Introduction
Fixed Indexed Annuities are contracts between the annuitant and an insurance company in which the insurance company promises to credit interest based on the performance of a certain stock market index, such as the S&P 500. Fixed Index Annuities have an inbuilt capital protection feature, so your principal will remain safe even if the index goes down.
Annuities are complex products, and many advisors try to mis-sell them without properly understanding the buyer’s needs. Thus, you must educate yourself on these products and not solely depend upon the annuity agent’s high-pressure sales pitch.
This article discusses an in-depth review of the MassMutual American Legend Fixed Indexed Annuity. American Legend 7 is a deferred, fixed-indexed annuity that may be a good option if you are looking for the safety of principal, good indexing options, lifetime income, and the most popular riders. After extensive research and due diligence, I have provided an in-depth and unbiased analysis of this plan.
The review of the MassMutual American Legend Fixed Indexed Annuity will be broken into multiple subcategories:
- Product Description
- Product Policy
- Rates and Costs
- Accessing your Money
- Riders
- What Makes This Product Stand Out?
- What I Don’t Like
- Company Details
- Conclusion
Product Description
The MassMutual American Legend is a Fixed Indexed Annuity (FIA) plan that offers the annuitant (annuity investor) the opportunity to earn a portion of a market index-linked return without incurring the risk of market downside. This is a suitable plan for individuals approaching retirement who aim to grow and protect their retirement savings. This plan is also suitable for individuals seeking a guaranteed lifetime income or those planning to leave a legacy for their loved ones, in addition to protecting and growing their retirement savings.
Let’s have a look at the high-level fine print of the MassMutual American Legend Fixed Indexed Annuity, and then we will discuss each point in detail.
| Field | Information |
|---|---|
Product Name | American Legend 7 |
Issuing Company | |
AM Best Rating | A++ (1st of 13 ratings) |
Withdrawal Charge Period(s) | 7 Years |
Maximum Issue Age | 85 Years (Qualified and Non-qualified) |
Minimum Initial Purchase Amount | $10,000 |
Surrender Charge Schedule | 9%, 8%, 7%, 6%, 5%, 4%, 3%, 0% |
Crediting Period and Strategies |
|
Plan Types |
|
Indexes |
|
Free Withdrawals | 10% of the annuity’s Accumulated Value; per year |
Death Benefit | Upon the annuitant’s death, the beneficiary can either choose from (i) Accumulated Value (Lumpsum) or (ii) Guaranteed Minimum Surrender Value
|
Riders | Two optional riders are available:
|
Surrender Value | Greater of Accumulated/Account Value (less any withdrawal charges/MVA) and the Guaranteed Minimum Surrender Value |
RMD Friendly | Yes |
Product Policy
How does the MassMutual American Legend 7 Fixed Indexed Annuity policy work?
An annuitant (maximum age at the time of policy issue: 85) can purchase the MassMutual American Legend 7 Fixed Indexed Annuity with a minimum initial purchase amount of $10,000, and in return, they will earn market index returns (calculated through a formula that we will discuss shortly), credited as per the chosen crediting period. Apart from the regular crediting period, various events may trigger earnings credit, including free withdrawals, long-term care events, terminal illness or injury events, or when a death benefit is payable.
The American Legend 7 Fixed Indexed Annuity offers the annuitant the choice of one or more of the five indexes (S&P 500 Index, S&P 500 Risk Control Index, iShares U.S. Real Estate Index, SPDR GLD Index, S&P U.S. Retiree Spending Index, First Trust Barclays Edge Index) to determine their earnings crediting formula. The S&P 500 index and the First Trust Barclays Edge Index employ two crediting strategies, whereas the other indexes each have a single crediting strategy. The plan also offers a fixed-rate guaranteed interest strategy to choose from, making a total of 9 strategy options. We will discuss each available index briefly:
1. S&P 500 Index
The S&P 500 index is one of the most popular and oldest indexes in the world. It tracks 500 large-cap publicly traded stocks listed in the United States. It is a reliable index and has often succeeded in the test of time.
It is very important to note that the American Legend 7 Fixed Indexed Annuity offers the S&P 500 index with cap rates in place, meaning that your interest-earning capacity is capped. These rates change frequently; I will discuss the rates more shortly.
2. S&P 500 Risk Control Index
The S&P 500 Risk Control Index is a strategic financial tool designed to measure the performance of the S&P 500 while maintaining a targeted level of risk. It does this by dynamically adjusting its exposure to the S&P 500 based on the volatility of the index. When volatility increases, the index reduces its exposure to the S&P 500 and increases its holdings in less volatile assets like cash or fixed income, and vice versa when volatility decreases. This approach aims to offer a more stable investment experience, especially appealing to risk-averse investors or those looking for a balance between growth and protection in volatile markets. While these volatility controls may result in less fluctuation in rates of return when compared with indexes that don’t use them, they also may reduce the overall rate of return compared with those other indexes.
3. iShares U.S. Real Estate Index
The iShares U.S. Real Estate ETF seeks to track the investment results of an index composed of U.S. equities in the real estate sector. IYR is among the first US real estate ETFs and has been a stalwart in the space. The fund tracks a typical broad-based real estate index and captures much of the real estate space, including REITs and firms investing directly or indirectly in real estate through development, management, or ownership, including property agencies.
4. SPDR GLD Index
SPDR® Gold Shares offer investors an innovative, relatively cost-efficient, and secure way to access the gold market. Originally listed on the New York Stock Exchange in November of 2004 and traded on NYSE Arca since December 13, 2007, SPDR® Gold Shares is the largest physically backed gold exchange-traded fund (ETF) in the world. NAV for the fund is determined using the LBMA PM Gold Price (formerly the London PM Gold Fix), so GLD has an extremely close relationship with spot prices. The SPDR GLD Index was created in November 2004.
5. S&P U.S. Retiree Spending Index
The S&P U.S. Retiree Spending Index measures the performance of a balanced, multi-asset investment strategy across equities and fixed income. The equity exposure in the index targets economic sectors that are expected to be impacted by retiree spending due to a changing US demographic, and the fixed income exposure helps reduce equity risk and overall portfolio volatility. The S&P U.S. Retiree Spending Index also provides diversified asset exposure by equally weighting its two components – the all cap S&P U.S. Retiree Spending Equity Index and the S&P U.S. Retiree Spending Bond Futures Index.
6. First Trust Barclays Edge Index
The First Trust Barclays Edge Index is a multi-asset index designed to provide balanced exposure to both equity and fixed income markets while maintaining a target volatility of 7%. It combines the Capital Strength Index™ and Value Line Dividend Index™ for its equity component and the Barclays US Treasury Futures Indexes (2Y, 5Y, and 10Y) for its fixed income component. The Index dynamically adjusts the allocation between these components to achieve the highest expected return at the 7% volatility target. When market volatility is low, the equity exposure can exceed 100%, but it is capped at 225%. Conversely, during periods of high volatility, the equity exposure may be reduced to below 100%. The Index operates on an excess return basis, meaning it returns performance above the risk-free rate, and it rebalances monthly, with additional daily rebalancing if component weight deviations exceed 10%.
It is essential to note that the American Legend 7 Annuity features cap rates or participation rates for these indexes, meaning that you will receive only a portion of the index return credited to your annuity. These rates change frequently; I will discuss these rates more shortly.
Note: In addition to allocating funds in the following indexes, the annuitant also has the option to allocate funds at a fixed interest rate. These Fixed Rates tend to change from time to time. The 1st-year fixed value rate at the time of updating this article was 4.15%. It is noteworthy that the fixed rates offered by MassMutual are relatively high when compared with other annuities. You can view the latest rates of this annuity on the company's website.
Rates and Costs
The earnings crediting formula
The earnings crediting formula is the most important part of this annuity discussion. It is essential to note that we don’t simply receive the index return credited to our annuity. There are a few rate-limiting mechanisms (in the form of a cap rate and participation rate) that the company has in place that affect our earnings. These rates are subject to change over time, and the updated rates can be checked on the company’s website at any time.
The formula to calculate the earnings credited is:
- For Strategies with Participation: (Participation Rate % X Index Return)
- For Strategies with Caps: Index return over a given crediting period, with a maximum potential of earning the cap rate
Let’s review the MassMutual American Legend 7 rate sheet (as of December 2025) to understand how earnings are determined.
The first thing to note is that the company offers six indices. Each index has point-to-point strategies. Additionally, the company offers a fixed rate strategy to choose from. All in, we get to choose from a total of nine strategies (eight index-based and one fixed). The company displays three types of crediting strategies across these rates (Participation Rate, Cap Rate, and Fixed Rate).
Let’s quickly go through the terminology described by MassMutual:
- Participation Rate (PR): The participation rate indicates the percentage of annuitants participating in the return of an index. For example, suppose the participation rate is 60%, and the index returned 10% over the agreed time. In that case, the annuitant will be eligible for only 60% of the return, i.e., 6%.
- Cap Rates: This refers to the rate at which your interest-earning capacity is capped. For example, if an index returns 12% but the contract’s cap rate is 6%, in this situation, the annuitant will be eligible for an interest credit of 6% only. It doesn’t matter how much the index goes above the cap rate; the maximum interest that can be earned is the cap rate.
- Fixed Account Rate/Declared Rate: If you opt for a fixed account rate, you simply earn the fixed rate for a particular period specified by the company before your policy begins. These rates usually tend to be low compared to other fixed avenues, such as CDs and MYGAs, so you should avoid fixed rates in a general scenario. The 1-year fixed rate on this policy at the time of writing this article was 4.15%.
Out of all these indexes, at this point in time, I would prefer the S&P 500 point-to-point index with a cap rate because the index has been time-tested, has good real performance, and offers a relatively high index cap rate. I also like the SPDR Gold Shares with a cap rate option, as gold exposure provides a good hedge against equities during uncertain times.
Accessing your Money
Each year, you are entitled to a 10% free withdrawal of your contract value without incurring any charges, fees, or penalties.
Should your needs change unexpectedly, and you need to take an excess withdrawal (a withdrawal that is above the free withdrawal amount available in a given contract year), you may be entitled to access additional monies, although certain charges and penalties may apply. Any amount withdrawn in excess of the remaining free withdrawal amount is subject to a Surrender Charge. Below is the Surrender Charge schedule for MassMutual American Legend 7 Fixed Indexed Annuity.
| Completed Contract Years | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8+ |
|---|---|---|---|---|---|---|---|---|
Surrender Charge % | 9% | 8% | 7% | 6% | 5% | 4% | 3% | 0% |
Market Value Adjustments - In case you need to surrender your policy, a Market Value Adjustment (MVA) will be applied to the portion of the withdrawal or surrender that exceeds the free withdrawal amount during the withdrawal charge period. Note that this policy also has No-MVA rates (check the rate card above). If you choose No-MVA rates, you’ll earn a lower interest credit than the MVA rates, but No Market Value Adjustments will be applied should you surrender/withdraw from your account. Please note that the surrender charges still apply.
Once the surrender charge period ends, you can typically access your full contract value without fees. However, any withdrawal reduces both your contract value and, if applicable, the income base tied to optional riders, which may impact future guaranteed income.
An annuitant can also convert the contract into a stream of guaranteed income, known as annuitization. They can choose from various payout options designed to meet different needs.
Life Only – Provides income for as long as you live.
Joint and Survivor Life – Continues payments over two lifetimes, often used by couples.
Life with Period Certain (up to 30 years) – Pays income for life, but guarantees payments for a minimum period even if death occurs earlier.
Period Certain (up to 30 years) – Provides guaranteed payments for a set number of years, regardless of lifespan.
Single Life or Joint Life with Cash Refund – Ensures that if the annuitant(s) pass away before receiving payments equal to the original premium, the difference is refunded to beneficiaries.
Single Life or Joint Life with Installment Refund – Similar to the cash refund, but any remaining balance is paid out over time in installments.
These options provide flexibility in balancing lifetime income needs with legacy goals, allowing you to customize how and when funds are accessed during retirement.
Death Benefit
Upon the annuitant’s death, the beneficiary will get the greater of (i) the Account Value or (ii) the Surrender Value
Riders
Riders are one of the most important parts of the American Legend 7 Fixed Indexed Annuity. The American Legend 7 Fixed Indexed Annuity comes with an option to select from two additional, chargeable riders:
- Income Secure - Enhanced Lifetime Income Rider
- Inheritance Enhancer - Enhanced Death Benefit Rider
IncomeSecure – Enhanced Lifetime Income Rider
When you purchase the IncomeSecure rider, a Benefit Base is set up for your rider. The benefit base starts with the account value and is increased by additional purchase payments and rollup credits.
Your rider’s Benefit Base is NOT the same as the annuity’s Accumulated/Account Value. The Accumulated Value is available for withdrawal and is used to determine the Cash Surrender Value of your fixed-indexed annuity. On the other hand, think of the Benefit Base as a value that is used just to calculate your Lifetime Income Withdrawal amount. This value has no cash value or surrender value and cannot be withdrawn in a lump sum.
However, a withdrawal from your Accumulated Value will reduce the rider’s Benefit Base (and thus the amount of future Lifetime Income Withdrawals) proportionally. For example, withdrawing 10 percent of your Accumulated Value will also reduce your Benefit Base by 10 percent.
Rollup Credit - At the end of each year during the 10-year rollup period, the current benefit base is increased by 10% of all purchase payments received in the first contract year, including any applicable purchase payment bonuses. The rollup credit for a purchase payment received after the start of the first contract year will be prorated. Rollup credits are not applied to purchase payments received after the first contract year.
Income Payments - If the client is 55 years or older, income payments may be taken at any time through withdrawals based on the benefit base and the income option that was selected. There are two ways to receive income:
- Single lifetime income
- Joint lifetime income
If the joint lifetime income is selected, the owner and spouse must be at least age 55 on the income start date, and the age of the younger spouse or legally recognized domestic partner is taken into consideration.
To calculate the Maximum Lifetime Income, the following formula is used:
Benefit Base at the time of first withdrawal * Lifetime Income Withdrawal Percentage
The lifetime income withdrawal percentage is based on how late you begin your lifetime income withdrawals and whether you opt for single-life or joint withdrawals. At the time of writing this article, the following Lifetime Income Withdrawal Percentage was applicable (for single life):
The income percentage is locked in and will not change once income payments begin.
Example of the Enhanced Lifetime Income Rider
Suppose an annuitant begins lifetime income withdrawals at age 70 with a final Withdrawal Benefit Base of $250,000. If the lifetime withdrawal percentage at age 70 is 6.65%, the guaranteed annual lifetime income would be calculated as follows:
$250,000 × 6.65% = $16,625 per year for life
This income amount is guaranteed to continue for the annuitant’s lifetime, even if the underlying account value is eventually reduced to zero, provided withdrawals remain within the terms of the rider.
Rider Charge - An annual charge of 1.00% of the benefit base will be taken at the end of each contract year. The charge is deducted from the account value. A prorated portion of the rider charge will be taken upon surrender of the contract or termination of the rider. The rider charge will be refunded at death if income payments have not started.
Inheritance Enhancer – Enhanced Death Benefit Rider
Inheritance Enhancer rider enables you to leave a legacy for your loved ones. Similar to the income enhancer rider, a benefit base is set up to determine the enhanced death benefit.
Rollup Credit - At the end of each year during the 10-year rollup period, the current benefit base is increased by 9% of all purchase payments received in the first contract year for issue ages 50-75 and 6% for issue ages 76-85, including any applicable purchase payment bonuses. The rollup credit for a purchase payment received after the start of the first contract year will be prorated. Rollup credits are not applied to purchase payments received after the first contract year.
Death Benefit Options - The rider’s death benefit is available after the fifth contract anniversary and replaces the annuity contract’s death benefit. Beneficiaries may choose one of two death benefits:
- Lump sum: Beneficiaries may select to receive the basic death benefit amount equal to the account value plus 50% of the difference between the account value and the benefit base amount.
- Annuitization: If beneficiaries elect to have the rider death benefit paid for life or a fixed period of at least five years, then the rider death benefit amount will be equal to the account value plus the entire difference between the account value and the benefit base amount.
Effect of Withdrawals - Withdrawals may be taken during any phase of the contract; however, they can reduce the account value, roll-up credits, and the benefit base. The benefit base is reduced proportionally based on the percentage withdrawn from the accumulated value. For example, if the account value is $100,000 and a $10,000 withdrawal (10%) is taken, the benefit base will also be reduced by 10%.
Rider Charge - An annual rider charge of 1.15% will be taken at the end of each contract year. The charge is based on the benefit base and is deducted from the account value. If your client surrenders the contract or terminates the rider, the rider charge will be prorated.
The American Legend 7 also comes with an Extended Care and Terminal Illness Waiver. This no-fee benefit is automatically included for owners, providing them with Extended care and Terminal Illness benefits.
Extended Care Waiver: After the first contract year, an annuitant can withdraw up to 100% of the contract’s accumulated value if he is confined to a Qualified nursing home for at least 90 consecutive days. No withdrawal charge or MVA applies if the owner qualifies for this benefit. Diagnosis must occur after the contract is issued, and written proof with supporting documentation is required from a qualified physician.
Terminal Illness Waiver: After the first contract year, an annuitant can withdraw up to 100% of the contract’s accumulated value if he is diagnosed with a terminal illness with a prognosis of 12 months or less. No withdrawal charge or MVA apply if the owner qualifies for this benefit. Diagnosis must occur after the contract is issued, and written proof with supporting documentation is required from a qualified physician.
Contract/Administrative Charge
The American Legend 7 Fixed Indexed Annuity levies no annual contract or administrative fees.
What Makes this Product Stand Out?
The American Legend 7 Fixed Indexed Annuity offers some of the features that not many fixed-indexed annuities offer. The ones that I like the most are:
- Higher Caps and Participation Rates: Caps on the equity indexing strategies are a bummer! However, the advantage of the American Legend 7 Fixed Indexed Annuity is that it offers higher caps, even for many popular indexes, such as the S&P 500. Similarly, it also has relatively higher participation rates than many of its competitors.
- Access to Most Popular Indexes and a Higher Fixed Declared Rate
- Multiple Lifetime Withdrawal Options
- Free Confinement and Terminal Illness Waiver
- No annual contract, mortality & expense, or administrative fees
What I Don’t Like
I don’t like the following limitations of this annuity:
- Rider Charges are relatively high for the features they offer.
Company Details
You must always keep in mind that, unlike CDs, annuities are not guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other federal insurance agency. An annuity's "guarantee" is only as strong as the insurance company that issues the annuity, so it is always important to assess the issuing company before buying an annuity.
MassMutual Ascend Life Insurance Company
MassMutual Ascend Life Insurance Company has been in the business since 1951. It has been one of the largest providers of fixed and fixed indexed annuities in the US for many years and has consistently ranked in the top ten for Fixed Indexed Annuity Sales. MassMutual is a Fortune 500 company, ranking #102 in 2025.
It is rated as follows by the rating agencies:
| Rating Agency | Rating |
|---|---|
AM Best | A++ (1st of 13 ratings) |
S&P | AA+ (2nd of 21 ratings) |
Fitch Ratings | AA+ (2nd of 19 ratings) |
Moody’s Investors Service | Aa3 (4th of 21 ratings) |
MassMutual Ascend Life Insurance Company has consistently maintained decent ratings for many years. It is considered to be financially strong and stable. In 2024, the company paid out over $9.4 billion in benefits and claims. As of year-end 2024, some of the other financial highlights for MassMutual Ascend Life Insurance Company include its:
- $2.5 billion in policyowner dividends
- $41 billion in total sales / direct written premium
- $33.2 billion of adjusted capital
- $1051 billion of life protection in force
- $285 billion in total invested assets
Thus, based on the operating history and financial numbers, we can confidently conclude that you can trust your savings with MassMutual Ascend Life Insurance Company.
Conclusion
With the advancements in healthcare and technology, the average American today lives longer than ever. Therefore, it’s crucial to have a steady stream of income that can grow safely and reliably, providing a guaranteed income during retirement years. This not only helps you mitigate the risk of outliving your income but also ensures that you continue to live a decent life even in your retirement.
The MassMutual American Legend 7 FIA helps you grow your savings with much less risk. Through its higher cap and participation rates, as well as optional riders, it offers principal protection and the opportunity to participate risk-free in the market index, providing a stream of guaranteed income and even legacy planning. If you are considering a Fixed Indexed Annuity that works best for income growth, guaranteed lifetime income, and even legacy planning, the MassMutual American Legend 7 Fixed Indexed Annuity may be a decent product to look at.
We understand that choosing the right annuity can be a complex decision, influenced by a myriad of factors, including market conditions, individual financial goals, and evolving life circumstances. To better serve you in this critical decision-making process, we regularly conduct in-depth reviews of various annuity products, examining features, costs, and potential benefits. Delve deeper into our extensive reviews here.