Northwestern Mutual is a Milwaukee-based financial security company that provides consultation and services related to life insurance, retirement planning, education planning, wealth management, asset income protection, and business planning. Here is the low down on Northwestern.
Our opinion is that Northwestern Mutual is a solid life insurance company from a financial standpoint. For someone who wants their life insurance agent to do more than just life insurance, such as financial advice and investment services, Northwestern is a convenient option but not always the most competitively priced for pure term life insurance.
Since Northwestern Mutual agents are employed by Northwestern, there could potentially be a conflict of interest where their agent is incentivized to offer Northwestern products instead of other life insurance companies even when it makes sense to do so. Northwestern Mutual is known for their participating whole life insurance so don’t be shocked if your Northwestern agent recommends whole life as part of your financial solution.
|S&P Global||A.M. Best||Fitch||Moody's|
Northwestern Mutual Financial Strength and Credit Ratings
As far as financial backing is concerned, Northwestern Mutual consistently earns top credit ratings from leading agencies like S&P Global (AA+), AM Best (A++), Fitch Ratings (AAA) and Moody’s (Aaa).
Northwestern Mutual has the distinction of having the strongest credit ratings among life insurers in the US and is one of the few companies having an impeccable Comdex score, which is the average of all the ratings company’s scores. If you are a Northwestern Mutual client, you have the assurance of knowing that their policy is very safe and can be confident that Northwestern will pay their claims
Additionally, Northwestern Mutual was called one of the “most admired companies” by Fortune magazine in 2019. It also got the 104th position in the Fortune 500 ranking of 2018. The Northwestern Mutual’s investment portfolio has grown from $146 billion in 2009 to $227 billion in 2017 which means that clients can share in the remarkable financial success of the company by buying its products.
Awards, Corporate Citizenship, and Ratings
According to a JD Power survey of September 2018, Northwestern Mutual obtained 812 points (out of a thousand point scale) to be ranked second out of all life insurance companies.
The Better Business Bureau has assigned Northwestern Mutual an A+ rating. This rating gives BBB’s opinion about how the business is likely to react to customer complaints. So the top rating means that Northwestern pays serious attention to customer satisfaction. The company is therefore extremely trustworthy.
Since 2012, the company launched the Northwestern Mutual Foundation to find cures for childhood cancers while also providing support to childhood cancer victims and their families. The research program has conducted over 240,000 hours of childhood cancer research for which the company provided $20 million.
The company has also committed itself to enhance Milwaukee by improving education, providing shelter for homeless children and launching a campaign to curb domestic violence.
Northwestern Mutual Whole Life Insurance
Northwestern Mutual offers a wide range of whole, term and universal policies. Of Northwestern Mutuals offerings, their participating whole life insurance stands out as one of their top offerings.
Northwestern Mutual’s participating whole life insurance is consistently among the top participating whole life policies on the market due to the strength of their cash accumulation from company dividends.
The immensely successful financial performance means that the company will pay about $5.6 billion in dividends, which is the biggest ever in its history and the largest payout ever by any Mutual company.
The company has the distinction of paying dividends every year since 1872, even during the most challenging economic times, which makes Northwestern Mutual is an industry leader for paying dividends to policyholders.
That said, dividends are not guaranteed, and the dividend rate of Northwestern has been in steady decline in recent years due to stubbornly low interest rates, which have put downward pressure on whole life dividends across the life insurance industry. Other major insurers have also seen similar declines, but Northwestern Mutual’s dividend rate in 2018 was relatively modest all things considered.
As far as whole life insurance is concerned, Northwestern Mutual offers some of the best benefits in the market such as dividend payments, guarantees for death benefit, cash and premiums, a minimum death benefit of $25,000, an upper age limit of 85, and no minimum age. The company offers a variety of coverage options that can suit most people’s needs.
However, if you are looking at a final expenses policy to cover your burial costs, then $25,000 may be overkill. We’d suggest looking at our best life insurance for seniors list to find a dedicated burial policy. The underwriting for burial insurance is simplified and by lowering the coverage amount to the death benefit you need, you can save on premium and avoid being over insured.
The attractive features of the company’s standard policy make it stand out in the highly competitive market. The features include highly flexible benefits in case of death, guarantees on lapse and expiration, policy conversion without requiring medical examinations. They also offer premium payments and deduction waivers in case of emergencies, guarantee on interest rate, access to cash value and partial surrenders.
Northwestern Term Life Insurance
Northwestern Mutual is best known for whole life insurance, but it also offers good value for term policies. Northwestern might not always be the lowest-priced term insurance, but you do get a little more bang for your buck.
Northwestern includes robust conversion options for converting their term life insurance to permanent life policy. Term policies can be purchased for as little as 10 years to as much as 30 years. These types of policies are best suited for temporary insurance needs, for instance, it may interest those who want to pay off outstanding mortgage amounts or replace their income.
Northwestern, surprisingly, offers an increasing term life plan. Increasing term policies are when the term premiums increase annually as opposed to level premiums that remain stable throughout your purchased term period. If you only need life insurance coverage for a short amount of time, for example, a year or two, this contract might make sense. Otherwise, level-term will make sense more often than not.
Northwestern Mutual conducts full underwriting for a bulk of its applicants. If you want a quality no-exam life insurance policy, we’d recommend looking at a life insurance company that specializes in non-medical underwriting.
Northwestern Universal Life Insurance
Northwestern also has two types of universal life insurance available for sale currently. The first policy is a single premium universal life insurance policy. This policy is designed to pay a single lump-sum payment to fund your universal life insurance policy. After the payment, a death benefit is instantly created that is larger than your initial premium.
Single premium universal life insurance policies are usually used for estate planning purposes. The death benefit proceeds can cover estate taxes and probate costs. Additionally, they can be used to even out liquid assets among your heirs. For example, say you want to leave a business to your children, but one child doesn’t have an interest in running the business. You can use the life insurance proceeds to compensate that child for their share of the business without actually leaving them the physical shares.
Northwestern also has a customer universal life accumulator policy, which is a classic universal life insurance policy. Universal life is more flexible than whole life and still has the ability to build cash value on a tax-deferred basis with lifetime death benefits. However, it does come with fewer guarantees compared to whole life.
Life Insurance Riders
Northwestern Mutual policies can be bolstered with different types of add-ons that will provide extra benefits to policyholders. These are called riders.
Riders make it easier for policyholders to further customize their insurance plan. Northwestern has your standard lineup of additional riders, for example, there is the rider for accidental death that can yield up to twice the policy amount in case the policyholder dies by accident.
There is an add-on as well for debilitating illness wherein a lump sum is paid upon diagnosis. Another rider provides disability income for those who find themselves unable to work including a rider for accelerated death benefit. This is very important because it allows policyholders to draw death benefits early on to cover expenses like hospital bills, therapy and other payments entailed by life-threatening conditions.
Northwestern currently does not offer a solution for critical and chronic illness on their term policy. If life insurance with living benefits is a feature you want in your life insurance, then we would direct you to other carriers that focus on those types of solutions.
How Northwestern Mutual Works with Clients
Northwestern Mutual provides financial advice to clients through its wealth management advisors who draw up a plan to achieve the goals of the clients. According to the company, they are trained to use simple jargon-free language, answer questions and listen sympathetically to client opinion and requirements.
It must be remembered that Northwestern Mutual agents may suffer a conflict of interest since they may receive a financial incentive for recommending their own company rather than other more competitive options.
Persons who want a less expensive life insurance policy, have a pre-existing condition or want no-exam underwriting should seek the services of independent life insurance brokers. These agents can match the right company with their insurance needs since they are not biased by being employed directly by a life insurer.
Captive Agents vs. Independent Agents
As the name suggests, captive agents can work for only one insurance company. They are usually paid commissions in a sales structure can reward and financially incentivize proprietary productions. Hence, they have financial motivation to recommend their own company products to clients which may be high margin or less than optimal.
One benefit to working with a captive agent is that they have a deep knowledge of all their company offerings. Another benefit is that they are employed by trustworthy brands with vast resources. They may have access to technologies that independent agents do not. This allows them to often offer other financial services like investment management or financial planning in addition to life insurance.
Independent agents do not suffer a conflict of interest like captive agents do. They can represent more than one insurance company, so you have a greater likelihood of being placed with the best company they can offer you. Independent life insurance brokers often specialize solely on life insurance. If you want a more comprehensive service that is outside the scope of life insurance, then working with a career agent and a large life insurance company with a broker-dealer may make more sense.
Final Thoughts: Is Northwestern Mutual Right for Your Family?
Northwestern Mutual is a great life insurance company. It is financially strong and has a stellar reputation for making good on their obligations. Their term life insurance might not be the best-priced term contract in town, but if you are interested in converting it to a whole life contract down the road, it is a choice worthy of consideration.
In our experience, people who choose to work with a company like Northwestern Mutual like knowing that they are being serviced by a large corporation. This type of client generally does not mind paying a more in premiums to have the Northwestern Mutual name and wants to consolidate both their insurance and investments under one roof for simplicity sake.
If you decide to work with a Northwestern Mutual agent, do not be surprised if they recommend whole life insurance. Captive agents tend to be experts in their own company’s products, but once you expand the scope outside of Northwestern, their knowledge may be limited.
Our clients in the independent channel tend to be looking for a life insurance specialist for a number of reasons. Most commonly it is to find them a great deal because they have a pre-existing condition or are in excellent health and want the rock-bottom lowest price or no-exam underwriting. They need an independent agent who can broker many companies and has a broader knowledge of the industry.
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Joe is a lifelong learner with a passion for sharing what he has learned with others. Joe has publicly spoken on life insurance in the past to both colleagues at industry conferences and to consumers in educational settings and as a contributor to industry blogs. Additionally, Joe is studying for certifications such as the CFP, CLU, and RICP to further his professional knowledge.