What will be covered in this annuity review?
In this annuity review, we will be going over the following information about the Northwestern Mutual Flexible Payment Variable Annuity Account B:
- Product type
- Current rates
- Realistic long-term return expectations
- How it is 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 recently been considering the purchase of an annuity because you are seeking tax-advantaged growth of savings and the opportunity for market-linked growth, as well as the guarantee of a future income in retirement, then the Northwestern Mutual Variable Annuity Account B could be a potential option.
But, before you go out and make a long-term financial commitment on this, or for that matter any, annuity, you really should have an in-depth understanding of how exactly the product works so that you’ll know what you can expect from it.
Annuities can be highly complex products, and the more “bells and whistles” they offer, the more confusing they tend to be. Because of that, many consumers aren’t really sure what they are purchasing – only to find out after they’ve purchased that the product really isn’t all that it was cracked up to be.
Unfortunately, at that point, it is too late to get out of the annuity without having to pay a substantial withdrawal fee. This is definitely not the way to grow and/or protect your hard-earned savings.
Annuity and Retirement Planning Information that You Can Trust
If this is the first time you have ever visited our AnnuityGator.com website, then we would like to welcome you here. We represent a team of knowledgeable annuity pros who are focused on providing our visitors thorough – yet non-biased – annuity review. We have been at this for a number of years now, much longer than our competitors. So, we have become a highly trusted source of annuity information.
If you have been in the process of seeking annuity info online, then it’s likely that you have at some point run across conflicting information regarding these financial vehicles. This, however, is not entirely surprising, because there are many, many annuities out there in the marketplace, and there are numerous opinions – both good and bad – about them.
If you have recently attended an annuity seminar or workshop, you may have – in return for a complimentary lunch or dinner – already heard some of the details about this, or another, annuity. Attending that even may even be what has brought you here to our site in search of additional details.
In your quest for annuity information, you may also have run across some of the other websites out there on the Internet that tout the benefits of their products. In fact, some of these sites make some pretty bold claims, such as:
- Highest annuity rates
- Lowest fees
- Top rated annuity companies
- Get your quote now!
While these sites may be able to provide you with some of the information that you need, we dare say that the website that you are on right now will provide you with much more of the in-depth information that is required for making a good, solid purchase decision.
We feel that you have to have the entire picture in order to truly make a decision that is right for you – and, because you can get “locked in” to an annuity, if you buy one of these products and then decide that you want to get out, it can cost you a great deal in surrender fees.
So if you’re ready to begin the review, let’s get started!
Northwestern Mutual Variable Annuity Account B at a Glance
|Product Name||Flexible Payment Variable Annuity Account B|
|Type of Product||Variable Annuity|
|Phone Number||(866) 950-4644|
Opening Thoughts on the Northwestern Mutual Flexible Payment Variable Annuity Account B
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). This insurer has been 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 a(n):
- A++ from A.M. Best Company
- AAA from Fitch Ratings
- Aaa from Moody’s Investors Service
- AA+ from S&P
While variable annuities have taken somewhat of a back seat to other, safer, alternatives like fixed and fixed indexed annuities over the past decade, there is a definite niche for these products – particularly with those who are seeking the opportunity for a higher rate of return, as well as the tax-deferred growth of assets.
Before we get into the gritty details, there are some required legal disclosures here…
This is an independent annuity product review. It is not a recommendation to purchase or to sell an annuity. Northwestern Mutual has not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This annuity review is meant solely to be an independent review at the request of our readers so that they may see our perspective when breaking down the positives and the negatives of this particular annuity. Prior to committing to the purchase of any type of insurance and/or investment vehicle, it is critical that you do your own due diligence, and that you also talk with a properly licensed professional if you have any questions that relate to your specific situation. All of the names, materials, and marks that have been used in compiling this annuity review are the property of their respective owners.
How Northwestern Mutual Describes the Variable Annuity Account B
According to the Northwestern Mutual Statement of Additional Information, this product is a flexible payment variable annuity which can be used in a variety of accounts, including traditional and Roth IRAs, SIMPLE IRAs, SEP IRAs, 457 plans, and other similar types of retirement plans.
There are a number of equity investment options that can be chosen from, which can allow the annuity contract to rise or fall with the movement of the market and these underlying investments.
As with many other similar annuities, this one offers a death benefit option. The amount of this benefit, which is paid out to a named beneficiary, will depend in part on when the annuitant passes away.
There are a number of different income payment options available on the Northwestern Mutual Flexible Payment Variable Annuity (Account B). For these and other details, you can refer directly to the updated prospectus, which can be viewed HERE.
Before committing to an annuity contract of any kind, it is important that you have a good understanding of what your financial goals are, and how that annuity may (or may not) help you to reach those goals.
With that in mind, remember that 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 for 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.
Taking all of this into consideration, it can be even 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.
How a Financial or Insurance Advisor Might “Pitch” this Annuity
Given its diverse array of investment options, it is likely that a financial advisor would “pitch” the Northwestern Mutual Flexible Payment Variable Annuity Account B as a financial vehicle that offers diversity, along with the ability to obtain market-related returns. These, in turn, could help your money to keep pace with rising inflation over time – which is something that fixed annuity products are not typically able to do.
There is also the ability to diversify the holdings to best fit your particular needs and risk tolerance. And, with the various investment strategies, you can be as hands-on, or as hands-off, as you want to be. It is also possible that an advisor would tout the lifetime income feature on this annuity.
Yet, while this is all well and good, variable annuities are not necessarily known for being the best alternative for generating lifetime income. While you can obtain a stream of income for life, oftentimes, due to the risk to the insurance company involved, these products end up only generating the same amount of income – or less – than safer options such as fixed annuities.
That being the case, would you really want to endure sleepless nights wondering what the market is going to do, and worrying that your hard-earned principal could be lost before you retire?
Annuities can be confusing products – and because of that, it is important that you know what you’re getting into, and you know what questions you should ask before moving forward. With that in mind, if you would like some additional tips on what you need to know before buying an annuity, just simply click here so that you can immediately access our free report on how to shop for an annuity.
What About the Fees on this Annuity?
Variable annuities have long had a bad rap when it comes to charges and fees. This annuity is no different. Here you have the option of a front-end sales load or back-end load if you opt to withdraw your funds.
The Account B version of the Northwestern Mutual Variable Annuity charges 4.5% as an upfront commission. Other fees that you may find in this version of the contract include:
- Mortality and Expense Risk Fees – up to .75%
- Annual Contract Fee – $30 (if the contract value is less $25,000)
- Optional Enhanced Death Benefit – .40%
If you opt to withdraw your Class B accumulation units from this annuity, you may incur a back-end surrender charge if you take out more than 10% of the contract value in any given year during the surrender period.
Northwestern Mutual bases the withdrawal charge on purchase payments made according to the categories and rates in the following table:
|Category||Withdrawal Charge %|
For a full breakdown of the fees, as well as additional details regarding this annuity from Northwestern Mutual, you can check out the full prospectus HERE.
The Annuity Gator’s End Take on the Northwestern Mutual Variable Annuity Account B
Where it works the best:
Variable annuities such as the Northwestern Mutual Variable Annuity Account B will typically work best for those who are looking for the following benefits:
- The opportunity for higher, market- related growth (as versus that of a fixed or fixed indexed annuity)
- Tax-deferred gains (which can be particularly beneficial for people who have already “maxed out” their IRA and/or 401(k) plan and still want to invest additional funds
- Guaranteed lifetime income in retirement
Where it works the worst:
There are some people who may alternatively want to shy away from this annuity – in particular, those who:
- Have a low tolerance for risk and are seeking principal protection
- Do not plan to use the lifetime income feature
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 Variable Annuity Account B, there are definitely some very beneficial features, such as a number of investment options, we well as the ability to diversify your holdings within the annuity contract.
Plus, 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 is to have it tested. We can do this for you. The calculator and resulting spreadsheet are free. So, if you are interested, please let us know and we will be happy to run the figures for you.
Do You Have Any More Questions About the Northwestern Mutual Variable Annuity Account A? Did You Happen to Notice Any Mistakes in this Annuity Review?
Admittedly, this annuity review was a bit lengthy. So because of that, we want to express our appreciation for you sticking with us here to the end. Our thoughts are, though, that we would much rather provide you with “too much” information than not enough.
If you did feel 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 also let us know.
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.
Any other annuities that you’d like to see reviewed?
If there are any other annuities that you would like to see reviewed, please let us know that, too, and we will get our team of qualified annuity “geeks” on the case and have more reviews available on our website soon.
The Annuity Gator
P.S If you would like to read more of our Northwestern Mutual annuity reviews here are some links to check out:
- Northwestern Mutual Fee Based Select Deferred Income Annuity
- Northwestern Mutual Select Fixed Annuity
- Northwestern Mutual Flexible Payment Variable Annuity Account A
- Northwestern Mutual Variable Annuity Account C