Northwestern Mutual has the honor of being the highest rated life insurance company in the U.S. Not only is this company financially strong but it is also one of the top mutual insurance companies out there. Let’s take a deeper look at this carrier in our Northwestern Mutual review.
About Northwestern Mutual
Northwestern Mutual is a Milwaukee-based company that was founded in 1857 and has maintained its principle headquarters in Wisconsin from its inception.
Originally known as the Mutual Life Insurance Company of the State of Wisconsin, within ten years, the young company renamed itself Northwestern Mutual Life Insurance Company (later shortened to just “Northwestern Mutual”) and expanded its marketing efforts throughout much of the Midwest.
Today, Northwestern Mutual issues life insurance policies across the U.S. and enjoys a reputation as one of the best life insurance companies in the industry.
In its most recent reports, Northwestern Mutual disclosed assets of over $290 billion and annual revenue just shy of $30 billion, both of which place the company comfortably on the Fortune 500 list. Source.
As a financially strong mutual insurance company, Northwestern is in a position to distribute annual dividends to policyholders.
In 2019, Northwestern Mutual paid out $6 billion in policyholder dividends.
While dividend payments are not guaranteed, Northwestern Mutual has an excellent track record—having paid out dividends every year for nearly 150 years.
Northwestern Mutual has thus far bucked a couple recent trends in the life insurance industry.
First, Northwestern does not allow prospective insureds to apply for coverage online.
Indeed, Northwestern is less internet-oriented than most competitors and doesn’t make nearly as much policy information available on its website.
Existing clients can manage most aspects of a policy through Northwestern’s website, but new applicants need to work through a financial adviser or insurance agent.
And, second, Northwestern Mutual does not offer any “no exam life insurance” policies. If you want to buy a policy from Northwestern, you’ll need to undergo a medical exam.
Another consideration worth mentioning is that Northwestern Mutual only markets its policies through captive agents, which means agents who sell Northwestern policies cannot also market coverage from competitors.
Independent agents offer a lot of advantages to consumers and help facilitate competition among insurers, so having to apply through a captive agent could be considered a disadvantage of Northwestern Mutual as a carrier.
The company does, though, have a reputation for offering competitive premium rates and generally receives high marks from its over 4.5 million clients.
Northwestern Mutual Group Financial Ratings
A.M. Best: A+
S&P Global: AA+
Most big, well-known life insurance companies can fairly be described as financially secure. After all, if people don’t trust a company to meet its contractual obligations, they’re unlikely to purchase policies.
So, it’s pretty impressive that, within that context, Northwestern Mutual stands out as one of (if not the) most financially secure life insurance companies. Northwestern maxes out all of the big ratings services.
And, together with sister company Northwestern Long Term Care, Northwestern accounts for one-third of the six life insurers sporting a coveted “100” rating from Comdex.
Northwestern Mutual also does well in customer satisfaction ratings, placing first in both J.D. Power’s and U.S. News’ recent industry rankings.
Further, the National Association of Insurance Commissioners (NAIC) reports that Northwestern Mutual receives substantially fewer consumer complaints than comparable insurers.
Products Offered by Northwestern Mutual:
- Term Life Insurance
- Whole Life Insurance
- Universal Life Insurance
- Disability Insurance
- Long Term Care Insurance
- Retirement Planning
- 529 College Savings Plans
Life Insurance Policies Offered by Northwestern Mutual
Term Life Insurance:
Northwestern Mutual has one basic term life policy, with a variety of options for structuring premiums. New insureds between ages 18 and 70 can purchase term coverage from Northwestern, and the minimum coverage level is $100,000.
Northwestern’s term premium varieties are Level Term 10, Level Term 20, Term 10, and Term 80.
The level term policies have fixed premiums throughout a policy’s ten or twenty-year term. Term 10 provides ten years of coverage, and Term 80 covers an insured until he or she reaches age 80.
With both Term 10 and Term 80, premiums start off lower and gradually increase each year throughout the policy’s duration as long as coverage remains effective. Not every premium option is available for every age group.
Though Northwestern’s term policies generally don’t renew upon conclusion of the initial term, the policies do include a conversion option that lets policyholders switch term coverage to a permanent policy (whole life or universal life) without any additional underwriting requirements.
Whole Life Plus:
New insureds up to age 85 can purchase whole life insurance coverage from Northwestern Mutual, with coverage amounts starting at $50,000.
Like most whole life policies, Northwestern Mutual’s offering features level premiums, lifetime coverage, and interest-accruing cash value that grows tax-deferred.
Northwestern lets whole life purchasers choose how long they will continue paying premiums.
The available options are 15, 20, or 25 years, or through the insured’s 65th or 100th birthday.
When a shorter period is selected, individual premiums payments will be higher. But when the period concludes, a policy is “paid-up” so that coverage stays in place, but no additional premiums are owed.
Northwestern also offers life insurance strategies combining whole life and term intended for policyholders who want permanent coverage with dividend eligibility and need higher coverage for a finite period.
Final Expense: Northwestern Mutual does not currently offer any guaranteed-acceptance or simplified-issue policies marketed as final expense or funeral insurance.
Northwestern Mutual’s basic universal life policies is known as Custom Universal Life. The policy looks like a normal cash-value oriented UL policy, with coverage and premium flexibility (subject to minimums and maximums) and opportunities for decent returns.
New insureds can be anywhere from 18 to 85 years old and need to purchase at least $500,000 in coverage. Policy growth is based on the overall performance of the company’s portfolio, subject to minimum rates of return.
What makes the policy “custom” is that new policyholders get to choose how long they want to pay premiums.
Shorter premium periods require higher individual payments but result in a policy that is “paid-up” earlier. The higher early payments can also expand a policy’s potential for cash-value growth.
Accumulator and Protector versions of Northwestern’s UL offering place different emphases on cash-value growth versus death benefit.
Northwestern Mutual also offers a single-premium UL and survivorship UL policies that are intended more as an estate-planning tool than as a means of replacing income.
When purchasing the single-premium policy, policyholders pay one big lump-sum premium upfront and then don’t owe anything further. Coverage levels start at $50,000, and new insureds can be up to 75 years old.
Available Life Insurance Riders
Terminal Illness Rider: This rider gives the policyholder the right to accelerate a portion of the policy’s death benefit if the insured is diagnosed with a terminal illness.
Waiver of Premium (Disability): If the insured becomes totally disabled before reaching age 65, and the disability lasts for at least 6 months, no premiums are owed while the insured remains disabled.
Additional Purchase Option: Available with whole life, this rider gives the policyholder the right to purchase increased coverage at specific times in the future, with not additional underwriting required.
Inflation Adjustment Rider: The policy’s death benefit is adjusted in accordance with the Consumer Price Index if death occurs during a certain period.