Do you have a Northwestern Mutual Life Insurance policy and the rate keeps increasing every year? You’re not alone. Northwestern Mutual used to offer a policy called Term 75. This policy is an annual renewable where the premiums increase annually and the policy ends at 75 years of age. The policy is typically available to convert whole or in part to whole life without evidence of insurability until age 60. Many of the clients we have spoken to find their rates really start to jump up over the age of 50.
As far as a life insurance company, Northwestern Mutual is a great. They have a perfect Comdex score, meaning they received the highest financial ratings possible from the four main rating agencies, one of only a few companies in the country to have this distinction. Also, they have been in business for over 160 years. However, NW Mutual’s rates can be significantly higher than other top insurers such as; Pacific Life, Prudential, Principal, AIG, Lincoln Financial, Protective Life, Banner Life, etc.
Annual Renewable Term Life Insurance vs. Level Term Life Insurance
The Northwestern Mutual Term to age 75 policy is an annual renewable policy. Each year on the policy anniversary date, the rate increases. Many of the clients we have spoken to believed the 75 means that the rate is fixed until age 75. However, the 75 in this case, means the policy is in effect until 75 years of age but does increase every year. This can get quite expensive, eventually.
Northwestern Mutual Life Insurance Term to 75- Conversion
Many people have told us a NW Mutual agent has contacted them to convert the Term 75 policy to whole life. If the whole life insurance is too expensive then to they offer a new level term policy. For many people, level term insurance is the best option since it is a fraction of the cost of whole life and usually at a certain time in the future the need for life insurance is reduced or eliminated. For example, the kids are grown, the house is paid down or off, have a healthy 401k are have other assets to be self-insured.
Northwestern Mutual Life Insurance Annual Renewable Term to Age 75 vs. New Level (Fixed) Term Policy
As mentioned, NW Mutual is a great company with a top tier financial rating. However, many people are surprised to learn they can often get a new level term (fixed rate) policy today for much less than they are currently paying with the NW Mutual term to 75 policy, even though they took out the NW Mutual policy many years ago.
Advantages of new level term vs. annual renewable NW Mutual Term 75
- A new level term policy has a fixed rate, meaning the rate will not increase for 10, 15, 20, 25 or 30 years, whichever you choose. Also, you can cancel anytime without a penalty.
- If you are in good health, the new level term rates are often less expensive per month then the current NW Term to age 75 policy.
Sample Level Term Life Insurance Rates
Below are the rates for a new $500k 20 year level term for a 50 year old male, healthy.
Protective Life $71 month— Financial Rating A+ Superior
Pacific Life $71 month— Financial Rating A+ Superior
Principal National $72 month— Financial Rating A+ Superior
Banner Life $73 month— Financial Rating A+ Superior
AIG $73 month— Financial Rating A Excellent
Transamerica $73 month— Financial Rating A Excellent
John Hancock $74 month— Financial Rating A+ Superior
MassMutual $85 month— Financial Rating A++ Superior
Lincoln Financial $75 month— Financial Rating A+ Superior
Northwestern Mutual $88 month— Financial Rating A++ Superior
New York Life $106 month Rating— Financial A++ Superior
As you can see there are many companies that still have are in the Superior rating (top) category and have very competitive rates. These are many of the top life insurance companies in the country. Again, the rates above are for a 20 year level (fixed) term, so the rate does not increase annually for 20 years.
Laddering Life Insurance
Some of the clients we’ve helped chose to ‘ladder’ their policies. This means one can get several policies for different term lengths that match their needs and will save money. For example, for a 50 year old, that is married and has teenagers, spouse and a mortgage. This individual could choose a $500k 10 year level term policy then add a second policy for $500k 20 year term. This would provide $1million of coverage for the next 10 years until the children are out of college, then for the remaining 10 years $500k is in place to protect the spouse, income, mortgage, etc. This would be a lower premium than a single $1million 20 year term by about $30 month. Also, provide flexibility if he wanted to drop a policy at any time. Not everyone does or knows about this strategy, but it is a good option to consider.
Northwestern Mutual Life Insurance Term to 75- Bottom Line
If you have a Northwestern Mutual Term to 75 policy and your rate keeps increasing you’re not alone. As many experience, the premiums can get quite expensive, especially after 45 or 50 years old. The good news is that if you are healthy, you can likely qualify for a new level term policy from a Superior rated company and for less than you are paying now. Also, the rate will be fixed for whichever term you choose and have the ability to cancel anytime without a penalty.