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Independent Review of the Northwestern Mutual Fee Based Select Deferred Income Annuity

What is Covered in this Annuity Review?

In this annuity review, we will be going over the following details regarding the Northwestern Mutual Fee Based Select deferred income annuity:
  • Product TypeIndependent Review of the Northwestern Mutual Fee Based Select Deferred Income Annuity
  • Fees
  • Current Rates
  • Realistic long-term return expectations
  • How it is best used
  • How it is most poorly used

Annuities can be complex. That’s where having an Annuity Investigator who loves math comes in. We make the complex, simple.

If you have been thinking about purchasing an annuity because you like the idea of tax-deferred growth, along with the security of having a lifetime income in retirement, then the Northwestern Mutual Fee Based Select deferred income annuity could be a viable option for you. However, before you run out and make a long-term commitment to this product using what could be a substantial chunk of your retirement savings, it is a good idea to understand just exactly how this product works, and how it may – or may not – work well for you. Throughout the past decade or so, many investors who are moving closer to retirement have been a bit skeptical about increasing their equity holdings – or even with keeping money invested in the market at all. One key reason for this is because, during the U.S. recession of 2008, many of these same investors felt the sting of watching their hard-earned savings disappear. If this includes you, then you likely remember that feeling quite well. There are ways that you can still have the opportunity for market-linked growth, though, while at the same time investing in a tax-advantaged manner, and ensuring that you have an income down the road. This is through a variable annuity. But even though these types of annuities offer some nice benefits, there are some things you need to look out for, too – and ideally, you’ll know these things before you commit to an annuity for the long-term (and when it is very costly to get out of it).

Annuity and Retirement Income Planning Advice that You Can Trust

If this is the first time you have been to our website, then please allow us to personally welcome you to We are aIndependent Review of the Northwestern Mutual Fee Based Select Deferred Income Annuity team of experienced annuity experts who have a primary focus on offering in-depth, and non-biased, annuity reviews. We have been at this for quite a few years now, far longer than our “copycat” competitors. Because of this, we have become known as a highly trusted source of information about annuities. If you’ve been in the process of researching annuities via the Internet, you may have come across a great deal of conflicting information about these products. This, however, is not entirely shocking, as there are many, many opinions about these financial vehicles floating around out there. In your search for additional information about annuities, it is possible that you have also recently attended an annuity seminar where, in return for a free lunch or dinner, the presenter provided you with details about the Northwestern Mutual Fee Based Select variable annuity, or some other similar product. While there is a lot of good information out there in the marketplace about annuities, you may have discovered that there are some websites online that will try “luring” you in by making some pretty bold claims about the annuity products that they offer, like:
  • Lowest Fees
  • Highest income payouts
  • Guaranteed income for life
Does this look familiar? Yet, even though these claims might sound very enticing, it makes it all that much more important for you to really know whether or not they are actually true. This is where the Annuity Gator comes in. If you have come here in search of more details about the Northwestern Mutual Fee Based Select variable annuity, then you are definitely in the right place. In fact, we dare say that our website is the only place online where you can discover all of the information that you need – which doesn’t just include the good, but also the bad and the ugly. However, knowing the entire picture, we feel, will help you to best determine whether or not this is the right annuity for you and your financial goals. In order to be perfect here, we want to make it known that we do feel that annuities can provide some good benefits. This, however, is really only true if the annuity fits in with your other goals and needs. So, if you are ready to learn more, let’s dive in!

Northwestern Mutual Fee Based Select Variable Annuity at a Glance

Product NameFee Based Select
IssuerNorthwestern Mutual
Type of ProductVariable Annuity
S&P RatingAA+ (Extremely Strong)
Phone Number(866) 950-4644

Opening Thoughts on the Northwestern Mutual Fee Based Select Variable Annuity

Northwestern Mutual has more than 160 years of experience in the insurance arena, making it one of the oldest financial and insurance entities in the U.S. Over 4.4 million people are clients of this company – and roughly 96% of the company’s clients remain with Northwestern Mutual for over one year. As a mutual insurance company, certain policyholders are eligible for dividends from Northwestern Mutual (although dividends are not guaranteed). In 2017 alone, the company anticipates paying out approximately $5.2 billion in dividends. For the year 2016, Northwestern Mutual paid out more than $4 billion in life, disability, and long-term care insurance claims. Northwestern Mutual has consistently been named as one of the World’s Most Admired Companies by Fortune Magazine, and it is ranked in the Fortune 100 Company list. Given its strong financial footing, the company has extremely high ratings from all of the insurer rating agencies, including an:
  • A++ from A.M. Best Company
  • AAA from Fitch Ratings
  • Aaa from Moody’s Investors Service
  • AA+ from S&P
Overall, variable annuities are designed for doing two main things. These include growing principal, and producing retirement income. But in reality, these types of annuities are not really all that good at producing income. One reason for this is because of the risk that they present to the investor, as well as to the insurance companies that offer them. In fact, because the value of a variable annuity can – and typically does – fluctuate so much, the insurance carrier that offers it can really only guarantee a lesser amount of retirement income than that of a “safer” alternative such as a fixed annuity… for the exact same amount of money that you’ve deposited. It seems a bit silly, then, to endure countless sleepless nights hoping that the market doesn’t “correct” itself when you may not gain any more in an equity-based product than you would with something that’s guaranteed. So, if your primary goal for purchasing an annuity is to use it for producing income in the future, then a variable annuity may not be your best option. That being said, when it comes to the investment aspect of variable annuities, these financial vehicles can offer you the opportunity of unlimited growth. But here again, this comes with the “tradeoff” of downside risk – and in some cases, it could be a substantial amount of such risk. In addition, variable annuities are also known for having high fees. These don’t necessarily only include an up-front commission charge, but also annual fees for account management and maintenance, as well as surrender charges if you withdraw more than 10% of the annuity’s value during its surrender period. With all of this in mind, it makes it more important than ever for you to be sure that the benefits of this – or any – annuity is well worth it. It is also essential that you know what to anticipate with this type of financial vehicle.

Before we get into the gritty details, here is some necessary legal information that we need to disclose…

This is an independent annuity product review and it does not constitute any type of recommendation to purchase or sell an annuity. Northwestern Mutual has not endorsed this review in any way, and I do not receive any compensation for providing this review. This information is meant to be an independent opinion so that readers may see my personal perspective when determining the potential advantages and/or drawbacks of this particular financial vehicle, and how it may or may not fit into their specific financial portfolio. Prior to purchasing any type of investment or investment product, it is important to pursue your own due diligence and to consult with a competent and properly licensed financial professional before moving forward. This way, you can more precisely ensure that the product and/or service fits in with your individual circumstances. All names, trademarks, and materials that were used in this annuity review are the property of their respective owners.

How Northwestern Mutual Describes the Fee-Based Select Variable Annuity

Northwestern Mutual describes the Select variable annuity product as a way to invest for retirement on your terms. One reason for this is because investors can choose whether to have the sales load/commission taken up-front, or later on down the road as a surrender charge. This annuity, as with most other annuities, should be considered a long-term financial endeavor. In addition to tax-deferred growth and a multitude of investment options, the Select annuity from Northwestern Mutual also offers a death benefit during the years when funds are being accumulated, and for a variety of income options during retirement.

How an Insurance or Financial Advisor Might Pitch this Annuity

Being that the Northwestern Mutual Fee Based Select variable annuity has several options that investor can choose, it is likely that an insurance or financial advisor will tout the fact that when the commission is paid as a benefit. (Although are fees being taken out of any investment really ever an advantage?) There are also a number of investment options to choose from here, so whether you are an aggressive investor or more on the conservative side, you may be able to find an investment mix that best suits your needs. But just as with any other investment, it is essential that you are aware of what the tradeoffs are when getting certain benefits. That’s because, when a financial services company “gives” you something, they will usually take something else away. For instance, in the case of the no-upfront-commission, even though 100% of your money can go to work for you right away, if you need to take any more than a small percentage of funds out of the annuity within the first several years, you will be charged a withdrawal fee (in addition to having to pay income tax on the gain, and possibly an additional IRS penalty fee). Also, because of the variable nature of this annuity, there is always the inherent risk that comes with market-related investments. So, as you inch your way towards retirement, you have to ask yourself just how much risk you want to take in order to possibly gain a bit more in terms of return.

What About the Fees on this Annuity?

Unfortunately, annuities – like most other types of financial and insurance products – will typically include some charges and/or fees to the investor. Variable annuities are particularly vulnerable to fees, and the Northwestern Mutual Fee Based Select variable annuity is no exception. For starters here, on the regular version of this product, there is an up-front load – otherwise known as a sales commission. So, if you are being offered this annuity by a commissioned insurance or financial services rep, a chunk of the money you deposit won’t go to work for you, but rather into the agent’s pocket. The commission is banded, meaning that the more you put in, the lower the overall commission charge will be. For example, here’s how these commission percentages break down:
Cumulative Purchase PaymentSales Charge for Front End Load
With the front-end load option, there are lower annual expenses charges, and you’ll have access to your money without having to pay a withdrawal charge. (It is important to note that a minimum $10,000 investment is required to purchase the front-end load version of this annuity). With the back-end load version of this annuity, you can put 100% of your money to work for you right away, without paying an up-front sales commission to your broker or agent. However, with this version, if you withdraw more than 10% of the contract’s value during the surrender period, you will incur a withdrawal charge. On the first $100,000 that you’ve put into the annuity, the surrender period lasts for 8 full years. Based on the amount of money you contribute into the annuity, the withdrawal charges are as follows:
Cumulative Purchase PaymentWithdrawal Charge Schedule for Back-End Load
First$100,0006%, 6%, 6%, 5%, 4%, 3%, 2%, 1%, 0%
Next$400,0004%, 3%, 2%, 1%, 0%
Over$500,0002%, 1%, 0%
It is also important to note that if you make withdrawals from the annuity before you turn age 59 1/2, you can also incur an additional 10% “early withdrawal” penalty from the IRS. There are also fees that will be incurred by the individual investments that are inside of the annuity. For instance, with the back-end load version of the contract, there can be mortality and expense risk fees (M&E) of up to 1.50%. There is also an annual contract fee of $30 (although this is waived if the contract value equals or exceeds $25,000). Plus, if you opt for the Enhanced Death Benefit option on the annuity, this will cost you an annual charge of up to 0.40%. Overall, depending on which version of this annuity you choose, your total annual expense percentage average can range from roughly 1.50% up to 1.98%.

The Annuity Gator’s End Take on the Northwestern Mutual Fee Based Select Variable Annuity

Where this annuity works the best: There is no one-size-fits-all investment that is right for everyone. But, if you are leaning towards the Northwestern Mutual Fee Based Select Variable Annuity, then it could be a viable option for you if you are seeking the ability to earn a higher rate of return than with a fixed annuity, while also taking guaranteed lifetime income in the future. Where this annuity works the worst: Certainly with most variable annuities, because of the added risk that investors may incur, these are not good options for those who are looking to keep their principal safe, and/or who do not have a high tolerance for risk.

In Summary

When considering any type of financial investment, it is essential that you determine first what your overall goals are. That way, you will be much better able to go through the process of eliminating the options that won’t fit in with your plan. In the case of the Northwestern Mutual Fee Based Select Variable Annuity, there can definitely be some attractive features, such as the many different equity investment options, and the ability to diversify your holdings within the annuity. You can also choose when to pay a front- or a back-end load. Likewise, you can also obtain tax-deferred growth of your money – which in turn, can allow your funds to grow and compound exponentially over time. Plus, you can count on at least some amount of guaranteed income down the road. But, in order to really know if this particular annuity will be a good fit for you, it helps to have it tested. We can do this for you. The calculator and resulting spreadsheet are free. So, if you are interested in running more in-depth information on this annuity, please let us know and we will be happy to run the figures for you.

Have Any More Questions? Did You Notice Any Mistakes in this Review?

Admittedly, this annuity review ran a tad bit long – so we truly appreciate you sticking with us here this far. Our thought is that we would much rather provide you with “too much” information, though, than with not enough. If you felt that this annuity review was helpful, then, by all means, please feel free to forward it on to anyone else that you think might also benefit from it. Alternatively, if this review brought forth, even more, questions, then please let us know that, too. Also, as many humans do, we can at times make mistakes. So, if you happened to notice any mistakes in this review, please send us a message here via our secure online contact form so that we can make the corrections as soon as possible. Are there any other annuities that you’d like to see reviewed? If there are any other annuities that you would like to see reviewed on our website, then please let us know that, too, and we will get our team of qualified annuity “geeks” on the case right away and will have more reviews available on our website soon. Best, The Annuity Gator Independent Review of the Northwestern Mutual Fee Based Select Deferred Income Annuity  

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