As its customer base recalibrated
risk tolerance in the wake of the recession, US life insurer
Northwestern Mutual ramped up its marketing of permanent life

The results have been spectacular:
Northwestern Mutual – which has used ‘The Quiet Company’ as its
slogan for a long time – announced that between January and July
this year the number of new permanent life policies purchased
increased more than 23% over the same time period in 2009.

In addition, Northwestern Mutual is
up more than 14% for total insurance product sales compared with
the same stage in 2009.

Pull quote by Scott Spiker, First Command Financial ServicesOver and above the
increase in permanent life insurance sales, the number of policies
has increased 10% for individual disability income insurance (DI)
and nearly 37% for individual long-term care insurance (LTC),
year-to-date over 2009. In fact, 2010 has been a record year for
LTC in terms of both number of policies purchased and overall
protection at Northwestern Mutual.

Northwestern vice-president for
life products Dave Simbro told LII the company’s recent
success was a matter of a solid, steady performance emerging during
difficult economic times.

“We take a lot of pride in the
combination of our financial strength and the long term value of
our products,” Simbro said.

“In a time when the overall economy
is weak, our value proposition really comes to the forefront.

“It is not that we are really doing
anything new, it is more that consumers are looking for
fundamental, consistent products that perform over time.”

Simbro said that much of the
insurer’s recent success stems from what he described as a
fundamental recalibration of risk tolerance.

“We think there is a ‘new normal’
with regard to risk, and our conservative approach is really well
suited to that risk environment,” he said.

“The key lies in the connection
between what we are really good at delivering and our unique
distribution system.”


Sales force

That exclusive distribution system
– a 50-state sales force with more than 7,000 financial
representatives in 350 offices scattered throughout the country –
is repeatedly described by outside observers as one of the finest
sales fleets in any business sector in the nation.

“That connection is so important to
us,” Simbro stressed.

“Our financial representatives have
a relationship-based practice grounded in information gathering and
needs assessment. A typical life client has a relationship with
Northwestern for over 40 years, so they are able to truly
experience our long term value.”


More conservative

Northwestern Mutual’s eye-opening
sales figures underscore the findings of the insurer’s
Financial Realities: Changing Timeframes study, which
showed that Americans have embraced a distinctly more conservative
approach to their financial planning, priorities and product

The study, released in June,
indicated that 75% of people with financial goals have widened the
time horizons in which they aim to accomplish them.

Additionally, nearly three out of
four Americans favour financial strategies that are lower-risk,
stable and steady versus those that carry higher risk in the
pursuit of aggressive growth.

When respondents were asked about
how various assets have held their value over time, permanent life
insurance emerged as the far and away leader in terms of
satisfaction levels – registering 60% greater satisfaction than

Given the strong market demand and
relevance of permanent life insurance in the current environment,
Northwestern Mutual announced a new campaign called ‘A Foundation
For Life’ that highlights the flexibility, stability and
consistency of their product.

The campaign breaks from the
traditional, lifestyle-driven creative that dominates the life
insurance space, and Northwestern’s attributes are brought to life
in two new TV spots and a Facebook ‘Life Stories’ application.

“We have taken a more aggressive
stance in our advertising this year,” Simbro said.

“This is to differentiate the
company in the marketplace and to help the customer appreciate the
connection between what we offer and what they are looking for and
what they need, in terms they can understand.

“The Quiet Company is speaking a
bit louder these days.”


Managing risk

As the economic downturn rolls into
its third year, middle-class consumers are showing a growing
interest in managing financial risk through the use of permanent
life insurance products.

Northwestern Mutual has always done
well in marketing permanent life to the middle class, though; its
average permanent life customer is 35 years old, Simbro said.

Northwestern Mutual is perhaps the
strongest player in a permanent life insurance market reinvigorated
by the economic downturn.

The August survey by financial
advisory firm First Command Financial Services for its consumer
Behaviors Index found 39% of middle-class Americans own
some form of permanent life insurance coverage. Among those who do
not own a permanent life policy, one-in-four say they are likely to
purchase this type of coverage in the future.

“After years of following the
popular pitch to ‘buy term and invest the difference,’ consumers
are now seeing how a market downturn can threaten a seemingly sound
financial strategy,” said First Command CEO Scott Spiker.

“These numbers support findings by
others in the industry who note that Americans are turning to
permanent life coverage as a time-tested tool for managing
long-term risk.”


Whole life most

The most popular permanent
insurance product is whole life, which is owned by 26% of
middle-class families.

Other permanent life products held
by survey respondents include universal life and variable life,
which are owned by 10% and 4%, respectively.

“The options that permanent life
insurance provides by accumulating assets while always providing
financial security with a death benefit work so well for us in a
long-term planning scenario,” Simbro said.

“When we look at our product suite,
it is the most flexible product we have.”

Charles Davis