Pros / It has good rates for smokers.
Cons / The company’s permanent policies are among the most expensive.
Verdict / Northwestern Mutual has good rates for term policies and a long record of financial success and dividend issuing, making it a good option for all life insurance policies.
After comparing all its premiums, plan offerings and other financial services, we’ve concluded that Northwestern Mutual is the best life insurance company overall. It has some of the best rates for term policies we saw.
Established in 1857, Northwestern is one of the longest running life insurance companies. It’s also one of the most financially sound insurers, receiving an A++ rating from A.M. Best, an organization that grades life insurers on their long-term financial health. When you choose a high-rated insurer, you can rely on your beneficiary’s claim being fulfilled.
There’s no one-size-fits-all life insurance policy. Each one is unique and based on a combination of your age, health, income, debt, savings and what you want to provide for your beneficiaries. For example, if you want to pay for their college educations, that will factor into your policy.
To get an idea of what you can expect to pay, we used two scenarios to obtain quotes. One was a 45-year-old man who smokes and has good health. The other was a 33-year-old woman in excellent health. We kept debt and income the same to avoid testing too many variables. Our quotes were for a $250,000 policy with a 20-year term.
Insurance policies come in two types: term and permanent. A term policy is the most basic – it pays a set amount if you die at any time during the term. Permanent insurance is more complex and expensive. It never expires and pays out a death benefit while also putting some of the premium in an interest-earning savings account. So, you also save money and build value that can help you in retirement. Term policies can be converted to permanent policies anytime during the term.
Northwestern’s term policy quotes were among the lowest we saw. Our 45-year-old’s policy was quoted at $101, which is significantly less than our average quote of $144 and much less than a similar policy from MassMutual. Over the course of a year, you’ll save around $500 on a term policy through Northwestern. The agent we spoke with told us that Northwestern has some of the best rates for smokers, so if you do smoke, this may be a good option for you. The term policy for our 33-year-old woman had a rate of $20, which is right in line with our average quote.
Permanent policies are more expensive, and Northwestern’s were some of the priciest. Our 45-year-old got a quote of $622 a month – by far the most expensive and much more than the average quote of $488. Our 33-year-old woman’s quote was also the most expensive, costing $239 a month, which is well above our average of $186.
Permanent policies earn dividends, and Northwestern has one of the most reliable records of issuing them. It has paid out dividends to policyholders since 1872. In 2018, it paid out dividends at a 7.5% rate.
Northwestern offers different permanent policy options. A whole policy is the most basic type and has a set premium you pay each month. Universal life insurance has a flexible premium, which can be adjusted over the life of the policy. You can also purchase a single-premium policy, which lets you pay entirely upfront.