, Inc., and the values for the First Trust Barclays Edge Index from Bloomberg Index Services Limited. If those sources are no longer available, we will select an alternative published source(s) to obtain such values.
Index Replacement
We may replace an Index if it is discontinued, we are no longer able to use it, its calculation changes substantially, we determine that hedging instruments are difficult to acquire, or the cost of hedging becomes excessive. We may do so at the end of a Term or during a Term. We will notify you in writing at least 30 days before we replace an Index.
We would attempt to choose a replacement Index that is similar to the old Index. To determine if a new Index is similar, we will consider factors such as asset class, index composition, strategy, or methodology inherent to the index and index liquidity.
If we replace an Index during a Term, we will calculate the rise and fall in the Index using the old Index up until the replacement date. After the replacement date, we will calculate the rise and fall in the Index using the new Index, but with a modified start of Term value for the new Index. The modified start of Term value for the new index will reflect the rise or fall in the Index for the old Index from the start of the Term to the replacement date.
If we replace an Index, the Positive Return Factor percentage for the Term and the Negative Return Factor percentage will not change.
Example. These examples are intended to show how we would calculate the Strategy value on any day during a Term if we have replaced an Index during the Term. These examples assume: (1) you allocate $50,000 to an Indexed Strategy with a Cap of 8%; and (2) the replacement is made on day 90 of the Term, and (3) no Performance Lock election has been made. To simplify the examples, we assume that you take no withdrawals during the Term.
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Example 1. This example illustrates a situation where the old Index has risen at the time of its replacement.
| | |
Loss of Principal Related to Growth Strategy and Buffer Strategy due to NegativeChange in Index Changeson Replacement Date for Old Index |
Old Index at Term start | | 1000 |
There is a significant riskOld Index on replacement date
| | 1050 |
Rise or fall of loss of principal and related earnings due to negativeold Index Changes if you allocate your Purchase Payment(s) to a Growth/-10% Floor Strategy or 10% Buffer Strategy. Such a loss may be substantial.on replacement date | | (1050 - 1000) /1000 = 5.00% |
The 5% rise in the old Index on the replacement date is then used to calculate the modified start of Term value for the new Index.
This risk exists for each Growth Strategy because you agree to absorb any loss in the Index during the Term up to the Maximum Loss of 10%. This risk exists for each Buffer Strategy because you agree to absorb any loss in the Index that exceeds the Buffer. This risk of loss does not exist if you allocate your Purchase Payment(s) to the Declared Rate Strategy or to a Conserve/0% Floor Strategy.
If you allocate money to a Growth Strategy, you may lose up to 10% at the end of each Term. If you allocate money to a Growth Strategy over multiple Terms, you may lose up to 10% each Term, which may result in a cumulative loss that is greater than 10%.
If you allocate money to a Buffer Strategy, you may lose up to 90% at the end of each Term. If you allocate money to a Buffer Strategy and withdraw it before the end of the Term, you may lose more than 90% because the Buffer is less than 10% until the end of the Term. If you allocate money to a Buffer Strategy over multiple Terms, you may lose up to 90% at the end of each Term, which may result in a cumulative loss that is greater than 90%.
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