With so many insurance providers to choose from, selecting a disability insurance policy can be a difficult decision.
It requires research. Comparing various plans is vital. You want to be sure that the one you choose offers the best coverage and terms.
At Physicians Thrive, we’re committed to providing physicians with the information to help them make that decision. Our ongoing series of Disability Insurance Provider Reviews is designed to do exactly that.
In recent weeks we’ve reviewed some of the Big 6 insurance providers, including Ameritas and MassMutual.
Today we’re taking a look at a provider that doesn’t get such high marks: Northwestern Mutual.
Ready to learn more about Northwestern Mutual disability insurance?
Here is everything you need to know about their policy and how it stacks up against other providers.
Who is Northwestern Mutual?
Northwestern Mutual Life Insurance Company has been in business since 1857. Founded as the Mutual Life Insurance Company of the State of Wisconsin, the company expanded to the Midwest and East Coast as early as 1865.
After 100 years in business, Northwestern Mutual began offering additional services, including disability insurance and long-term care insurance. Despite its other products, the company is still best known as a life insurance policy provider.
Northwestern Mutual gets high ratings from A.M. Best, Standard & Poor’s, and Moody’s. And that is because the company is financially sound. As a mutual company, it doesn’t have shareholders. Instead, their policy owners can actually share in the dividends of the company.
Northwestern Mutual does, however, have a reputation for denying disability insurance claims.
In 2017, an attorney with congestive heart failure sued Northwestern Mutual for denying his disability claim. Though his physician told him not to return to work, Northwestern Mutual claimed that he could have returned to work but chose not to. The court agreed that Northwestern Mutual’s denial of the claim was wrongful and ruled that the attorney be paid his disability benefits.
In 2018, a Tennessee physician with an extreme anxiety disorder surrendered his medical license, as he could no longer practice. Northwestern Mutual denied his claim, stating that it was the loss of his license, not a disability, that prevented him from working.
In the 2018 case, the claimant lost his suit in court, and Northwestern Mutual did not have to pay. The physician was left without work and without disability insurance benefits.
These are just two examples of some of the issues physicians have had to battle after filing claims.
Individual Disability Insurance from Northwestern Mutual
Northwestern Mutual offers a variety of disability insurance options for individuals. They even have a policy titled “Medical Own Occupation Disability Insurance”, designed specifically for physicians and dentists.
But, after a hard look into what the policy offers, it seems as though the name is little more than a way to lure physicians in. There is nothing in the policy that offers anything better than any other insurance provider does.
In fact, Northwestern Mutual actually offers less protection.
Definition of Disability
One of the most important aspects of any disability insurance policy is the “definition of disability.” A policyholder must meet the definition in order to be eligible to collect benefits.
There are three main definitions that providers use:
- Any occupation
- Own occupation, not working
- True own occupation
Let’s take a look at what each entails.
This definition is the hardest standard to meet in order to collect disability income.
To be eligible for benefits under this definition, you must be so severely disabled that you cannot work any job. You cannot work part-time, you cannot be able to do any part of your job, and you can’t do any type of work at all.
To collect benefits, you must have a serious illness or a severe disability.
Own-Occupation, Not Working
To qualify for benefits under an own-occupation, not engaged policy, you must be unable to work in your current job but able to work in another. However, in order to collect benefits, you cannot be working at all. This definition is sometimes viewed as the most complicated.
Under this definition, you must have the ability to work another job but not actually work.
True own-occupation is the preferred definition of disability. With this definition, you can collect benefits as long as you are unable to perform the duties of the job you were doing before your illness. It does not restrict or limit you from doing other work.
Northwestern Mutual’s Definition of Disability: Medical Own-Occupation
Northwestern Mutual has its own unique definition of disability: Medical Own-Occupation.
The language they use reads as follows:
“The Insured is totally disabled when both unable to perform the principal duties of the regular occupation and not gainfully employed in any occupation.”
Northwestern Mutual presents this as a flexible definition under which physicians can choose to: keep working in some capacity, stop working altogether, or switch to a new career and still collect benefits.
But the definition makes it clear that you will not receive benefits unless you are “totally disabled.” And to be “totally disabled”, you cannot work at all.
It may sound enticing to physicians because it’s called “Medical Own-Occupation.”
Disability Insurance Premiums
Monthly premiums vary depending on your policy, the amount of coverage you need, your elimination period, and how many riders you add.
To determine what a fair premium is, it’s best to compare quotes from various providers to see how the rates differ.
Northwestern Mutual premiums tend to be just as high as (and sometimes higher than) other insurance providers. But their coverage is less comprehensive.
Keep in mind that Northwestern Mutual doesn’t offer the true own-occupation definition of disability. It’s likely that you can pay the same premium for a policy with another provider that does offer the true own-occupation definition.
Every policy has an elimination period. This is the waiting period between the day that you become disabled and the day that you can start collecting benefits.
Elimination periods vary depending on the policy and the provider.
Elimination periods for Northwestern Mutual policies vary between approximately 90 and 180 days.
Elimination periods for other insurance companies vary between 30 and 720 days. A shorter period means that you can start collecting your benefits faster.
Yet some physicians prefer a longer waiting period.
Because the longer the elimination period is, the less your premium may be.
Many physicians and high-income earners have the means to sustain their financial obligations for an extended period of time. That could be because they have a significant savings account or have a spouse that also brings in a high income. In this scenario, a longer elimination period may be preferred.
Unfortunately, Northwestern Mutual lacks some of the built-in benefits that other companies include in their disability policies.
Some of the built-in benefits that other insurance companies offer include:
- Presumptive total disability benefit
- COBRA premium benefit
- Cosmetic surgery benefit
- Surgical transplant benefit
- Premium waiver
- Recurring disability benefit
- Rehabilitation benefit
- Guaranteed insurability option
Like all other insurance providers, Northwestern Mutual offers you the chance to add optional riders to their policy. Riders provide additional measures of coverage and offer added protection. They also add to your monthly premiums.
The more riders you add, the higher your monthly premium will be.
Here are some of the optional riders that you can add to a disability insurance policy with Northwestern Mutual:
Additional Purchase Benefit Rider
This rider offers policy owners the chance to obtain more coverage if they need it. This is a common rider that almost all insurance providers allow you to add.
When you decide to buy more coverage, most insurance companies will amend your policy to reflect the changes in coverage and premiums.
Northwestern Mutual handles things a bit differently.
If you exercise this option with Northwestern Mutual, your current policy will not be amended. Instead, an entirely new policy will be created.
That means that the rates, terms, and conditions of your policy are all subject to change. There’s no guarantee you will get the same terms as you had with your original policy.
Future Increase Benefit
The FIO is another rider that all insurance companies provide. This simply allows your benefits to increase based on inflation and the Consumer Price Index.
Social Insurance Substitute Benefit
Cons of Northwestern Mutual Disability Insurance
Physicians rely on us to be honest, informative, and transparent. So we must address some of the biggest cons and common concerns that other physicians have experienced with Northwestern Mutual.
The biggest problem with Northwestern Mutual is that they have a reputation for denying claims.
The whole reason for having disability insurance is to protect yourself and your finances in case you cannot work in your current job. Northwestern Mutual is known for making it difficult to collect those benefits.
There are a variety of tactics they use in order to deny claims, negate policies, and refuse to pay benefits.
Expect Your Application to Be Scrutinized
It is common for Northwestern Mutual to take a look at your policy application both before and after your policy goes into effect. In fact, they often do so within the first two years of a new policy.
If there are any mistakes (even simple ones) on your application, they can rescind your policy.
But even if you’re ten years into your policy, they can still look back on your application as a way to deny your claim.
Here’s what they sometimes do:
When you file a claim and list the duties of your current job (duties that you can no longer perform), they will look back at your original application. If the duties on your claim do not match the duties on your application, they can deny you.
Northwestern Mutual often seeks out discrepancies as a way to deny claims.
They Will Dig Deep Into Your Tax Returns
They will also scrutinize your tax returns. If you’re earning any income outside the job listed on your application and claim, they can deny your benefits.
Northwestern also conducts field interviews. These face-to-face interviews are a way for them to ensure that your claim is valid. It’s also a way for them to find inconsistencies that can help them deny your claim.
When you’re suffering an illness or injury, having to meet with your insurance company in person is not usually at the top of most people’s to-do list.
You’ll Need to Provide Lots of Evidence to Back Up Your Claim
If you file a disability claim, Northwestern Mutual requires that you seek continued treatment from your doctors. They require you to provide them with evidence of such treatment.
You’ll need to show your medical records periodically to ensure that you are disabled throughout the entirety of your benefit period.
The bottom line is this:
Is Northwestern Mutual Disability Insurance a Smart Choice?
The short answer is no.
There are better providers that offer better policies with more options and more flexibility than Northwestern Mutual. Most physicians prefer disability insurance policies provided by the Big 6 insurance companies:
Why are these companies called the Big 6?
Because they are the only ones that offer physicians a true own-occupation definition of disability.
Most disability policies are non-cancelable and guaranteed renewable. Northwestern Mutual policies are not. That means that your policy can be subject to cancellation and that your premiums can and will increase over time.
To find a disability insurance policy that offers better terms, better benefits, and the true own-occupation definition of disability, contact Physicians Thrive. We can help steer you in the right direction, so you get a policy that works for your needs.
Do a quick Google search for “Northwestern Mutual disability insurance reviews”, and you’ll see the big red flag almost immediately. There are lots of search results for law firms specializing in lawsuits against the company.
As a physician looking to protect your finances, it’s best to stick to a policy from one of the Big 6 insurance companies. For more information on how to select the best policy, contact Physicians Thrive now.
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When you receive your quote comparison, our experienced advisor will review the quotes, explain all your options and the verbiage in each policy in detail to help you create a customized plan that meets your needs and your budget. We will review each element of the plan and the cost associated with it to help you evaluate the value and build unique, cost-effective coverage tailored to your situation.
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