Northwestern Mutual offers long term care insurance through its wholly owned subsidiary Northwestern Long Term Care Insurance Company.
We receive a lot of inquiries about Northwestern LTC policies. Let's take a look to see how Northwestern compares to other widely available policies.
First offered in 1998, the Northwestern Mutual Quiet Care LTC policy is one of 3 notable long term care insurance policies available through an A++ rated mutual company. Mass Mutual and New York Life are also A++ rated mutual companies that offer long term care insurance.
With Northwestern Mutual, New York Life and Mass Mutual, long term care insurance policies are participating policies. This advantage allows policyholders to receive a reduction in premium through declared policy dividends should claims experience prove more favorable than initial pricing. In recent years, however, dividends have not been paid by Northwestern Mutual to its long term care insurance policyholders so it would be unwise to assume a dividend will be paid on long term care insurance.
Northwestern Mutual Long Term Care Insurance Options
Northwestern Mutual Quiet Care is somewhat of a "plain jane" policy with the benefits that are available for you to select from.
Northwestern Mutual Quiet Care is a reimbursement model as most policies are today.
The Quiet Care LTC policy reimburses benefits to the policyholder on a monthly basis. You may elect a monthly benefit between $1500 month and $12,000 month. Monthly benefit models will provide the policyholder with a little more flexibility should care be received in home-based and community settings, so we like the fact that Northwestern is a monthly reimbursement model.
With Northwestern Mutual however, only 2 options are available for benefit periods. You may select a benefit period of either 3 years or 6 years.
Also, the very popular Shared Coverage feature for couples is unavailable.
This is somewhat of a drawback.
Most long term care insurance policies will offer benefit period choices of 2 years, 3 years, 4 years, 5 years, 6 years, 8 years, or 10 years. A handful of policies are still offering Unlimited benefit periods.
Additionally most policies will allow couples to pool their benefit periods together. My wife and I bought shared coverage.
Thus, from an asset protection, as well from a policy benefit design standpoint to only have 2 choices---a 3 year benefit period or a 6 year benefit period---is very limiting. Many of our clients definitely wish to have benefit periods longer than 3 years each. Without the shared coverage option with Northwestern Mutual it seems like the only real viable option is to buy 6 year benefit periods per person.
Northwestern Mutual offers a few inflation protection options to select from.
Northwestern offers automatic annual compound inflation protection of 3%, 4% and 5% compound inflation protection. Northwestern also offers an Automatic Additional Purchase benefit (AAPB) that allows policyholders to buy up additional benefits on policy anniversaries without additional underwriting. This option is known as a GPO (Guaranteed Purchase Option) with other companies.
We always recommend buying automatic compound inflation protection.
Automatic 3% compound inflation protection will provide a good baseline of coverage for future health care costs.
Purchase Options - Beware
We rarely would ever consider Northwestern's Automatic Additional Purchase Benefit (AAPB). You will find it gets prohibitively expensive to purchase your benefit increases as you grow older. Also, if you refuse 2 AAPB offers Northwestern will no longer offer you a future purchase. Stick with automatic inflation protection of either 3%, 4% or 5% compound.
Unfortunately, care received outside of the United States and Canada is not covered.
Northwestern Mutual will have significantly higher premiums for the same benefits for long term care insurance when rates are compared to rates of other companies on an apples-to-apples basis.
Below is a link of current sample premiums for a healthy 60 year old married couple residing in Massachusetts. Benefits are for $6000 month with 3% compound inflation protection.
In January 2015, Northwestern Mutual moved to a gender based pricing model so Northwestern Mutual currently charges women twice as much premium compared to companies that still price rates for women on unisex models.
A second drawback to Northwestern's LTC insurance pricing is Northwestern Mutual does not currently offer Preferred health discounts as are offered by other long term care insurance companies. Thus, if you are in good health you may qualify for significant discounts with other LTC insurance companies.
For example, a healthy married 60 year old female applicant residing in Massachusetts could receive the following rates:
$6000.00 monthly benefit, 3 year benefit period, 3% compound inflation protection, 12 week waiting period (90 days)
Mass Mutual $2380.45 year A++ rated AM Best
Mutual of Omaha $2698.84 year A+ rated AM Best
Northwestern Mutual $4428.90 year A++ rated AM Best
New York Life $5740.05 A++ rated AM Best
Northwestern Mutual is rated A++ by AM Best. Northwestern Mutual is a superior company from a financial strength viewpoint.
Other superior companies rated A++ by AM Best are Mass Mutual and New York Life.
As you can see, though, of the 3 companies with A++ ratings by AM Best, the Mass Mutual's rates are currently the far better purchase.
Northwestern Mutual and the New York Life long term care insurance premiums are extremely high.
(New York Life, in fact, might be the worst value ever for long term care insurance)
Conclusions on Northwestern Mutual Long Term Care Insurance Policies
Northwestern Mutual is considered to be one of the strongest life insurance companies purely from a financial strength and stability viewpoint. Mass Mutual and New York Life are the two true peers of Northwestern Mutual of companies offering long term care insurance.
From a design standpoint it is currently difficult to customize benefit periods with Northwestern Mutual. Many long term care insurance buyers opt to buy shared care policies to protect assets against longer than usual claim periods. We wish Northwestern offered a Shared Coverage option for couples for enhanced flexibility for long tail duration claims.
From a price standpoint, Northwestern is positively not the most competitively priced company. Buyers of long term care insurance will purchase the same benefits with similar companies such as Mass Mutual for decidedly less premium. For women, Northwestern's pricing is very close to ripoff territory, AKA NY Life territory.
Buyers of long term care insurance will have to determine the value of Northwestern's significantly higher premiums to current rates of other A+ and A++ rated mutual companies such as Mutual of Omaha and Mass Mutual.
April 2019 LTC insurance pricing update: Mass Mutual moves into Northwestern Mutual pricing territory.
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