Have You been Over-Charged on a Policy Loan by Northwestern Mutual Life Insurance Company?

Did you or a family member ever borrow on a life policy with Northwestern Mutual? Did you or a family member ever skip a payment and pay the premium with an “automatic” premium loan? If so, what interest rate is Northwestern charging you? Probably 8% -- in a 2% economy!

When you make a policy loan you are essentially borrowing your own money -- the cash value of your policy. If Northwestern Mutual has been charging you 8% on policy loans, it has been grossly over-charging you.

If you took a policy loan against your Northwestern Mutual whole life policy at any time in the past 10 to 20 years - whether to cover a special expense, finance an investment, tide you over a financial setback, or pay premiums (whether with an automatic premium loan, or on a one-time basis) you may have a claim against Northwestern Mutual for over-charging you. Even if you paid off the loan, or you are the beneficiary of a Northwestern Mutual policyholder who took out a loan and has died, you still may have a claim.

Even if your policy always said that Northwestern MAY charge you an 8% rate on policy loans, you still may have been overcharged. If you ever agreed to permit Northwestern Mutual to increase your policy loan interest rate – even in order to receive a higher dividend – you certainly have a claim against Northwestern Mutual.

Since the early ‘1990’s interest rates on other types of safe investments insurance companies make have been pretty consistently below 8%. They are far below 8% today, yet Northwestern Mutual is still charging 8%. That means Northwestern Mutual is now charging policyholders a far higher interest rate on policy loans than the interest rate Northwestern Mutual could earn from other comparable safe investments. Short-term government interest rates are well below 1%; rates on 10-year government bonds are below 4%.

What makes all this worse is that Northwestern Mutual is not an ordinary business, but a mutual life insurance company. As a mutual company Northwestern is supposed to be operated for the benefit of its policyholders. So why has Northwestern Mutual been overcharging its policyholders who borrow their own money through policy loans? Why is Northwestern Mutual charging an excessive rate of interest? Why is Northwestern Mutual still arrogantly claiming 8.0% in this economy is a reasonable rate in light of long term economic conditions for over a decade?

Northwestern Mutual has been improperly profiting from its 8% policy loans at its policyholders’ expense. Is it pure greed? Does it wants to create a record for Wall Street so company insiders can make hundreds of millions by turning Northwestern Mutual into a for-profit insurance company, as such former large mutual companies as MetLife, Prudential, Equitable and John Hancock have done? Does it want to enrich its executives, pay higher commissions to sales agents, run ever more luxurious conventions, create an empire, or establish a record for Wall Street? Whatever its motivation, Northwestern Mutual is legally bound to honor its obligations and be fair to its policyholders. It has not been honoring its obligations to many policyholders to vary interest rates on policy loans in line with long term economic conditions. In fact, Northwestern Mutual has become untrustworthy. Now Northwestern Mutual policyholders no longer have to take it.