Updated May 22nd, 2020
Northwestern Mutual Whole Life Insurance Review
DISCLAIMER: We are not Northwestern Mutual. This is an independent review.
Founded in 1857, Northwestern Mutual is one of the oldest financial security companies in the world. The company offers a variety of products and services, including its popular whole life insurance policies.
Northwestern Mutual is one of the large mutual insurance companies. It is ranked as #104 in the Fortune 500 list.
The Good
Industry Leader
When shopping for whole life insurance, peace of mind is extremely important. As a consumer, a focus on industry ratings can help you make an informed and confident decision.
Great Ratings For Northwestern Mutual
Financial Ratings
Northwestern Mutual is an industry leader in regards to its financial ratings. All the top rating agencies consider the company a top performer, including the following:
- A.M. Best Rating: A++
- Fitch Ratings: AAA
- Standard & Poor’s Rating: AA+
- Moody’s Rating: Aaa
To see all of their rating information go to:
Northwestern Mutual Financial Info
There are other companies that perform this well, but not many have higher ratings than Northwestern Mutual.
Variety of Coverage Options
It’s easier to find and buy whole life insurance when you have access to a variety of coverage options.
Here are some details to consider:
- There is no whole life minimum age.
- Whole life maximum age is 85.
- The minimum whole life death benefit is $25,000.
- There are guarantees on cash, death benefit, and premium.
- Dividend-paying whole life insurance.
These benefits, compared with affordable premiums, have moved Northwestern Mutual whole life insurance policies to the top of the market.
Full of Features
One of the primary benefits of Northwestern Mutual whole life insurance is its standard policy features. You get the best of the best with your monthly premium, without being asked to pay any extra.
Some of these features include:
- Cash value access and partial surrenders.
- Interest rate guarantee.
- Waivers on deductions and premium payments in emergency situations, such as an injury that leaves you out of work.
- Expiration and lapse guarantees.
- No-exam conversions.
- Flexible death benefits.
It is these types of features that allow Northwestern Mutual whole life insurance policies to stand out in a crowded market.
The Not So Good
Low and Decreasing Dividend
Northwestern Mutual’s dividend has been decreasing over the past years. The dividend when from being the highest in the industry to being average. This dividend is what drives the performance of the whole life insurance cash and death benefit growth.
The dividend has decreased from 8.8% in 2000 to 5.45% for 2016 and all the way down to 4.8% in 2018.
However, in 2020, it bounces back to 5.0%. So it’s not all bad news.
Still, one of the main reasons to buy whole life insurance is because of the participating dividend. If the performance of the dividend keeps decreasing, so does the performance of their whole life policy.
Stability Of Your Agent
In reality, Northwestern Mutual had 5,900 employees in 2016. But the employee count went down to a little over 5400 in 2018 (source Forbes 500).
What this means to you is that finding an agent that will stay longer with Northwestern Mutual may be more difficult in the future.
This is a product of the significant competition that Northwestern Mutual has faced, and that other companies keep growing past them. See the revenue from the large Mutual Companies (Fortune 500 Source):
Northwestern Is Not The Top Dog In The Mutual Insurers Any More
The Quotes
In the past Northwestern Mutual had one of the best performing whole life insurance in the market.
Today, Northwestern Mutual’s lower dividend will not help when comparing Northwestern Mutual whole life insurance with the competition.
The cash value and the death benefit will grow slower than some of the top 7 whole life insurances in the marketplace.
Total Dividend
In 2020, the company will pay an estimated $6 billion to policy-owners through its dividend payout. This is an industry-leading dividend but bear in mind that Northwestern is a large company. They have many policyholders, so this gets split by all the current policyholders. The policy dividend interest payout will be 5% for 2020.
Real Example
Final Word
In conclusion, Northwestern Mutual has long been one of the top providers of whole life insurance. With high ratings across the board and a record amount paid in dividends to policy-owners, the company seems to be in a strong position.
However, a rapidly decreasing dividend could be a concern for new whole life insurance products and participating policies.
If you are looking for a new policy there are many better options out there like:
Top Whole Life’s – Northwestern Mutual Whole Life Insurance Review:
3 out of 5
Hi,
In doing my research it seems that the dividend scale interest rate is only one component of the dividend that is credited for these policies. It appears as if you only focused on that. What about favorable mortality costs and expenses? The dividend scale interest rate isn’t a rate of return correct? Please help explain because it seems you are missing important information in determining future performance. Thank you!
Best,
Casey
Hi Casey, You are correct. There are many other factors that are not easy to infer, because companies do not disclose their expenses and mortality costs. We try to keep it simple. However, dividend is still the #1 driver of performance. If a company has a 30% drop in dividend their performance will suffer. Northwestern Mutual’s whole life was #1 many years ago. Now, it is not very competitive.
Did you notice that each companies dividend is net of different expenses and others are not. This is a significant factor and why some of the companies with lower dividend rates actually outperform companies with higher dividend rates. Ignoring the fact that the interest rates are not comparable and then comparing policies only on the dividend rate is amateur hour and not something I would expect from a blog. However, consumers would be interested to know that you can not sell Northwestern Mutual or some of the other companies you don’t recommend and therefore can’t make commissions. That is why you don’t recommend them.
Hi Aaron,
You are right. Northwestern is a captive company and we cannot provide their products. We would be happy to compare side by side an actual Northwestern illustration with any other company if you can provide us with one. We will add it to this post. We understand expenses on whole life dividends very well. But we also understand that if a dividend drops significantly so will the performance of the whole life.
Only comparing dividend rates on whole life policies and stressing the emphasis on just dividend rates, you are leaving a lot information out. There are a variety of things that distinguish NM policies from the industry that has always led to there dominant performance. There are a lot of factors when considering cash value growth excluding just dividend rates and that is something to greatly consider that this blog left out.
How about you compare the historical performance of an NM policy over the last 30 years with any of the companies that you make money off of and show us the actual truth? Does that sound doable? I would bet money on my NM policy any day of the week, oh wait I already did.
Hi Geoffrey,
We would be happy to compare them. Could you please email us the illustrations you have to quotes@topwholelife.com?