UPDATED: Nov 30, 2018
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Originally a life insurance company, Northwestern Mutual today offers a range of related products, including other insurance products and financial planning choices. The company has been climbing the ranks of the Fortune 500 steadily in recent years, and in 2017 ranked in the number 92 spot. On the global 500 list, the company ranks 377.
While Northwestern Mutual doesn’t have the visibility of competitors like MetLife, they have focused on building a reputation for accountability. In theory, that approach should make this life insurance company one of the most reputable – something we’ll examine in this review along with their product offerings and services.
Northwestern Mutual Overview
Northwestern Mutual was founded in 1857 in Janesville, Wisconsin under the name Mutual Insurance Company of the State of Wisconsin. A few years later they moved their headquarters to Milwaukee, where they remain to this day.
They paid out their first claims shortly after the move, borrowing funds to cover two policyholders who were victims of a train accident. The company grew quickly after this, and by 1865 had expanded throughout the Midwest and towards the East Coast as well.
The company changed its name to The Northwestern Mutual Life Insurance Company that same year. In 1907, they introduced their Policyholder Examination Committee, a group of policyholders granted access to the company’s financial information to ensure accountability. That tradition continues to this day.
After paying dividends as a mutual company to policyholders in 1864 for the first time, the company paid every few years and then annually from 1872 on.
Northwestern Mutual remained a life insurance company only until 1969, when they started offering disability insurance as well. In the 1970s they added annuities, and they started offering long-term care coverage in the 90s. It was during this time period that the company also expanded into a variety of other investment products.
Still located in Milwaukee, Northwestern Mutual began construction of a new headquarters in 2015, which is expected to be completed by 2017 at a cost of $450 million. This creation of a landmark headquarters in the company’s home state follows on a tradition of life insurance companies that have done the same in other cities.
Northwestern Mutual sells its products through financial professionals across the country, although not all products and services are available equally everywhere. Unlike many other such large life insurance companies, they do not offer online or other direct buy option to obtain insurance products, but remain fully committed to the agent system.
As of 2015 numbers, Northwestern Mutual was the seventh largest life insurance company by assets in the United States, just behind Manulife Financial.
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For the first hundred years or so of the company’s existence, life insurance was their focus. In more recent decades, however, they’ve expanded into other related insurance products as well as financial planning for retirement.
Northwestern Mutual’s flagship product remains a major part of their business to this day. They offer a range of both term and permanent life insurance options to meet the needs of most customers.
Term Life Insurance
Northwester Mutual offers two types of term life insurance. These products provide coverage for a limited period of time, allowing you to purchase more coverage at a lower premium to provide benefits when you need them most.
Level Premium Term Life Insurance is the most common type, offering steady, affordable premiums over a specific time period with a guaranteed death benefit.
The Level Term 20 policy offers coverage with level premiums for 20 years, while the Level Term 10 offers level premiums for the first 10 years with an additional 10 years of coverage at a newly calculated premium. Both are 20-year term policies, but the 10-year may allow policyholders to pay lower premiums during the first 10 years for a more affordable option – although it will then increase in cost.
Annually Renewable Term Insurance is a product designed to allow the customer to determine on a yearly basis how long they want to keep the policy. The premium is recalculated each year when the policy is renewed. Northwestern Mutual has two options. Term 80 can be renewed annually up to age 80, while Term 10 can be renewed annually for a period of 10 years.
Northwestern Mutual offers the option to convert a term policy to a permanent policy. It’s a little surprising that they have limited selections for term length in these options – both the 10-year and the 20-year are actually 20-year terms, and there is no option for a longer term. Most major life insurance companies offer 15-year and 30-year terms as well, but there is no sign of those options here.
Whole Life Insurance
The most basic of permanent life insurance options, Northwestern Mutual’s whole life policies offer guaranteed premiums, guaranteed death benefits, and a cash accumulation account.
Northwestern’s whole life policies come with three payment options:
- 65 Life spreads payments over the years up until the policyholder turns 65, after which the policy remains in force for life with no more premiums due.
- 90 Life spreads the payments over more years, up to age 90, which allows for a lower monthly premium since the policyholder is paying for a longer time period.
- Limited Pay Life allows the policyholder to select a length of time for premium payments ranging from 10 to 30 years. This allows each individual to select how much they would like to pay monthly and fit the premiums to their budget based on the number of years for which they will continue to pay.
This Northwestern-specific policy type combines permanent and term life insurance coverage in one policy. This policy takes a base permanent life insurance policy and allows the policyholder to add term life coverage to provide additional benefits during a specific time period. Instead of having both a permanent and a term life policy, the two are combined into one flexible policy with multiple options.
The underlying permanent life insurance policy includes a guaranteed death benefit and a cash accumulation account, with the option in increase the death benefit with an increase in premiums.
The policyholder then has the option to add term coverage with a higher death benefit amount for a specified period of time, increasing the premium during the time that the term coverage is in place.
Northwestern offers three versions of their CompLife policy:
- Adjustable CompLife, which is flexible, with a guaranteed time period during which premiums will stay level
- Estate CompLife, which is designed to offer lower premiums
- Survivorship CompLife, which covers two people and pays out on the death of the second
Universal Life Insurance
Northwestern’s Universal life options are a flexible permanent life insurance choice with guaranteed death benefits and cash accumulation. These policies offer premiums that can be adjusted to your budget within certain parameters, and allow you to control how much goes into your cash accumulation account. Northwestern also allows for adjustments to death benefits.
There are two options:
- Custom Universal Life Accumulator is the standard universal policy from Northwestern
- Single Premium Universal Life is a policy that allows you to buy life insurance with a single lump sum payment
Variable Universal Life
The final life insurance policy type that Northwestern writes is variable universal, which combines all of the basics of a universal life insurance policy with a bit more of an investment aspect.
These policies include all of the benefits of universal life with more choice as to where your cash accumulation account will be invested, offering the possibility of more return on investment.
All Northwestern Mutual life insurance policies have the added perk of paying dividends. Although these payments aren’t guaranteed, the company has (as previously mentioned) paid them every year since 1872, which makes it pretty likely that policyholders will see a return every year. These returns can have a big impact on the overall value of the policy, and are important to keep in mind when considering this company. A Northwestern Mutual representative can provide more information on dividends and how they are disbursed.
In addition to life insurance, Northwestern Mutual also writes two other types of insurance to protect against the unexpected.
Disability Income Insurance
This policy is designed to replace income lost as the result of a disability. These policies provide a regular payment as a percentage of your income for as long as needed, up until retirement age if necessary. Payments are tax-free as long as the premiums were paid with post-tax dollars.
Long Term Care Insurance
Northwestern offers long-term care policies that will pay for costs not covered by Medicare or other health insurance in the event of an injury or illness that requires ongoing treatment and care. Long term care policy options vary from state to state, so details are best found by checking out the options in your home state.
Northwestern Mutual offers a range of investment and financial products to pay for education, plan for retirement, or any other investment need.
Northwestern offers both immediate and deferred annuities to provide immediate income or to prepare for income in retirement. These products come with a guaranteed income that can be provided on a tax-deferred basis. They are a popular and relatively simple choice to provide income for retirement with little risk. Customers can choose the level of growth they would like to work towards based on the type of annuity and how funds are invested.
Immediate annuities are available in three forms:
- Select Immediate Income Annuities
- Select Portfolio Immediate Income Annuities, which offer the potential for growth through dividends
- Immediate Income Plans
Deferred annuities are also available in multiple forms:
- Select Portfolio Deferred Income, which is similar to the immediate version but with deferred payments
- Select Deferred
- Select Variable
- Select Fixed
- Portfolio Deferred Income Plans
- Qualified Longevity Annuity Contracts
Northwestern Mutual offers a range of different college savings options. These include 529 plans and Coverdell Educational Savings Accounts among others.
Northwestern’s additional financial services include multiple options for investments. These include:
- Brokerage services
- Trust services
- Investment Advisory services
- Fee-based financial planning
- Private Client Services
Overall, there are a number of different ways to save for the future with this company, and they are best discussed with a local agent since the investment needs of each individual can vary greatly.
Prices and Premiums
Northwestern Mutual doesn’t offer online quoting. All quotes for life insurance are obtained by contacting a financial professional selling Northwestern products. The website will help put you in touch with the representative in your area.
This is not a company that we would expect to be the least expensive option for life insurance. That’s a function of a few things – first of all, the fact that they sell through agents, which adds the cost of commissions, and secondly the focus of the company, which is much more on service than on being inexpensive.
Northwestern Mutual does not appear to write the type of simple, no medical exam life insurance policies that are popular with some other companies. Using medical exams and health questionnaires can help the insurance company to offer better rates to those in good health, whereas simple issue polices can cost a little more overall since the company is taking a bigger risk.
One of the things that will come into play when it comes to policies from Northwestern Mutual is the dividends. These added perks can really bring more value to a policy even if it doesn’t have the lowest premium to begin with. As we address in the section on consumer feedback, some customers report receiving annual dividends in excess of premiums paid. That’s definitely something to keep in mind when comparing rates to other companies.
As with all insurance companies, there is a certain balance between the premium cost and the service and benefits you’re getting in return for your premiums. The cheapest insurance isn’t always the best choice, and that holds true for life insurance as much as for auto or home insurance. How the company handles claims and customer service issues, in addition to the value of the product itself, is a big part of what makes a premium worth paying. We’ll take a look at those things next.
Like many life insurance companies, Northwestern Mutual accepts claims by phone only during particular business hours.
Claims can be reported at 1-800-388-8123 from 7:00 a.m. to 6:00 p.m. Central Time.
There is also an online claims reporting form that can be used at any time of the day to report the death of an insured on a life policy. There is also an online disability claims form.
Online claims reporting for life insurance policies is becoming more common, but many insurance companies still don’t offer this option, so it’s good to see it here. This is especially true of an insurance company that doesn’t have a 24-hour line, although for life insurance claims 24/7 service isn’t as vital as for auto or home insurance claims, which can require immediate assistance.
Claims can also be filed through a local representative, who can help with filing and answering questions about settlements.
Northwestern Mutual offers several settlement options for life insurance claims, including the choice of a single lump sum payment or a series of payments. They also offer interest income payments, allowing the beneficiary to benefit from the investment of life insurance proceeds for a longer period of time. Representatives are available over the phone to discuss the options for settlement with the beneficiary after filing the claim.
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Northwestern Mutual has been Better Business Bureau accredited for a very long time – since 1939. They currently have an A+ rating, and there are only 32 complaints filed in the past three years. Only nine of those were closed in the past 12 months.
While it’s common for life insurance companies to have fewer complaints than auto and home insurance companies, these numbers are still impressively low for such a large company.
J.D. Power’s 2016 Life Insurance Study of life insurance companies rates Northwestern Mutual very highly. They have a 4 out of 5 rating in all areas. With a 4 out of 5 overall rating, this leaves them in third place behind Nationwide, who also received a 4 out of 5 rating, and top honor recipient, State Farm, who received the only 5 out of 5 rank. These ratings are based on a survey of customers, so are based on actual policyholder opinions.
Overall, reviews of the company are few and far between. The complaints that can be found are fairly common with life insurance companies and not raising much in the way of red flags. Life insurance companies often have fewer reviews than companies that sell other insurance products such as auto and home – those types of policies generally involve more interaction with the company and more frequent claims. Still, a general lack of complaints for a life insurance company is always reassuring.
There are even a fairly good number of positive reviews of Northwestern Mutual from policyholders who are impressed with the company’s products and services. Policyholders report receiving dividends in excess of premiums paid, fast claims service, and generally good customer service.
Seeing positive reviews of an insurance company it carries a great deal of weight, since people are far more likely to write a complaint than a positive review. There are enough good reviews of Northwestern Mutual – especially when compared to the smaller number of complaints – to leave a generally positive impression overall of the company.
With good reviews, a small number of complaints, and high ratings from both the BBB and J.D. Power, the impression of this company is overwhelmingly positive. It ranks among the best life insurance and financial planning companies out there.
Northwestern Mutual has an excellent reputation on all sides – both from professional rating systems and in terms of online reviews directly from customers. They also open their books to a committee of their policyholders in order to make sure they are seen as accountable. These things combined make for a highly reputable company, better than most.
While we are unable to compare Northwestern Mutual rate-wise, they do have a strong suite of life insurance products with the added value of paying dividends annually. The only minor issue is a lack of varied options in term length for the term life insurance product. Their other products appear solid as well.
They offer a simple claims reporting system and there is no indication of anyone having issues with getting a claim paid out. Unless the premiums come out to be a whole lot higher than other companies, which seems unlikely given the reviews, there is enough value in the products here to make a bit of an extra premium well worth it.
Northwestern Mutual has a great reputation, is customer-centered, and has a great product lineup. They’re well worth taking the time to get a quote from a local representative for just about anyone in the market for a solid life insurance policy or for other future-planning needs. This company comes highly recommended, even without a rate comparison.
For a list of companies that we recommend, visit our Best Insurance Companies page.