Northwestern Mutual

  • Stephen H. Frankel
  • Dale R. Gustafson
  • John Keller
  • William Koenig 
  • James Reiskytl
  • William M. Snell
  • We believe current illustrated rates are much higher than what is reasonably expected over the course of the policy and may lead to consumer disappointment, which could negatively impact the entire industry.

--  Metropolitan Life Insurance Company, New York Life Insurance Company and Northwestern Mutual Life Insurance Company

2014 0812 - Letter to NAIC LATF - IULISG – Indexed Universal Life Illustrations Subgroup

  • The number one perceived problem is that buyers simply do not understand the nonguaranteed nature of life insurance illustrations.
    • Also, it is impossible for the average buyer to judge the reasonableness of the assumptions underlying the numbers in the illustration. 

--  John W. Keller, Northwestern Mutual

1991 - SOA - Illustrations, Society of Actuaries - 20p

  • 20xx - LC - FRED WALFISH, Plaintiff, v. NORTHWESTERN MUTUAL LIFE
    INSURANCE COMPANY and NORTHWESTERN MUTUAL INVESTMENT SERVICES, LLC, - Opinion - 12p - Case 2:16-cv-04981-WJM-MF Document 81 Filed 05/06/19 Page 1 of 12
  • One thought about the Moss Report is that requiring that costs for both term and whole life be provided when selling insurance products does not seem right in the American marketplace.
  • If the agent wants to do it voluntarily, that is one thing, but to have it mandated, seems to be against our way of marketing products.

-- William M. Snell, Northwestern Mutual Life and Chairman of the Wisconsin Task Force

1979 - SOA - Cost Disclosure (Moss Report), Society of Actuaries - 18p

  • William Koenig (Northwestern Mutual) suggested that the parties all needed a common understanding of the terms used in their discussion. (p655)

1993-4, NAIC Proceedings - Life Disclosure Working Group – NAIC

  • This was an optional idea that we called "Illustrations As Road Maps."
    • The concept is that instead of letting the actual performance of a Universal Life policy diverge over time further and further from what was originally illustrated, you could send policyholders a notice each year on the anniversary, if the results are below what was illustrated.
    • A letter would state the need to pay an additional amount to get back to what was illustrated, because interest rates are lower.
    • This would have two advantages.
      • First, it would keep people on track with their illustrations.
      • Second, it would help people understand the workings of their universal life policy."

--  John Keller, Northwestern Mutual

1991 - SOA - Illustrations, Society of Actuaries - 20p

  • John KELLER, Northwestern Mutual:
    • I'll respond briefly to the suggestion that we use focus groups to get the consumer point of view.
    • We did consider that early on in our work and rejected it for a couple of reasons.
      • One was the time constraints we were under and the cost of doing focus groups.
      • But probably the most important reason is that if you get 15 people in a room who are recent purchasers of life insurance and then spend an hour or two dissecting the sales process and the use of their illustrations in that sales process, you're likely to have 13 people coming out slightly or greatly disillusioned over what they just did.
    • We found that our field force and our marketing department didn't like that idea at all.
    • So if somebody could think of a way to get to the consumer without causing real problems among recent buyers, who are our most fragile customers, we would like to hear it.
  • Judy FAUCETT:
    • In line with John's comments, we were told by one group that actually runs focus groups that if you got a group of recent purchasers of insurance in a room, you might get responses of what they think they did or what they think they should have done, as opposed to what they actually did.

1991 - SOA - Illustrations, Society of Actuaries - 20p

  • 1957 - Northwestern Mutual Life: A Century of Trusteeship, by Harold F. Williamson and Orange A. Smalley, Northwestern University Press, ©1957,
    • It goes on: "Even the more modest claims for this type of policy proved to be misleading because of two trends...
      • ...one was the increasing life expectancy in the United States,
      • ...the other the continued fall in the rate of interest ....
    • Over longer intervals survivors ultimately collected much smaller dividends than they had been led to expect." (op. cit.)

This sounds eerily like the situation today.

--  William C. Koenig

1991 - SOA - Disclosure Systems: Can an Ideal Method be Found?, Society of Actuaries - 22p

  • At a SOA Annual Meeting maybe 15 years ago or more, a speaker challenged anyone in the audience to tell him that a portfolio illustration was exactly comparable to a new money illustration.
    • He wanted to make it clear, then and there, that anyone who was willing to do that was either ignorant or incompetent or both.
  • Now, I am not going to bother doing that because I would guess that everybody here would admit after 15 years of this, that a portfolio and a new money illustration are not comparable.
    • They are both out there, however, and regardless of which system you are on, there is the potential for problems in competition. So those creative types have something to work on.
    • I think both the regulators and the ASB would appreciate a solution.

--  William C. Koenig, senior vice president of Northwestern Mutual and the incoming chairperson of the Life Committee of the ASB

1996 - SOA - Update on Life Insurance Illustrations, Society of Actuaries - 24p