My Northwestern Mutual Life Insurance Nightmare
Northwestern Mutual life insurance devastated my family and abandoned a Vietnam Vet
I’m sharing my story to warn other senior citizens about predatory and heartless life insurance company practices. I hope I can save even one person the headache and devastation my family and I have suffered at the hands of Northwestern Mutual life insurance.
Part I
My family lost our home during the 2008 Great Recession, due to my husband being unable to work for more than a year due to an extended illness from Parvo virus, several surgeries, and extended inpatient physical rehabilitation. In 2013, I received a job offer on the West Coast and we relocated to a San Francisco rental hoping for a fresh start. He was on the mend and feeling optimistic. After leaving NJ, my husband was not capable of working and had to retire completely. He had worked following his retirement after his 21 year career in the Air Force, but now was no longer capable of working.
My husband is no stranger to adversity — he proudly served his country as a flight surgeon during the Vietnam War as part of Operation Homecoming, which brought prisoners of war back from Vietnam.
Our move into our new apartment was a sort of homecoming for us — a new chapter, making it out of the hell of the 2008 economic crisis alive. If we only knew as we unpacked, breathing in the fresh Bay Area air, and hanging up photos of our two daughters, our hell was just beginning.
Both my mother and sister died during our first year in California. My husband had a heart attack while we lived in San Francisco. He had multiple falls and soon was not capable of managing the stairs in our flat in San Francisco. I was also laid off from my job in San Francisco. We moved to the East Bay to escape the high prices of San Francisco, to be closer to my daughters, and for my new job. We found a house which was all on one floor and easier for my husband to manage. Unfortunately, despite the owner’s assurances of a long term rental, we had to move after one year. We then eventually found another rental house.
Shortly after moving into our new home in summer, 2018, putting the pieces of our life back together, our world fell apart once more. I received a letter in the mail, and started shaking and had to sit down. My breath became short and my heart started to pound. I put my glasses on and re-read the letter, in utter shock and disbelief.
Our permanent whole life insurance policy with Northwestern Mutual had been abruptly cancelled without notice or warning due to nonpayment.
By the time I received the letter, the policy had already been cancelled. To say that we were caught off guard by the cancellation of his policy is an understatement; we depended on this reserve as a source of financial security, and losing it meant losing all the money we had invested over three decades. As soon as we received the letter, I called Northwestern Mutual in a panic. They told me the policy might be reinstated if we simply repaid the money, since the deadline had only passed a few months prior. I was incredibly relieved since I had no idea of what would be involved. They never disclosed that my husband would be reinstated as a “new client” after a physical assessment.
Without hesitating, we frantically scraped together the funds to repay money due to Northwestern Mutual in full. We then requested that the policy be reinstated. We waited and a nurse came to the house to examine my husband. We didn’t understand that reinstatement was not of the original policy. We were coldly told that he would only be offered reinstatement as a new customer. Even this was denied as he was assessed as in too poor health to qualify for a life insurance policy.
This offer was not only absurd, but insulting, considering that my husband, a military veteran of 21 years who proudly served his country in the Vietnam War, was now 82 years old and in poor health.
Clearly this was not something we felt we could accept, so we appealed again, hoping that having been loyal customers since 1992, our appeal would be thoughtfully considered. The company did not care that we had not received any prior notice of the cancellation and did not know that the policy was going to be cancelled.
Northwestern Mutual life insurance had made no effort to contact us by email or phone.
I also had an active life insurance policy and can be easily located on the internet due to my professional listing. I have received email notices from Northwestern about my policy. Northwestern was quite aware of the devastating financial liability which would be incurred by the cancellation of the policy. However, despite this knowledge, their customer service made no effort to confirm that my husband or I were aware of the cancellation. Certified Mail costs $3.35.plus $2.75 for return receipt.
Northwestern Mutual did not think it was worth spending $6.10 to make sure a customer of 30 years knew that they would not only be losing their only life insurance policy but would eventually have to pay IRS and CA. close to $100,000. We were not worth $6.10!
To the contrary, the correspondence we received back was tone deaf and heartless. Over the course of several letters, we were ultimately told that my husband is uninsurable because of his age and health conditions, despite having been a loyal customer for thirty years.
I’ve been a psychologist and therapist for almost thirty years, over the span of which my husband and I paid diligently into both his permanent life insurance policy and my own. When we adopted his policy in 1992, we were advised by our agent that eventually dividends earned from the policy over time would cover the monthly premiums. As the policy was invested, returns from the investments covered the cost of monthly premiums, and after some years, the dividends covered the monthly premiums.
The whole point of buying into a life insurance policy is to ensure a source of financial stability for your family. A whole life policy is a much more expensive investment than most insurance policies. Enduring the effects of a botched policy is a nightmare scenario, the potential for which prevents many people from buying policies to begin with.
However, we were confident in Northwestern Mutual because of their solid reputation. How wrong we were.
Knowing (or rather, assuming) that we had security in our policies allowed us to provide comfort and stability for our daughters throughout their childhood — even when the 2008 financial crisis hit us hard. During that time my husband was sick and couldn’t work, but hadn’t yet retired. Later that year he had to have a hip replacement and a revision to that replacement after dislocating it several times. At that point we lived in New Jersey and were unable to pay the mortgage on our house; like a lot of families in New Jersey and many other states, we eventually lost the house. Still, we took comfort in knowing we had reserves in our life insurance policies.
My husband and I both went to college and wanted the same for our three daughters. I was the first generation in my family to go to college and my parents invested in my education. We believed that investing in their education would set them up for financial stability. We ended up borrowing against our insurance policy to pay for our daughters’ education. Even though it wasn’t ideal, we conceded that if we didn’t manage to pay the loan off, it would just be deducted from the payoff of the life insurance policy (which only gets taxed if the policy is terminated). Our priority was to invest in our children’s future. We never considered any other possibility. We paid my husband’s insurance policy consistently over the years, even when finances were difficult.
It wasn’t until a decade later that we found out Northwestern Mutual reported the loan as income, which now leaves us with about $100,000 tax bill including penalty and interest to pay to the IRS and California. If we pay it over time, it will cost a lot more than $100,000 as interest mounts up. This is not a debt we can feasibly pay off within our lifetimes.
Thanks to Northwestern Mutual’s negligence and draconian policies, and lack of consideration for the elderly, the disabled, or veterans, we are without a life insurance policy we diligently paid for and depended on, and facing insurmountable debt in our twilight years.
I have tried everything to reverse this decision, appealing to the company, regulatory agencies, etc. No one cares to help my elderly husband and I. I’m sharing my story to warn others my age of predatory and heartless life insurance company practices. I hope I can save even one person the headache and devastation my family and I have suffered at the hands of Northwestern Mutual life insurance.
