Selling Your Life Insurance: Northwestern Mutual's Options

Life insurance is a contract between an individual and an insurance company, where the individual makes regular premium payments in exchange for a certain dollar amount of coverage. If the individual passes away while their coverage is in place, the insurance company pays out a death benefit to the beneficiaries. Northwestern Mutual offers several types of life insurance policies, including term life insurance, whole life insurance, universal life insurance, and variable universal life insurance. These policies differ in terms of coverage period, flexibility, and cost. Term life insurance offers coverage for a set period, such as 10 or 20 years, while whole life insurance provides lifelong coverage and accumulates cash value over time. Universal life insurance allows for more flexibility in payment amounts and schedule, and variable universal life insurance gives policyholders the option to choose how their policy's cash value is invested in the markets. Additionally, Northwestern Mutual provides optional insurance riders, such as the waiver of premium in the event of disability, the ability to purchase additional coverage at certain life stages, and the accelerated care benefit to help pay for long-term care expenses.

Whole life insurance

One of the key advantages of whole life insurance is its flexibility. The cash value can be accessed at any time and used for anything you need, making it a valuable financial asset. Additionally, whole life insurance premiums are set and will never increase, providing stability and peace of mind. The cash value also grows tax-deferred, which means it accumulates without being affected by market fluctuations or tax consequences until it is withdrawn.

However, whole life insurance is not without its drawbacks. The monthly or yearly premiums can be high, and the policy may not be as flexible as other investment options in the short term. It is important to carefully consider your goals and financial situation before deciding whether whole life insurance is the right choice for you. Seeking advice from a financial advisor or tax professional can help you make an informed decision.

Northwestern Mutual's whole life insurance offers industry-leading coverage and various benefits. Their policy allows you to accumulate cash value over time, which can be used for unexpected expenses, college tuition, or retirement income. Additionally, they have a strong financial strength rating and a history of paying dividends annually since 1872.

Universal life insurance

One of the key advantages of universal life insurance is the ability to adjust your premium payments and death benefit according to your circumstances. You can choose to pay more or less, depending on your financial situation, as long as there is enough cash value to cover the monthly fees and expenses. The cash value of your policy earns interest daily, and you can use it for anything, such as emergencies, home repairs, college tuition, or business investments, without incurring taxes.

However, it's important to note that universal life insurance differs from whole life insurance in that it offers a flexible death benefit and premiums. While whole life insurance provides a guaranteed death benefit and set premiums, universal life insurance allows you to increase or change the type of death benefit and gives you the option to pay higher premiums later to maintain coverage. Additionally, whole life insurance can earn dividends, while universal life insurance cannot.

Northwestern Mutual offers three types of universal life insurance policies: Custom Universal Life, Survivorship Universal Life, and Variable Universal Life. Custom Universal Life insures one person and offers flexibility in choosing the death benefit amount and premium payment schedule. Survivorship Universal Life covers two individuals and pays the death benefit upon the death of the second person. Variable Universal Life provides customizable coverage and control over how the cash value is invested, allowing you to potentially build more cash value and achieve a higher death benefit.

Variable universal life insurance

Flexibility in Premium Payments

Lifelong Coverage

Unlike term life insurance, which has a fixed duration, variable universal life insurance provides coverage for your entire life as long as you pay sufficient premiums to keep your policy active.

Accumulated Cash Value and Tax Considerations

The premiums you pay into your variable universal life insurance policy fund your accumulated cash value, which can grow over time based on the performance of its underlying funds. This accumulated cash value grows tax-deferred. Accessing your cash value, however, may impact your death benefit and could have tax consequences. You can consider options such as taking a loan against your policy or withdrawing a portion of your accumulated cash value.

Investment Choices and Risk

With variable universal life insurance, you can allocate your accumulated cash value to sub-accounts that provide exposure to the stock market and other investment options. This allows you to be more aggressive with your investments compared to a traditional whole life policy. However, it's important to remember that while you have the potential for higher returns, you also expose yourself to a greater risk of losing value in bear markets.

Peace of Mind and Financial Planning

A variable universal life insurance policy can give you peace of mind, knowing that your family will be protected financially when you're gone. Additionally, it provides flexibility and control over how you accumulate cash value, which becomes an asset that you can use throughout your life.

Term life insurance

Northwestern Mutual offers two types of term life policies: Annual Renewable Term Life Insurance and Level Term Life Insurance. With Annual Renewable Term Life Insurance, you get coverage at a lower initial cost, but the premiums will increase every year as you get older. The available coverage periods are 10 and 20 years, or until you turn 80.

Level Term Life Insurance offers coverage for 10 or 20 years, with the option of having level premiums throughout the term. Level Term 20 keeps your premiums the same, while Level Term 10 increases your premiums for the second set of 10 years.

Another benefit of term life insurance from Northwestern Mutual is the option to convert some or all of it to a whole life policy, which provides lifelong coverage and builds cash value that you can use for anything. Approval for this conversion is guaranteed regardless of your health, but the premiums will increase with age, so it is advisable to lock them in early.

Permanent life insurance

Whole Life Insurance

Whole life insurance is one of the most common types of permanent life insurance. It provides coverage for your whole life, and your premiums will remain the same even as your age and health change. You will also earn cash value on your policy, giving you another financial tool to use as you work towards your goals. Whole life insurance policies can also earn dividends, which can be taken as cash, used to pay premiums, or buy more coverage.

Universal Life Insurance

With a universal life policy, you will have a death benefit that covers you for life, and your policy will accumulate cash value. Universal life offers more flexibility, as you can adjust your premiums in any given year or raise and lower your death benefit amount within limits. It is important to work with a financial advisor to ensure that any changes you make align with your overall needs. Universal life policies do not pay dividends and do not have fixed premiums or a guaranteed cash value.

Variable Universal Life Insurance

Variable universal life insurance is similar to universal life insurance, with the added benefit of more flexibility in how your cash value is managed. You can invest your cash value in sub-accounts that are tied to the market, allowing it to grow more than it might with other permanent life insurance policies. However, because the sub-accounts are tied to the market, the value of your cash value could also decline.

Benefits of Permanent Life Insurance

Frequently asked questions