Facts Regarding the Termination of Your Career Contract Effective March 2014 Disclaimer This document is not intended to provide legal, tax, or financial advice but is provided to assist you by highlighting items you may wish to consider or act upon following the termination of your contract. It is not all-inclusive, nor is it intended to apply to each agent s unique circumstances. The information presented here is intended as general information, but the provisions of the contract, benefit plans, group policy, etc., are the final authority. Benefits are determined by the terms of the plans in effect at the time you become eligible for the benefits. Refer to appropriate Summary Plan Descriptions (SPDs) and Summaries of Material Modification (SMMs) for detailed information on available benefits. SPDs and SMMs are available on FieldNet My Practice Benefits Summary Plan Descriptions & Important Info. You may also request a copy of SPDs and SMMs by contacting MassMutual Producer Services & Operations. MassMutual reserves the right to modify, revoke, change, suspend or terminate any one or all plans, programs, policies, benefits or services described in this document or the underlying plan documents at any time and from time to time, with or without notice. In the event of a discrepancy between descriptions in this document and information in relevant benefit plan documents, the plan documents will govern. Receipt of this material does not imply your eligibility for any one or all of the plans and programs described. All information described in this document is current as of the March 2014 publication date. Table of Contents Table of Contents...1 Events that Trigger Career Contract Termination...1 Benefits Impact...2 Unemployment...5 Commissions Impact...5 Indebtedness...6 Company Property...6 New Business and Service to MassMutual Policyholders...6 Voluntary Errors and Omissions (E&O) Coverage for Career Agents...7 Contacts...8 Events that Trigger Career Contract Termination Circumstances that trigger the termination of an agent s career contract include, but are not limited to, the following: The career agent does not satisfy the minimum production requirement The career agent voluntarily terminates his or her contract, including retirement The career agent signs another type of contract, including a broker, agent emeritus or retired broker contract (execution of these contracts automatically terminates a career contract) The general agent or general manager terminates the contract The agency vice president (or other such person overseeing the agency) terminates the contract, only when there is no general manager or no general agent The career agent dies Page 1 of 8
Benefits Impact Health and Welfare Benefit Options Medical, Dental and Vision Coverage, Health Savings Account (HSA) and Health Care and Dependent Care Flexible Spending Accounts (FSAs) If you are enrolled in medical, dental, vision coverage at the time of termination, your coverage will continue through the end of the month in which your contract terminates and you will be billed accordingly. If you retire, take an Agent Emeritus contract or Retired Broker contract, medical, dental and vision benefits will end when your career contract ends. Dependent care FSA participation ends immediately upon termination of the contract. COBRA Continuation Coverage The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986 provides for continuation of group health coverage that otherwise might be terminated. Those covered under a MassMutual group medical, dental or vision care option (and in some cases, a healthcare FSA) can enroll in COBRA. A COBRA notice is sent by MassMutual s COBRA vendor, Benefit Concepts, Inc., within 14 days of notice of contract termination. You must complete the COBRA election form and return it to Benefit Concepts within 60 days of receipt. You have an additional 45 days from the date of your COBRA election to make the first premium payment, which must include all monthly premiums retroactive to the date your regular group coverage ended. The premium for continued coverage is the unsubsidized cost plus a two percent administrative fee. All contributions are made on an after-tax basis. Claim payments for COBRA continuation (including continuation of prescription drug coverage) will not begin until Benefit Concepts receives the COBRA election form and the required premium payment. For information about COBRA, contact Benefit Concepts at 866-629-6350. Health Savings Accounts Your health savings account will convert to an individual account at JPMorgan Chase. The account holder must pay monthly maintenance fees to maintain the account after contract termination. If you continue to participate in a high-deductible health plan through COBRA or under a new plan and have no other group coverage, you may make health savings account contributions directly to JPMorgan Chase. You may also transfer your account to the savings institution of your choice. Group Term Life (GTL) and Dependent Life Insurance Coverage Your GTL and dependent life coverage ends immediately upon contract termination. GTL and Dependent Life Insurance Conversion Option You may convert your GTL insurance and dependent life insurance coverage to an individual whole life policy without providing medical evidence of insurability. You must complete the Notice of Right of Conversion Form and provide the first premium payment within 30 days of your contract termination. To convert GTL and/or dependent life insurance to a whole life policy: Page 2 of 8
1. Email AgentBenefitQuestions@MassMutual.com or call MassMutual Producer Services & Operations at 800-767-1000, Ext. 48850 and request a Notice of Right of Conversion Form. 2. Call Anthem Life at 800-801-6142 to complete conversion and arrange for premium payment. 3. Steps 1 and 2 must be completed within 30 days of your contract termination. Group Variable Universal Life Plan for Top Producers (GVUL) Coverage under the GVUL Plan is portable. You can continue GVUL coverage by paying the entire premium. You can also choose to continue only a portion, or none of the coverage. Contact Executive Group Life Client Services at 800-548-0073 for more information about continuing GVUL. Group Disability Coverage Group disability coverage (including short- and long-term disability) ends immediately upon termination of your contract. The group disability coverage cannot be converted into an individual policy. Retirement Benefit Options If your career contract terminates (voluntarily or involuntarily) and you receive a qualified retirement plan distribution or receive a distribution from a nonqualified plan not subject to IRC, Section 409A, you cannot be re-contracted as a career agent by MassMutual for at least six months from your career contract termination date with one exception: If you receive a mandatory distribution from the qualified retirement plans (see below for details), you can be re-contracted within six months. If you receive a non-qualified distribution under an IRC section 409A-governed plan, you cannot contract in any capacity for at least one year. If you have no separation from service because you took another contract (e.g., broker or agent emeritus), then you cannot take a nonqualified distribution until you terminate all contracts and meet the definition of retirement under New York Insurance Law, Section 4228, or until February following the year in which you attain age 65, if earlier. MassMutual Pension Plan You become fully vested in the MassMutual Pension Plan after you complete three years of service or if you die while covered by a career contract. If, upon termination of your career contract, including retirement, the present value of your vested accrued pension benefit is less than or equal to $1,000, you must receive a mandatory distribution as either: a lump sum (if you separate from service before age 55 and receive a lump-sum distribution before age 59½, you may be subject to a 10-percent penalty tax), or a rollover into an individual retirement account (IRA) or an employer s qualified retirement plan. If you do not make an election within 60 days from notification of your options, your benefit will be automatically distributed to you as a lump sum. If the present value of your vested accrued pension benefit is greater than $1,000, you will receive information from Retirement Services about the other options available to you. Page 3 of 8
For more information, contact a customer service representative toll-free at 800-743-5274, weekdays between 8 a.m. and 9 p.m., ET. Choose the MassMutual Pension Plan from the list of plans and then opt to speak to a customer service representative. MassMutual Thrift Plan A career agent with a MassMutual Thrift Plan account can receive his/her vested Thrift Plan benefit once his/her career contract has terminated. After termination, no additional contributions to the Thrift Plan can be made, nor can any additional loans be taken out. Any existing loans are due and payable within 60 days of the agent s contract termination date. After 60 days unpaid amounts will be defaulted, resulting in a taxable distribution. The amount attributable to the agent s contributions is always fully vested. MassMutual contributions, if any, become vested based on the completion of three 12- month periods of service as indicated on the chart. Completed Years of Vested Percentage Service 1 40 2 80 3 100 Career agents who have a life insurance policy paid for through the Thrift Plan must surrender the policy or transfer ownership of the policy to themselves. (Thrift Plan life insurance policies are owned by the Plan while the agent s contract is active.) For more information, contact a customer service representative toll-free at 800-743-5274, weekdays between 8 a.m. and 9 p.m., ET. If, upon termination of your career contract, including retirement, your vested Thrift account balance is less than or equal to $1,000, you must receive a mandatory distribution as either: a lump sum (if you separate from service before age 55 and receive a lump-sum distribution before age 59½, you may be subject to a 10-percent penalty tax), or a rollover over into an individual retirement account (IRA) or an employer s qualified retirement plan. If you do not make an election within 60 days from notification of your options, your benefit will be automatically distributed to you as a lump sum. If your vested Thrift account balance is greater than $1,000, you will receive information from Retirement Services about the other options available to you. For more information, contact a customer service representative toll-free at 800-743-5274, weekdays between 8 a.m. and 9 p.m., ET. Massachusetts Mutual Life Insurance Company Agent Pension Plan If, upon termination of your career contract, including retirement, the present value of your vested account balance in the applicable plan is less than or equal to $1,000, you must receive a mandatory distribution as either: The Massachusetts Mutual Life Insurance Company Agent Pension Plan was frozen effective February 28, 2001, at which time all active participants became fully vested. a lump sum (if you separate from service before age 55 and receive a lump-sum distribution before age 59½, you may be subject to a 10-percent penalty tax), or a rollover into an individual retirement account (IRA) or an employer s qualified retirement plan. Page 4 of 8
If you do not make an election within 60 days from notification of your options, your benefit will be automatically distributed to you as a lump sum. If the present value of your vested account balance in the applicable plan is greater than $1,000, you will receive information from Retirement Services about the other options available to you. For more information, contact a customer service representative toll-free at 800-743-5274, weekdays between 8 a.m. and 8 p.m., ET. Nonqualified Plans Distribution must be made according to the terms of the specific nonqualified plan. Nonqualified payments cannot be deferred to a later date. Note: Post 409A deferrals (deferrals after Jan. 1, 2005) will be paid at the earlier of: (1) termination of all MassMutual contracts (including agent emeritus or broker) and meeting the definition of retirement under New York Insurance Law, Section 4228 or (2) February of the year following attainment of age 65. Nonqualified plans not governed by IRC section 409A regulations may be distributed at termination of your career contract. If you receive a non-qualified post-409a distribution, you cannot re-contract in any capacity for at least one year. If you have no separation from service because you took another contract (e.g., broker or agent emeritus), then you cannot take a post-409a non-qualified distribution until you terminate all contracts, or February following the year you attain age 65, if earlier. If you receive a nonqualified distribution from a plan not governed by IRC section 409A, you cannot re-contract as a career agent for six months. Unemployment Independently contracted sales agents (including statutory employees) are not covered employees for state unemployment insurance law purposes. Exceptions may apply for non-california based financed agents and sales managers only. Commissions Impact Vested Commissions: After termination (other than for retirement), only vested commissions are payable. Vested commissions for this purpose are defined in the compensation section of your agent contract and/or in the Career Agent Commission Schedule and Vesting Provision. No further commissions on business generated while under a Career Capital Plan will be payable. Non-Vested Commissions: All non-vested commissions cease unless your contract is terminated due to your retirement. If you retire you will continue to receive your non-vested commissions in accordance with the compensation section of your agent contract and/or in the Career Agent Commission Schedule and Vesting Provision. Annualization of Commissions: Commission advances on certain monthly business (annualization) cease immediately upon your termination. Unearned commission advances must be repaid within 30 days after your termination. Page 5 of 8
Indebtedness (Applies to non-financed agents only) Full settlement of any indebtedness, which could result from loans, commission advances, commission charge-backs, E&O charges, benefit deductions, supply charges, etc., is expected within 30 days after your contract termination. If you fail to repay your indebtedness, MassMutual has the right to apply any or all of your commissions to the indebtedness until it is repaid in full. In this event, you will receive a semimonthly voucher showing, among other things, the commissions you earned, the amount applied to reduce your debt, and the current balance of your indebtedness. Note: A voucher will only be generated when there is new activity for that commission cycle (e.g., commissions earned, new charges). If there is any indebtedness balance remaining after 30 days, MassMutual will notify you in writing and make an attempt to resolve the indebtedness. Failure to pay any outstanding balance may result in turning the indebtedness over to a debt collection agency for recovery. Company Property You must return all Company or agency property to the general agent when your contract terminates. Examples of property to be returned include, but are not limited to: 1. Rate manuals, Blue Chip Series training materials, and other training materials. 2. Client files maintained in connection with your business as a MassMutual agent and a MML Investors Services, LLC (MMLIS) registered representative (whether in hard copy or electronic form). Note: The Company has no interest in, or claim to, any records you have for your clients with respect to their non-massmutual or non-mmlis business. 3. Furniture and equipment, paid for in whole or in part by the Company or general agent, including computer and related equipment, computer software, desks, chairs, file cabinets, typewriters, calculators, and other similar equipment. 4. Sales materials and stationery. Once your contract is terminated, you may not represent yourself as a MassMutual agent. You may not use any sales material that refers to the Company and/or the agency and you may not use business cards and letterhead bearing MassMutual s or the agency s name. In addition, unless you retain a broker s contract and continue as a registered representative of MMLIS, you may not use business cards and letterhead that reference MMLIS. Even if you subsequently sign a broker s contract with the general agent, that contract does not authorize you to present yourself as representing MassMutual. New Business and Service to MassMutual Policyholders New Business: If your general agent wants to continue to allow you to submit new business to the agency, he or she may do so only after signing an appropriate contract with you. Service to existing MassMutual policyholders: It is Company policy to provide uninterrupted service to policyholders. Upon your contract termination, every effort will be made to promptly assign another agent to service the newly orphaned policyholders. In limited situations, with the general agent s approval, you may continue to provide service to MassMutual policyholders. Page 6 of 8
Voluntary Errors and Omissions (E&O) Coverage for Career Agents No acts of the agent after the date of the termination of any career contract are covered under the Professional Liability Policy currently in place (Errors and Omissions Insurance or E&O). However, there is an unlimited discovery period for claims made against you for the sale of MassMutual products if the sale took place before your career contract terminated. This means that if a claim is made against you, following your contract termination, having to do with selling or servicing a MassMutual product when you were a MassMutual career contract agent, and you have no other E&O coverage that will respond, you will be eligible for coverage under the MassMutualsponsored program, unless the Company changes carriers or the insurance contract is amended at some future date and this benefit is lost. As for any business you brokered with other insurers while a MassMutual agent, you have one year from the date your career contract terminates (and this period may also be shortened if the master policy terminates or is amended) to make a claim against this policy. The current carrier also offers you the option to purchase a two-year extending reporting period, if your contract is terminated. Please contact Aon Affinity at 1-877-425-2573 to request this option. If your career contract terminates due to retirement or total disability, your E&O coverage continues as provided here. You will be billed for E&O coverage in the month in which your contract terminates. All policies are written on a Claims Made and Reported Basis, subject to the terms and conditions contained in these policies. Claims decisions are made by Chartis. This document does not guarantee coverage of any particular claim. If you choose to purchase a new E&O policy, either from another carrier or from your state chapter of the National Association of Insurance and Financial Advisors (NAIFA), and want to prevent any gap in your E&O protection you must contact either the new carrier or NAIFA no later than the date your contract with MassMutual is terminated. We highly recommend that you consider this option to protect yourself from potential unknown claims. If, when your career contract terminates, you are aware of any situation which may lead to a claim, send a full, written description of the circumstances to the carrier as soon as possible. Please send your notice to Casualty Claims Department, Everest National Insurance Co., P.O. Box 830, 477 Martinsville Rd., Liberty Corner, NJ 07938 or to everestnationalnjclaim@everestre.com. It is your responsibility to submit any potential claim to the carrier (not MassMutual) for consideration. There is no group E&O insurance program available to individuals with broker contracts, except for those retired, full-time career agents on special broker contracts. If you obtain a broker s contract with MassMutual, you should seek an individual policy in the professional liability insurance market. As mentioned above, state chapters of NAIFA can assist or NAIFA s insurance broker can be reached at 800-247-3448. If you wish to retain your status as a registered representative of MMLIS, you are required to participate (unless you verify comparable coverage) in a separate E&O program through MMLIS. The MMLIS E&O program covers business sold through MMLIS and MassMutual. The MMLIS E&O program also covers the sale and servicing of outside insurance products. The MMLIS program has an unlimited reporting period for certain types of products and not for others. There is no unlimited reporting period under the MMLIS program if the relationship is terminated for disciplinary reasons. A letter will be sent to you directly by AON Affinity (TPA) explaining the coverage available on the program. If you have any questions about enrolling/billing (MMLIS Direct) in this program, please call MMLIS Distribution Contracting Services at 800-767- 1000, Ext. 48850. Page 7 of 8
Contract Termination Questions Benefit Questions Contacts Subject of Question Health and Welfare Benefits Qualified Pension or Thrift Benefits Nonqualified Retirement Benefits Contact MassMutual Producer Services & Operations, C250 Website: https://benedirect.massmutual.com/irj/portal, select mybenefits Email: AgentBenefitQuestions@MassMutual.com Phone: Phone: 800-767-1000, Ext. 48850, business days between 8 a.m. and 6 p.m., ET Participant Information Center (PIC) Website: RetireSMART SM (www.retiresmart.com) Phone: 800-743-5274, business days between 8 a.m. and 8 p.m., ET The Newport Group Website: www.plandestination.com Phone: 800-230-3950, 8 a.m. 8 p.m., ET COBRA Benefits Benefit Concepts, Inc: 866-629-6350 Group Term Life Insurance Conversion Call MassMutual Producer Services & Operations and complete your paperwork within 30 days of your contract termination. After conversion, Anthem Life: 800-801-6142 GVUL Continuation Executive Group Life Client Services: 800-548-0073 Health Savings Account Termination of Career Contract JP Morgan Chase: 866-524-2483 Website: www.chasehsa.com MassMutual Producer Services & Operations, C250 Corporate, Agent Emeritus, Broker Contracts and Agent Retirement Errors and Omissions (E&O) Coverage Phone: 800-767-1000, Ext. 48850, business days between 8 a.m. and 6 p.m., ET Kristin Plater Aon Risk Services Northeast, Inc. 199 Water Street New York, NY 10038 877-425-2573 (option 2) Telephone: 212-441-1262 Email: Kristin_Plater@ars.aon.com Page 8 of 8