According to the Insurance Information Institute, of the top 10 writers of individual life insurance for 2015, Northwestern Mutual ranked #1. The company is one of the top dividend paying whole life insurance companies in the U.S. with an 8.3% market share for total direct premiums written.
In the following Northwestern Mutual review we will focus on the company’s history, strong ratings, life insurance policies, and the unique features offered.
Review of Northwestern Mutual Life Insurance
The following review of Northwestern Mutual is part of our life insurance reviews series focused on what we consider the best life insurance companies for wealth building and legacy creation. We are focusing on strong companies that offer the option to generate high cash value, as opposed to an initial high death benefit.
With that in mind, let’s find out a little more about this company.
About Northwestern Mutual
In 1857, Northwestern Mutual was originally known as the Mutual Life Insurance Company of the State of Wisconsin. Northwestern Mutual ranks 100 on the 2016 FORTUNE 500, and is recognized by FORTUNE as one of the “World’s Most Admired” life insurance companies in 2016. Northwestern Mutual is a mutual insurance company.
What is a mutual insurance company?
A mutual insurance company is one that is owned by the policyholders. Policyholders share in the ownership rights of the company. Participating policyholders take part in the company’s profits through dividends.
Northwestern Mutual’s dividend interest rate was 4.90% in 2018 and the company will pay participating policy holders a total of $5.6 billion in dividends in 2019.
Northwestern Mutual’s current assets are $265 billion, with revenues of $28.1 billion and $1.8 trillion worth of life insurance in force.
Northwestern Mutual Ratings
Northwestern Mutual is the highest rated life insurance company in the U.S. As of October 2018, Northwestern Mutual holds the following financial ratings:
- A.M. Best Company Rating: A++
- Fitch Ratings rating: AAA
- Moody’s Investors Service rating: Aaa
- Standard & Poor’s rating: AA+
- Comdex Ranking: 100
Northwestern Mutual Products
- Term Life Insurance
- Permanent Life Insurance
Disability Income Insurance
- Supplemental disability income insurance
Long Term Care Insurance
- Long term care planning
- Immediate Income Annuities
- Deferred Income Annuities
Investment Products and Services
- Brokerage products and services
- Investment advisory services
- Trust services
- Private client services for HNW individuals
- Fee-based financial planning
- 529 Plans
- Coverdell Educational Savings Accounts
Northwestern Mutual Life Insurance Policies
Although Northwestern Mutual is known more for its stellar whole life insurance, the company also offers both term life and universal life insurance.
Although there are benefits to all types of coverage, in our opinion there is a clear winner when considering between term life insurance vs whole life.
Benefits of Term Life Insurance
- Lower Initial Cost
- Income Protection
- Mortgage Protection
- Conversion Option
Benefits of Permanent Life Insurance
Although not exhaustive, below are some areas where permanent life insurance can be extremely beneficial when combined with a diversified asset portfolio:
- Business Succession Planning
- Buy Sell Agreements
- Key Man Insurance
- Estate Planning
- Infinite Banking
- Executive Bonus Plans
- Deferred Compensation Plans
- Retirement Planning
- Wealth Building
Northwestern Mutual Life Insurance Policies
We often recommend that if you are considering term life insurance then you should choose convertible term life insurance that can be converted into a top of the line permanent life insurance policy. Alternatively, you can always get a smaller universal or whole life policy and add a supplemental term life rider to maximize your death benefit, but also begin growing your cash value.
Northwestern Mutual Term Life Insurance
Northwestern Mutual offers both Level Term Life Insurance and Annual Renewable Term Life Insurance.
Term life insurance allows you to have a large guaranteed death benefit for a lower initial cost than permanent coverage.
Northwestern Mutual Life Insurance Company offers level term life insurance for 10 and 20 years. You can also choose from its annual renewable term offerings of Term 80 and Term 10.
Northwestern Mutual Permanent Life Insurance
CompLife: Blends permanent insurance with term life insurance to give you ultimate policy design flexibility.
Universal Life: the benefit of permanent coverage with an adjustable death benefit and premium payments.
- Custom Universal Life Accumulator
- Single Premium UL
Variable Life: the flexibility of universal life insurance with the additional benefit of allowing the cash value to be invested in various options across different asset classes.
Northwestern Mutual Whole Life Insurance
Whole life insurance lasts your entire life and offers specific guarantees, including:
- Guaranteed death benefit,
- Guaranteed cash accumulation and
- Guaranteed level premiums.
Additional cash value growth is available through dividends. Although not guaranteed, Northwestern Mutual has paid a dividend every year since 1872.
Dividends are valuable and can be used to:
- Purchase paid up additions
- Pay Premiums
- Earn interest with the company
- Cash Out
Northwestern Mutual has 3 whole life options to choose from:
- 65 Life: make premium payments until age 65.
- 90 Life: make premium payments until age 90.
- Limited Pay Life: 10 Pay, 20 Pay, and 30 Pay are among the options available.
You can go here to read more about limited pay life insurance pros and cons.
Additional Benefits of Whole Life Insurance
Tax free life insurance policy loans
Tax free life insurance loans are available from the company using your cash value as collateral.
Tax deferred cash value growth
The cash value in your policy grows tax deferred. And if you utilize the policy correctly you will never need to pay taxes on the cash value growth.
Additional tax deferred cash value accumulation can be acquired through the use of paid up additions. Paid up additions allow you to contribute more premium into the policy, but not exceeding the total limit set by formula described in the internal revenue code. If you exceed the limit your policy will be considered a modified endowment contract.
Tax free death benefit
You beneficiary receives the death benefit income tax free. Normally, the only way a death benefit is taxed is if your estate exceeds the federal estate tax exemption limit or your state has a death tax. Careful asset protection planning is prudent for those with large estates.
Northwestern Mutual Life Insurance Policy Riders
Accelerated Care Benefit: allows access to your death benefit for long term care needs.
Additional Purchase Benefit: purchase additional insurance at future dates without evidence of insurability. This is a great option when considering life insurance for children, as it will protect their future insurability in the event they are diagnosed with some type of disease or develop some other lifestyle habit that would preclude them from coverage.
Waiver of Premium Benefit: waives all premiums due if the insured becomes totally disabled.
Northwestern Mutual Review Conclusion
Northwestern Mutual is a fantastic company with a long history of success. The question then becomes, is this the right company for you based on your unique needs, objectives and goals?
Which is why…
If you are considering purchasing a Northwestern Mutual Life Insurance policy, we would encourage you to give us a call so that we can generate an illustration for you and help you compare how Northwestern compares with other options that might be available to you.
If you actually do decide to apply for coverage, you won’t always have that “nagging ich” in the back of your mind wondering if you made the right decision!
So, give I&E a call today and see what we can do for you.