Massachusetts Mutual Life Insurance Co. has agreed to pay $1.6 million to settle charges it misled customers about an obscure restriction in $2.5 billion worth of variable annuities sold from 2007 to 2009, federal regulators said Thursday.
The Springfield insurance giant failed to fully explain a feature that capped the benefits for certain optional riders in the annuities, the Securities and Exchange Commission alleged. In a worst-case scenario, investors could stop receiving annual income from the investments once the cap on withdrawals was reached.
The SEC said the cap was not fully explained in either the company’s sales literature or its formal prospectus. The SEC also noted MassMutual stopped selling the riders in 2009, and it revised the prospectus to better explain the consequences of making withdrawals. And after the SEC wrapped up its investigation, the company removed the cap altogether.
A MassMutual spokeswoman, Patty Norris Lubold, said the company neither admitted to nor denied the allegations.
“We are pleased to have resolved this matter with the SEC,” Norris said. “As the SEC notes in its announcement, no investors were harmed in this matter.”