Northwestern Mutual Vs Ohio National - Whole Life Insurance

[Chuckles21]

Ironically, the NML agent mentioned that he could offer a variable rate, but said he would never recommend it to a client. He compared it to a mortgage interest rate...as one would want to keep a known fixed rate rather than get a variable rate.

I would like to be funding it at +/-$12,000/yr within 5 years.

That is interesting that he said that but more than likely the reason is that he doesn't know that it can be changed from one to the other. Here is how it works. If you go with NML go with a fixed rate to start the contract, as you are not looking to take money out for a long time. This sets your loan at 8% and if variable rates do skyrocket then you are locked in at 8%. If in 30 or whatever years interest rates are ultra low, like now, and you want to use those rates then you request the loan to be taken at the variable rate. Here's the part that i think is the real kicker. Say you have a variable rate at 5% then next year it goes up to 6% then the following year 7% and the trend seems to be continuing that way. BEFORE the declared variable loan rate gets above 8% you can STILL lock it in at a fixed 8% and be happier than ever. If the variable rate rises above 8% before you try and change it then you just have to stay with the variable. No other company, that i am aware, offers you this flexibility. Most now don't even offer a fixed rate ,which isn't a big deal now, but for sure would be in a high rate environment.

If the NML agent calls the home office he can confirm what i have written.

One other thing to consider as it seems you want to fund it further in the future is to build a whole life policy that allows that flexible additional premium to be put in. Unless structured correctly from the start most whole life contracts are not flexible at all on the premium front once in force.

 

[scagnt83]

I agree that no matter who you go with you are not doing bad. Both companies are very good and will work very good for you. One thing I will say about NML and all the comparisons these guys are referring to are that they are all based on NML's 8% fixed loan interest rate. What they don't know or just don't analyze is that you have the choice of taking a variable loan from NML same as ON. I don't know how much you are looking to fund this with but I just did a simple 24 year old male comparison for two NML policies that started distributions at age 75 through 95. With the 8% rate they illustrated $55,000 per year. With the variable rate they illustrated $71,000 per year. That is a good bit of difference by just choosing one option over the other.
.

So what is the credited Dividend on Loan collateral under the variable loan option?

 

[2insureyou]

That is interesting that he said that but more than likely the reason is that he doesn't know that it can be changed from one to the other. Here is how it works. If you go with NML go with a fixed rate to start the contract, as you are not looking to take money out for a long time. This sets your loan at 8% and if variable rates do skyrocket then you are locked in at 8%. If in 30 or whatever years interest rates are ultra low, like now, and you want to use those rates then you request the loan to be taken at the variable rate. Here's the part that i think is the real kicker. Say you have a variable rate at 5% then next year it goes up to 6% then the following year 7% and the trend seems to be continuing that way. BEFORE the declared variable loan rate gets above 8% you can STILL lock it in at a fixed 8% and be happier than ever. If the variable rate rises above 8% before you try and change it then you just have to stay with the variable. No other company, that i am aware, offers you this flexibility. Most now don't even offer a fixed rate ,which isn't a big deal now, but for sure would be in a high rate environment.

If the NML agent calls the home office he can confirm what i have written.

One other thing to consider as it seems you want to fund it further in the future is to build a whole life policy that allows that flexible additional premium to be put in. Unless structured correctly from the start most whole life contracts are not flexible at all on the premium front once in force.

Ditto that... NM is simply a better product than anyone other than an NM agent on this forum is willing to give credit for.

 

[scagnt83]

Ditto that... NM is simply a better product than anyone other than an NM agent on this forum is willing to give credit for.

So what is the dividend credited on variable loan collateral?

 

[2insureyou]

So what is the dividend credited on variable loan collateral?

Depends on the loan rate at the time. If the dividend interest rate is higher than the loan rate, the amount borrowed would receive a slightly lower dividend interest rate credited on that amount only (and again, it's just the interest rate... does not factor M&E)

If the loan rate is higher, the dividend interest rate credited would actually be slightly higher through direct recognition on the policy loans.

Again, the client gets to choose at the time of loan whether to go fixed or variable, and as Chuckles said, if they choose variable, they can lock in the 8% fixed later if rates start to go up.

 

[scagnt83]

Depends on the loan rate at the time. If the dividend interest rate is higher than the loan rate, the amount borrowed would receive a slightly lower dividend interest rate credited on that amount only (and again, it's just the interest rate... does not factor M&E)

If the loan rate is higher, the dividend interest rate credited would actually be slightly higher through direct recognition on the policy loans.

Again, the client gets to choose at the time of loan whether to go fixed or variable, and as Chuckles said, if they choose variable, they can lock in the 8% fixed later if rates start to go up.

You didnt answer the question.
So it depends on the loan rate... that is pretty obvious.
What is the formula behind it?
How about you post the illustrations front explanation so we can actually read it.

Or just answer this:
Right now the Dividend is 5.6% and the Variable Loan Rate is 4.4%.

What would the Credited Dividend be today, on collateral with the Variable Loan option?
Any NWM guys are welcome to answer...

 

[CFP83]

would be interesting to see the above answered by an NML agents...seriously, no scarcism intended.

I had a call with NML's home office just yesterday with a new client of mine. We are now managing this individuals IRA assets, however he also has a old NML whole-life policy from the early 80's. His policy provides a net DB of 40,000 and net cash-value of 24,000....he currently has a 25,000 loan at 8%. So we called the home office to see about getting the loan rate changed to variable. They faxed a form to my office as we were on the phone with them. They are switching him from 8% fixed rate to the 5% variable rate upon our request.

The client was extremely thankful for the help and expressed that in the middle of our call with NML's home office by saying:

to me: "boy am I glad you initiated this call today"
to the NML customer service rep: "thanks for your helpfulness today as well. By the way is there any reason that over the course of the 10 years I've had this loan that the home office of NML hasn't even made mention of this variable loan option? I haven't had a rep assigned to me for over 20 years and I all get is an annual statement once a year along with a loan interest payment form."

His comments weren't intended to be brash towards the customer service rep....she was indeed very helpful. However, he brought up a great point in that companies do very little once a loan is taken to educate the client of their other options.

 

[scagnt83]

would be interesting to see the above answered by an NML agents...seriously, no scarcism intended.

I had a call with NML's home office just yesterday with a new client of mine. We are now managing this individuals IRA assets, however he also has a old NML whole-life policy from the early 80's. His policy provides a net DB of 40,000 and net cash-value of 24,000....he currently has a 25,000 loan at 8%. So we called the home office to see about getting the loan rate changed to variable. They faxed a form to my office as we were on the phone with them. They are switching him from 8% fixed rate to the 5% variable rate upon our request.

The client was extremely thankful for the help and expressed that in the middle of our call with NML's home office by saying:

to me: "boy am I glad you initiated this call today"
to the NML customer service rep: "thanks for your helpfulness today as well. By the way is there any reason that over the course of the 10 years I've had this loan that the home office of NML hasn't even made mention of this variable loan option? I haven't had a rep assigned to me for over 20 years and I all get is an annual statement once a year along with a loan interest payment form."

His comments weren't intended to be brash towards the customer service rep....she was indeed very helpful. However, he brought up a great point in that companies do very little once a loan is taken to educate the client of their other options.

But did they tell you what the credited dividend on the variable collateral would be? I realize that is an old policy and possibly has different specs. But I would guess it would be similar.


Does anyone have a NWM WL illustration they could post??? Specifically the policy explanation in the front of it...

 

[scout]

The young agent is just repeating what he is being told by trainers and managers.
Is he doing harm? No.
Is he unaware of better options? Most certainly yes!! (I have been that agent before)

An all too common occurrence, including myself.

Ironically, the NML agent mentioned that he could offer a variable rate, but said he would never recommend it to a client. He compared it to a mortgage interest rate...as one would want to keep a known fixed rate rather than get a variable rate.

This theory is taught during NM training and is emphasized by senior agents in the field.

I was with NM for 5 months, currently at Mass, and will say that I never heard of being able to change the loan rate from 8% to variable and so forth. Everything we were told was that it was locked in from th get go and to push the clients towards 8%. I sat in on meetings where clients were paying the 8% and the 3 year NM agent never mentioned switching to variable either.
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His comments weren't intended to be brash towards the customer service rep....she was indeed very helpful. However, he brought up a great point in that companies do very little once a loan is taken to educate the client of their other options.

NM doesn't even make sure the client has the right policy to begin with. New agents are allowed to run free rein and draft any type of policy at their own discretion, regardless of whether it's the right policy for the client and their goals.

I've had numerous conversations with agents stating they don't use AP's due to not being paid for them, regardless of what's best for the client. A lot of insurance guys are no better than used car salesman with their tactics.