Northwestern Mutual dates so far back - 1857 - that its initial area of operation, Wisconsin, was considered the Northwest at the time. Headquartered in Milwaukee, the company is a mutual company, which means that its customers or policyholders are its owners.
Today, the company sells annuities, life insurance, long-term care insurance, disability income insurance and investment products. Through two of its subsidiaries - Northwestern Mutual Investment Services, LLC and Northwestern Mutual Wealth Management Company - it also offers brokerage, financial planning, investment advisory and trust services. On the Fortune 500 list for many years in a row, the company ranked No. 97 in 2022. And for seven consecutive years including 2022, Fortune also named it one of the “World’s Most Admired Companies.”
Fixed, indexed, fixed indexed, variable, immediate - annuities come in a variety of forms. Plus you can add riders that guarantee certain death benefits or income benefits. If your head is swimming, a financial advisor can help you cut through the complexity to determine the best annuity for your retirement income needs.
|Annuity||Fees||Annuity Type||Minimum Initial Premium||More Information|
|Select Fixed Annuity Find an Advisor|| ||Fixed annuity||$10,000|| |
Annuity TypeFixed annuity
Minimum Initial Premium$10,000
|Select Variable Annuity (Account B) Find an Advisor|| ||Variable annuity||$10,000|| |
Annuity TypeVariable annuity
Minimum Initial Premium$10,000
|Select Immediate Annuity Find an Advisor|| ||Immediate annuity||$0|| |
Annuity TypeImmediate annuity
Minimum Initial Premium$0
Northwestern Mutual has strong financial strength ratings backing up its business. In fact, A.M. Best, Fitch and Moody's all give the company their highest ratings, respectively.
Select Fixed Annuity
The Select Fixed Annuity is a fixed single premium deferred annuity. This means that you fund it when you purchase it, and your principal is meant to grow before you annuitize or turn it into an income stream. Your deposit will earn a fixed interest rate for the length of the guaranteed period, which can be one, three or five years.
At the end of the guaranteed period you can withdraw your money, renew your contract, transfer your balance to another annuity or annuitize. Northwestern Mutual offers this annuity at three different levels: Select Silver, Select Gold and Select Platinum. At the Select Silver level, the initial guaranteed period is five years, and you can renew for one, two, three, four or five years. At the Select Gold level, the initial guaranteed period is one or three years, and the renewals periods are also one or three years. At the Select Platinum level, the guaranteed period and the renewal period are both only one year.
At the Select Gold and Select Platinum levels, you can get a one-year interest rate enhancement if your deposit is at least $50,000. The regular minimum without the enhancement is $10,000.
Should you die before both the guaranteed period is over and you’ve annuitized, your beneficiary will receive your full account balance without being charged an early withdrawal fee. These fees will also be waived if you are diagnosed with a terminal illness or are confined to a qualified medical care facility for at least 30 consecutive days.
When you decide to annuitize, you can either make withdrawals or enter an income plan. You must annuitize at or before age 98.
This annuity has no front-end or annual administrative or maintenance fees. However, there are surrender charges for early withdrawals:
|Contract Tier||Year 1||Year 2||Year 3||Year 4||Year 5||Year 6||Year 7||Year 8|
Additionally, withdrawals before age 59.5 may be subject to a 10% IRS penalty, plus ordinary income tax.
Realistic Return Expectations
Northwestern Mutual does not publish its fixed interest rates. But presumably, the more valuable the metal, the higher the interest rate (at the platinum level, the rate will stay the same for eight years). Depending on what the rate is, your nest egg may keep even with - or get slightly ahead of - inflation. If there’s any chance you may need the money during the guaranteed period, though, you should consider a certificate of deposit (CD). Top CD rates are probably just slightly lower than this annuity’s fixed rates, but the penalty for early withdrawals is often just 90 days of interest and does not touch the principal.
Select Variable Annuity (Account B)
Select Variable Annuity (Account B) is a flexible payment variable annuity. This means that you can make multiple deposits while in the accumulation phase of the annuity. Your money will be allocated to earn a fixed interest rate and/or be invested in your choice of portfolios. These portfolios in turn are invested in funds from:
- Northwestern Mutual Series Fund, Inc.
- Fidelity Variable Insurance Products
- Neuberger Berman Advisers Management Trust
- Russell Investment Funds
- Credit Suisse Trust
This annuity comes in two forms. You can either choose the front-load design, where you pay an upfront sales commission, but then there are no surrender fees and your annual expenses are lower. Or you can go with the back-load version, where you pay no sales commission, but you will incur withdrawal fees and higher annual expenses. These withdrawal fees generally decrease by 1% each year, and once they reach 0%, your Class B units will convert to Class A units, which have lower annual fees.
Both versions of this annuity come with a standard death benefit. If you should die before your contract has matured and before you’ve annuitized, and you are 75 years or older, your beneficiary will receive the value of the contract on the day Northwestern Mutual receives proof of death. If you are younger than 75, your beneficiary will receive the greater of your contract value on the day Northwestern Mutual receives proof of death or your deposits adjusted for withdrawals. For an additional fee, you can add an enhanced death benefit. This locks in any gains from earnings as measured on each contract anniversary prior to your 80th birthday.
When you annuitize, you can choose to receive monthly payments for a specified period, monthly payments for life, monthly payments for life and guaranteed for a specified period or monthly payments for your life and another person’s life. Once you choose an option, you then have to choose a fixed income plan or a variable income plan.
The initial minimum investment for this contract is $10,000. The maximum maturity age is 98, meaning you must annuitize by then.
Variable annuities tend to have more fees than other kinds of annuities. Additionally, withdrawals before age 59.5 may be subject to a 10% IRS penalty, plus normal income taxes.
If you go with the front-load version, the maximum one-time sales charge is 4.5% of your deposit and the maximum annual mortality and expense risk fee is 0.75%. If you go with the back-load version, the maximum withdrawal fee is 6% (the percent varies according to your asset level, and generally declines 1% every year). The maximum annual mortality and expense risk fee in this case is 1.50%, though.
For both kinds of annuities, total annual portfolio operating expenses range from 0.21% to 1.28%. There are also underlying fees associated with your investments and an annual $30 contract fee, which is waived for accounts larger than $25,000. The cost for the enhanced death benefit rider, should you choose it, is 0.40%.
Realistic Return Expectations
How your investment does depends on the stock market, of course. Generally speaking, the more aggressive the portfolio, the more potential you have for both growth and losses. Money that's allocated to a fixed-rate strategy will hopefully keep pace with inflation, though this obviously can't be guaranteed.
Select Immediate Annuity
The Select Immediate Annuity is a single premium immediate annuity. In exchange for a lump sum, Northwestern Mutual will make payments to you on a monthly, quarterly, semi-annual or annual basis. The amount of payment depends on your age at the time of purchase, the amount of your single premium payment, the payout option you choose and whether you add any benefits for a spouse or beneficiary.
There are five total payout options. You can choose to receive payments for life, payments for a certain period (from 2 to 30 years), payments for life and guaranteed for a period certain, payments for life with a refund to a beneficiary or payments for your lifetime and the lifetime of another. With this last option, which is called a joint and survivor plan, you can add a period certain or change the percentage the survivor would receive after the first death.
This annuity has no age restrictions and no minimum premiums.
Like most immediate annuity contracts, the Select Immediate Annuity has no front-end or annual charges to pay. The sales commission will be factored into your payout rate.
Realistic Return Expectations
If you opt for payments only during a set period, you can calculate how much you’ll receive. If you opt for lifetime payments, whether you and your beneficiary get your money back or more depends on how long you live. Of course, the insurance company is taking the chance that it won’t have to pay out more to you than it took in.