Independent Review of the Northwestern Mutual Flexible Payment Variable Annuity Account A
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 A:
- 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.
For those who have been considering the purchase of an annuity because they 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 Flexible Payment Variable Annuity Account A could quite possibly be a good option for you.
However, before going out and making a commitment on this annuity – or for that matter, on any annuity – it is highly recommended that you first have a good understanding of just exactly how the product works so that you know what you can anticipate.
Annuities are 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.
That’s where we come in!
Annuity and Retirement Income Planning Information You Can Trust
If you have never been to our website before, please allow us to first welcome you here to AnnuityGator.com. We are a team of experienced and knowledgeable financial professionals who focus on providing highly informative and unbiased annuity reviews.
While you may have noticed other similar websites on your quest for annuity information, we’ve actually been offering annuity product reviews for many years – far longer than most of the other copycat sites. (Although, it has been said that imitation is the highest form of flattery).
It could be that your insurance or investment advisor has offered you the Northwestern Mutual Flexible Payment Variable Annuity Account A, or some other similar annuity, which has possibly even been the reason that you’ve begun to do some more research about annuities online.
Likewise, you may have recently attended an annuity seminar where, in return for a free lunch or dinner, the presenter offered you more details about how annuities work, and why one might just be the solution to your retirement income planning problems.
However, even though you may feel like the presenter left you “well informed,” it is still extremely important that you know more about the entire picture – which includes the good, the bad and the ugly – before you commit what will likely be a large chunk of your retirement savings.
In researching annuities online, you may have come across other annuity websites – many of which tout some pretty bold claims about their annuities, such as:
- Highest income payouts
- Low fees
- Top-rated annuity carriers
But unfortunately, rather than present you with all of the pertinent details about the annuities that they’re marketing, these websites would rather just highlight the good features, in order to get you to provide your contact information.
As enticing as some of these claims may be, you absolutely, positively need to know both sides of the story when it comes to annuities. This includes having an understanding that, while the Northwestern Mutual Variable Payment Annuity Account A has some nice features, there may also be some areas where this financial vehicle has a few drawbacks.
The reality about most any annuity – or other financial product – is that, while the majority of financial and insurance advisors work do what is right for their clients, they may only place a key focus on the positive features of a product, while leaving out the possible drawbacks
Our annuity reviews, however, will offer you the good and the bad, which in turn can allow you to make a much more well-informed decision as to whether or not the Flexible Payment Variable Annuity Account A from Northwestern Mutual will be right for you.
So, if you are ready to begin, let’s go ahead and dive in!
The Northwestern Mutual Flexible Payment Variable Annuity Account A at a Glance
|Product Name||Flexible Payment Variable Annuity Account A|
|Type of Product||Variable Annuity|
|Phone Number||(866) 950-4644|
Opening Thoughts on the Northwestern Mutual Flexible Payment Variable Annuity Account A
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. Fidelity Investments 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 Flexible Payment Variable Annuity Account A
According to the prospectus for the Northwestern Mutual Flexible Payment Variable Annuity – Account A, this product is an individual flexible payment contract that is designed to provide retirement benefits for self-employed persons and their eligible employees.
This annuity provides a number of investment options, including a growth stock portfolio, large-cap core stock portfolio, and a small cap value portfolio. There are also fixed options available for the purpose of safety and diversification.
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.
For instance, if he or she dies before the contract’s maturity date – and on or after his or her 75th birthday – the death benefit will equal the contract value. However, if the annuitant dies after the maturity date of the contract, or any time after the annuity payments begin, no death benefit will be payable. Alternatively, there is an enhanced death benefit available on this contract.
There are a number of different income payment options available on the Northwestern Mutual Flexible Payment Variable Annuity (Account A). 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 A 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. With the Account A version of this Northwestern Mutual product, you will initially find that this annuity has either a front-end or a back-end sales load. (Another name for this is a commission).
The front-end commission can be as high as 4.5% – so in essence, you could be starting out at a “loss” of 4.5% before the annuity even has the chance to attain any market-related returns.
With the back-load version, a sales charge would be assessed if and when amounts are withdrawn from the annuity. In this case, there is a withdrawal charge for sales expenses that could be as high as 6%.
This version of the annuity also has higher annual charges. For instance, in this case, the maximum mortality and expense risk fees are 1.5%, and the current mortality and expense risk fees are at 1.25%. The charge for the regular death benefit, however, is the same as with the front-load version. This is .40%.
Typical of variable annuities, there are also a plethora of annual expenses. These include the following:
- Mortality and Expense Risk Fees – up to .75%
- Annual contract fee (if the annuity’s contract value is below $25,000) – $30
- Enhanced Death Benefit charge (if applicable) – .40%
So, the range of total annual portfolio operating expenses – including investment advisory fees, 12b1 fees, and other expenses as a percentage of the average portfolio assets – can range between .21% and 1.40%. Over time, this can become somewhat expensive.
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 Flexible Payment Variable Annuity – Account A
Where this annuity works the best:
- For those who are looking for the opportunity to attain market-related growth
- For those who are seeking lifetime income
- For those who are seeking a way to diversify their assets
- For those who wish to obtain additional tax-deferred growth and have already maxed out their 401(k) and IRA options
Where this annuity works the worst:
- For those who have a low-risk tolerance
- For those who do not intend on using the lifetime income feature
If you’ve been going back and forth with the thought of purchasing a variable annuity – or any annuity, for that matter – but you’ve been hesitant to move forward because you just aren’t sure which annuity might be right for you, it is important that you know all of the ins and the outs of a particular product before you sign on the dotted line.
This is because an annuity should always be considered as a long-term financial commitment – and if you do end up determining that a particular annuity just isn’t for you after you’ve purchased it, it can be fairly expensive to get out of it.
If you’re still leaning towards the purchase of the Northwestern Mutual Flexible Payment Variable Annuity Account A, there are definitely some nice advantages that you could attain. However, this annuity may also fall somewhat short – particularly if you are seeking the safety of your principal.
The only way to know for sure whether or not this is the annuity for you is to have it tested. We would be happy to provide this testing for you, at no cost or obligation. So, just simply contact us here via our secure online contact form now.
Do You Need Any Additional Info? Did You See Any Mistakes in this Annuity Review?
While we do realize that this annuity review was a bit lengthy – and we appreciate you sticking with us through it all – we feel that it is much better to “err” on the side of providing “too much” information than not enough. With that in mind, if you felt that this annuity review was helpful, then please feel free to forward it on to anyone else that you think may benefit from it, too.
Also, as humans will often do, we also understand that information about annuities can change quickly. Therefore, if you happened to notice any details in this review that were out of date or that need correction, please let us know that as well, and we will get it fixed quickly.
Are there any other annuities that you would like to also see reviewed?
If you have checked out our list of annuity reviews and there is another annuity (or more than one other annuity) that is not currently in our annuity review database, but that you would like to see reviewed, please let us know the name of the annuity or annuities and our team of annuity “geeks” will get right on it. So, be sure to check back with us soon to see any updates.
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