Northwestern Mutual and New York Life: A Look at the Top Whole Life Insurance Sellers
Many people purchase whole life insurance policies, often because of aggressive marketing as insurance agents can receive larger commissions for whole life coverage.
Unfortunately, whole life policies are costly and Consumer Reports warns that premiums can be as much as 10 times higher than premiums for a term life plan with the same death benefits. While costs are justified by claiming whole life policies are an investment, the average rate of return for a guarantee cash value of a whole life policy is just 1.5 percent, while 2.2 percent is the current inflation rate and the current rate of return on treasury bonds. If you would like an insurance lawyer to review your policy for free, contact Evans Law Firm, Inc.
Top Whole Life Insurance Providers
Nerdwallet named the top sellers of whole life policies and the business practices of several of the top sellers are disturbing.
Northwestern Mutual was identified as being the largest insurance company with a net income of $815 million and revenue of $27.8 billion in 2015. Northwestern Mutual was founded back in 1857 as a life insurance provider, and by 1865, it was established as a provider expanding into new markets. Life insurance was its primary product until 1969 when it began selling disability insurance. A decade later, annuities were added to Northwestern Mutual’s offerings and long-term care insurance began being sold by in the late 1990’s.
Unfortunately, this major life insurance provider, whose president personally borrowed funds to immediately pay the company’s first death claims after two deaths in 1859, has been accused of wrongdoing in connections with retirement investments it sold to vulnerable consumers.
In 2015, Reuters reported that Northwestern Mutual was forced to pay $84 million to settle a lawsuit* against the company for allegedly cheating investors. The company had reportedly breached contractual obligations by changing the way in which dividends were calculated, with the change costing millions.
New York Life Insurance Co. (NYLIC) was named as the second largest seller of whole life policies, although it is considered the largest mutual life-insurance company in the U.S. NYLIC dates back to 1845, when it was first founded as the Nautilus Insurance Company. It was also the first U.S. insurer to provide policyholders with a cash dividend and it developed a non-forfeiture option that allowed policies to remain in effect even with missed premium payments. This was the precursor to today’s guaranteed cash value policies.
NYLIC too has been sued for alleged dishonest actions including self-dealing and excessive fees on 401(K) policies, according to Investment News. New York Life was also the first company ever to be sued based on allegations exclusively against an index fund, according to Forbes.
Getting Help With Whole Life Insurance
Investors who buy whole life insurance should not act without doing careful research to make sure the insurer is a reliable one and their policy provisions are reasonable. If unexpected fees, costs, or other problems arise after a policy is purchased, or if you would like a free review of your insurance policy, a Marin County financial elder abuse attorney at the Evans Law Firm, Inc. can provide help in exploring options for making a damage claim. Contact us today.
*Disclaimer: Evans Law Firm, Inc. did not handle this lawsuit.