BREAKING NEWS: Northwestern Mutual Announces 2016 Dividend

Insurance News

The Northwestern Mutual Life Insurance Company has announced its intentions to pay $5.6 billion in dividends to policyholders in 2016. This represents an increase over 2015 of $120 million.

Breakdown of Dividends Paid to Policyholders

The breakdown reported by Northwestern was per product line was:

  • $4.9 billion to whole life policyholders
  • $340 million to disability insurance policyholders
  • $155 million to term life insurance policyholders
  • $115 million to variable life insurance policyholders
  • $55 million to annuity policyholders

Northwestern did not mention a dividend payment for long term care insurance policyholders.

New Whole Life Dividend Interest Rate

The press release says, “In 2016, the company's dividend scale interest rate on unborrowed funds for most traditional permanent life insurance will be 5.45 percent.”

We'll note that the $120 million increase over last year is substantially smaller than the $300 million increase year over year from last year.

You can read the press release from Northwestern here.


6 Responses to “BREAKING NEWS: Northwestern Mutual Announces 2016 Dividend”

  1. Raye says:

    It’s about time they increase their dividends to policyholders. But why they did not increased this 2015.

    • Mike says:

      They didn’t increase their dividend percentage rate (that actually went down a quarter percent). They only increased the amount they are paying out to policies> This means new policies on the books. The reason why that number went from 300 million to 120 million is because their sales force sold less policies last year then previous years.

  2. Jay says:

    “In 2016, the company’s dividend scale interest rate on unborrowed funds for most traditional permanent life insurance will be 5.45 percent.”

    So then what is the rate on borrowed funds???

  3. John says:

    To Jay: This is why you need to a mutual company that pays dividends even on borrowed funds like MassMutual (non-direct recognition vs. direct recognition)

    • Oren says:

      John, your statement seems to imply that Direct Recognition companies do not pay dividends on borrowed funds. While I’m not familiar with all companies, for those that I am familiar (and as a matter of fact, that is the meaning of Direct Recognition) dividends ARE paid on Cash Value collateralizing a loan (what you call borrowed funds), but there’s a certain spread relative to the loan interest rate.

      BTW, to the best of my knowledge MassMutual gives a choice of direct recognition or non-direct-recognition. They are currently pushing the non-direct-recognition option.

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