Northwestern Mutual Life Insurance Review: Low Rates and a Wide Variety of Options

Northwestern Mutual Life Insurance Products

Northwestern Mutual is one of the largest life insurance companies and offers a full spectrum of products, including term, whole, universal and variable life insurance. It also offers its own CompLife policy with the combined benefits of term and permanent life insurance. The only policies not offered by Northwestern Mutual are those with limited underwriting, meaning it doesn't have options for people with significant pre-existing conditions or who are looking to purchase life insurance very quickly.

All of Northwestern Mutual’s permanent life insurance policies build cash value and you, as the policyholder, are eligible to receive dividends. In addition, these policies come with an Additional Purchase Benefit, which is the option to increase your policy’s face value at certain points in time. If your financial situation changes and you want more coverage, you could increase your policy’s death benefit without demonstrating your insurability. However, this option is only available after certain life events, such as when you turn 40 or have a child.

Northwestern Mutual’s policies allow your beneficiaries to choose how they receive the death benefit if you pass away. Your family can take a single payment or a series of payments, in which case Northwestern Mutual would pay interest on the proceeds.

Northwestern Mutual Term Life Insurance

Northwestern Mutual offers four different term life insurance policies:

Northwestern Mutual’s rates for term life insurance aren’t the cheapest, but are very competitive when compared to similar insurers. We compared the annual cost of a Level Term 20 policy against some of the largest insurers for three common life insurance shopper profiles:

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As you can see, Northwestern Mutual has somewhat average rates for young and healthy shoppers. However, they are cheaper than any other company in our sample for smokers and seniors.

All of Northwestern Mutual’s term life insurance policies offer the option to convert your coverage to permanent life insurance with guaranteed acceptance. There’s no additional underwriting and your new premiums would only be determined by your age and the type of coverage. While this feature isn’t available through every insurer, it's typically an option with insurers that also offer permanent life insurance policies.

If you’re undecided between term and permanent life insurance, the option to convert your coverage can be valuable if you get sick later, because the insurer won’t take this into account. However, take note of exactly when you’re able to convert your policy. With Northwestern Mutual, this has to be done within a certain number of years of purchasing your term life insurance, and the number of years varies according to the policy.

Northwestern Mutual Whole Life Insurance

Northwestern Mutual’s whole life insurance policies provide lifetime coverage with level premiums and can be purchased until you turn age 85. The minimum death benefit is $25,000, but you should be able to get as much coverage as you need. Its whole life insurance policies have a cash value component that grows at a guaranteed rate over time. The cash value is the amount of money you would receive if you were to give up your coverage, but it can also be used to borrow money from the insurer in a policy loan.

The company offers three types of whole life insurance policies, with the difference being the period of time during which you pay for coverage:

If you become seriously ill, Northwestern Mutual’s whole life insurance policies give you the option of receiving your death benefit while still alive. This feature is available with most insurers and can be valuable if you would otherwise have difficulty paying for significant medical expenses or supplementing lost income.

Since Northwestern Mutual is a mutual insurance company, it is owned by the policyowners and whole life insurance policies are participating. This means that if Northwestern Mutual collects more money in a particular year than is spent, the company issues a dividend to those with permanent life insurance policies. These dividends can be taken in cash, used to pay premiums or used to purchase additional coverage. Dividend returns aren’t guaranteed and vary in size, with Northwestern Mutual’s actually decreasing over the past several years, but the company has consistently issued them for decades.

Northwestern Mutual CompLife Insurance

Northwestern Mutual’s CompLife product is essentially a combination of whole and term life insurance, and you choose how the coverage is divided.

Depending on the CompLife policy, premiums may be guaranteed to stay level for a period of time, but this isn’t always the case. To reduce costs and increase the policy’s value over time, Northwestern Mutual lets you use dividends to purchase paid-up whole life insurance. These are essentially miniature policies that replace the policy’s term coverage (lowering your premiums), increase the permanent death benefit, and add to the policy’s cash value.

CompLife is a helpful product from Northwestern Mutual if you have both short and long-term life insurance needs and want to diversify your portfolio with a cash value policy. However, if you need both term and permanent coverage, but aren’t interested in the cash value component, you should also consider combining guaranteed universal coverage and term coverage. Though these can only be purchased as separate policies, guaranteed universal life insurance has little to no cash value, so it’s considerably less expensive for permanent coverage than whole life insurance.

Northwestern Mutual Universal Life Insurance

Similar to its whole life policies, Northwestern Mutual’s universal life insurance policies are fairly traditional but offer multiple payment structures:

Choosing how to pay for your universal life insurance policy may sound like a simple decision, but it can make a significant difference in your finances. Not only does the single premium option eliminate one of the core benefits of a universal life insurance policy—flexible payments—but you need to confirm if this policy will be a modified endowment contract. Certain cash value life insurance policies can become modified endowment contracts if they’re paid up over a shortened period, which can have negative tax implications.

Aside from their payment structure, Northwestern Mutual’s universal life insurance policies are similar to those available from other insurers. The cash value grows according to a rate determined in the policy, and the amount can be borrowed against. Premiums are flexible; you can pay more in certain years to drive up the cash value and less in other years using the cash value to meet the minimums. As with their whole life policies, Northwestern Mutual’s universal policies are participating, meaning you are eligible to receive dividends.

Northwestern Mutual Variable Universal Life Insurance

Northwestern Mutual offers three variable universal life insurance policies:

For each of these policies, Northwestern Mutual provides a range of cash value investment options with low expense ratios, though the majority are their own mutual funds. In addition, Northwestern Mutual offers the option of paying a higher premium to guarantee the death benefit, an option that’s not standard for most variable universal policies.

However, there are no guaranteed returns on your cash value investments, and your premiums may increase over time if your cash value performs poorly. These restrictions are standard for variable universal life insurance and contribute to the policy’s "higher risk, higher potential return" tradeoff.

Northwestern Mutual Customer Reviews & Complaints

Northwestern Mutual is a suitable choice if you’re looking for one of the best life insurance companies for financial strength ratings and a reputation for few customer complaints. Their A++, or Superior, A.M. Best rating indicates Northwestern Mutual’s ability to pay claims.

In addition, Northwestern Mutual’s 0.03 NAIC Complaint Ratio demonstrates that it has very few complaints as compared to the amount of business it writes. The company also has four out of five stars in J.D. Power’s customer satisfaction rankings.

Northwestern Mutual does have some negative customer reviews which are primarily focused on its agents’ tendency to push permanent life insurance to consumers over term coverage. Permanent life insurance policies, particularly those that build cash value, only make sense in certain situations, but agents make higher commissions by selling them. If you’re considering Northwestern Mutual, you should research the coverage you need before meeting with a representative.