mutual advantage. - Northwestern Mutual

OUR
MUTUAL
ADVANTAGE

Of all the reasons policyowners and clients value
Northwestern Mutual as their partner on the path to
financial security, one is paramount. It’s often called the
company’s “mutual advantage.”
As a mutual life insurance company,
Northwestern Mutual did not invent the
concept of “mutuality.” Over time, however,
and continuing today, the company has become
what many point to as the pre-eminent example
of the power inherent in the mutual form of
corporate governance.
Indeed, Northwestern Mutual offers dramatic
evidence that a company governed by mutual
values can be, in its field, best in the world. 1
The mutual structure of Northwestern Mutual
allows the company to act differently than
most publicly traded stock companies,
which typically must split their focus between
customers and shareholders. As a mutual,
Northwestern Mutual has no shareholders.
The company’s mutual structure allows it to
focus solely and directly on its customers.
Customers buying life insurance, disability
insurance and annuities become members the
instant they purchase their policies.
In the typical stock company, profits go
to shareholders. In contrast, Northwestern
Mutual is more like a cooperative. After
setting aside a safe margin for reserves and
surplus each year, the company returns what
would otherwise be “profits” to its participating
policyowner members in the form of dividends.
Customers of our subsidiary, Northwestern
Long Term Care Insurance Company, hold
policies that have the potential to pay
dividends in the future if actual experience
proves to be more favorable than
pricing expectations.
In other words, Northwestern Mutual’s
mutual structure brings into alignment
the interests of both policyowners and
company. For policyowners, that’s an
enormous “mutual advantage.”
There are others. As a mutual, the company can
focus the investments in its general account over
the long term. That’s another reason why respected
experts praise the company’s mutual structure
and values as the underpinnings for its “strong
competitive position” 2 in which “policyowner
value and security are the paramount focus.” 3
As practiced by Northwestern Mutual,
however, mutuality extends well beyond these
basic mutual advantages. The customer
benefits of our mutuality are manifested in
four key values—
• Doing what’s right for policyowners
and other clients
• Building long-term relationships to meet
their needs
• Building and preserving financial strength
• Offering world-class products and expert
guidance that address changing needs over
a lifetime.
We invite you to explore these values on the
following pages, to see how our brand of
mutuality sets us apart. We believe you will
find it to be … a mutual advantage.
1
Fortune magazine, Global Most Admired, March 7, 2005
2
Moody’s Investors Service, March 2005
3
Standard & Poor’s, July 2004
1

THE RIGHT THING
Ever since Northwestern Mutual was founded
in 1857, generations of company leaders have
used a single test in making corporate decisions:
“Is what we’re doing in the best long-term
interest of our policyowners?”
This steadfast customer focus requires a
special kind of “purposeful fairness.” It has
produced a tradition as old as the company—
equitable treatment for all.
Mutuality in practice
Elsewhere in life insurance, inequitable
treatment of some over others became
commonplace. Many companies tried to
attract new customers by offering special
or improved benefits not available to
current policyowners.
This is not the practice at Northwestern
Mutual, where the mutuality that sets us apart
extends to our practice of operating on our
policyowners’ behalf in very tangible ways,
including pricing, underwriting, claims,
service—and more.
‘Retroactive’ benefits
One practical example is Northwestern
Mutual’s approach to “retroactivity.”
As new and enhanced benefits to
Northwestern Mutual life and disability
insurance products become available, existing
policyowners are given the opportunity to
acquire them, whenever possible and practical.
“… It (is) …. pre-eminently the
policyowner’s company.”
- Executive Committee of the
Board of Trustees, 1888
“The company is a mutual organization
in the strictest and best
sense … This is a company
operated by the policyholders
and for the best interests of
the policyholders.”
- Examination of the Wisconsin Insurance
Department, 1905
“Our beliefs are not the easy way—
but we think they are the right way.
We do not propose to change our
philosophy of mutuality and fairness
to all policyowner-members.
This company is different.”
- Francis Ferguson, President and CEO,
Northwestern Mutual, 1973
“Northwestern Mutual executives
use a simple yardstick to measure
every business venture, every
business decision, every contract:
Is it in the best interest of the
2.8 million policyowners …?”
- Best’s Review, March 1999
2

Throughout the years, the company has
offered several life insurance amendment
programs, or “Updates,” which involved
massive efforts to extend new advantages
to existing policyowners. In one program
alone, Northwestern offered life insurance
policyowners $4.5 billion of additional
insurance at no increase in premium.
Forbes magazine recognized the unusual nature
of this commitment: “The tactics of Milwaukeebased
Northwestern Mutual … are a little bit
unconventional. It has a habit of attracting new
customers by giving away money to old ones.” 4
4
Forbes, “Shopping for Life,” February 22, 1988
“We believe mutuality provides
Northwestern Mutual with great
competitive advantage and is one of
the factors that has enabled the
company to remain financially strong
and to keep decisions focused on
longer term implications (rather than
on reported quarterly earnings.)”
- Report of the Policyowners’ Examining
Committee, 2001
“Our mutual company has prospered
for 148 years by pursuing a model of
long-term commitment to policyowners.
We believe the company, through its
talented employees, will continue this
tradition...a present of promises met
and a future of promises delivered.”
- Report of the Policyowners’ Examining
Committee, 2004
“The commitment to do “the right
thing” for policyowners, supported by
the advantages of having a mutual
structure rather than a publicly traded
stock structure, provides a common
value system that drives and shapes
every aspect of Northwestern
Mutual’s business.”
- Report of the Policyowners’ Examining
Committee, 2002
“Because of its ongoing commitment
to mutuality, policyowner value comes
first as opposed to shareholder value.
As a result, policyowners receive
demonstrably better economic value
in two ways: industry-leading dividends
and the promise that the company
will be there when claims come due.”
- Report of the Policyowners’ Examining
Committee, 2003
3

LONG-TERM VIEW
Steeped in mutuality, Northwestern Mutual
enjoys unusual customer loyalty and is
commonly ranked as a leader in customer
satisfaction. 5 Policyowners not only keep their
policies, they keep returning for more. In a
typical year, more than half of life insurance
purchases are made by existing—and satisfied—
customers. 6 The key to encouraging such
loyalty isn’t only how we attract customers
initially, it’s what we do to keep them.
“Going forward, we’re going to continue
to drive home the value proposition of
excellent product value and long-term
customer relationships built by our
financial representatives.”
- Ed Zore, President and CEO, Northwestern Mutual,
Leaders magazine, 2002
Whether it’s product development, investment
selection or other activities that contribute to
our lifetime relationships, Northwestern
Mutual takes the long view—with an eye
toward lasting strength and an enduring
“mutual advantage.”
One key to building long-term relationships
is to provide superior long-term product
value. Northwestern Mutual has and
continues to return outstanding dividend
payouts. 7 The company’s consistent results
are powered by careful underwriting,
vigilant expense control and prudent but
productive investment practices.
Superior value
The company provides superior value, in part,
through its general-account investment
strategy. This strategy emphasizes long-term
investments, which typically outperform shortterm
investments.
The result has been that policyowners receive
steady, stable, excellent value. That’s why
Northwestern Mutual pays far more individual
life insurance dividends each year than any
other company ($3.9 billion in 2005). 8
Lasting relationships
It’s often said that Northwestern Mutual
already has what many others in financial
services hope to create—lasting customer
relationships built on confidence and trust.
Building such relationships is truly a team
effort. And this team effort begins with
Northwestern Mutual’s nationwide field force
of financial representatives.
Northwestern Mutual has long been
committed to maintaining a well-trained corps
of financial representatives who make this
profession their lifelong career. Rooted in the
Northwestern Mutual culture, our financial
representatives are:
• Trained to develop lifetime clients rather than
one-time customers; to address long-term
needs and to help clients build sound plans
aimed at ensuring their financial security.
• Committed to providing service throughout
their clients’ lifetimes.
• Attracted to and joined with Northwestern
Mutual through a bond of common values.
4
5
American Customer Satisfaction Index, February 2005. Produced by the Stephen M. Ross Business School at the
University of Michigan in partnership with the American Society for Quality and international consulting firm, CSI Group.
6
Source: Northwestern Mutual
7
For a fuller explanation of dividends, see inside back cover
8
Source: A.M. Best Company. Data calculated by Northwestern Mutual

“Since some 54 years
ago, when I took out a
small life policy, I have
been very impressed
with the way your
Trustees have guided
your company, and
more impressed with
how you deal with your
policyowners.”
- California policyowner, 1993
Listening is key
Listening to clients has been a historic company
strength. One tradition that keeps us sensitive
to customer needs is our Policyowners’ Examining
Committee. Since 1907, the company’s Board
of Trustees has annually named a group of
three to five policyowners to produce an
independent and unrestricted evaluation of
company operations, management and strategic
plans. The committee’s report is published
each year in our Annual Report. Important
improvements in company structure and
operations have resulted from this unique
annual “customer check-up.”
“The Policyowners’
Examining Committee
is an extraordinary thing.
I don’t know of any
company, insurance or
not, that opens up its
entire shop, in intimate
detail, to its customers.
The ultimate winners
are the policyowners.”
- George Dickerman,
Policyowner, Trustee and
former member, Policyowners’
Examining Committee,
Chairman (Retired) Spalding
Sports Worldwide
“Over the years, we have
always thought in terms
of the individual rather
than the mass and have
consciously built toward
a personal relationship
between the policyholder,
the agent and the
company.”
- Edmund Fitzgerald, President
and CEO, Northwestern
Mutual, 1958
5

FINANCIAL STRENGTH
Financial strength is and has been integral to
Northwestern Mutual’s vision for
policyowners and clients. Our mutuality sets
us apart financially.
On a basic level, of course, financial
strength is an obligation. It arises from our
commitment to policyowners, from the
personal security they entrust with us.
Company founders pioneered a culture of
“…consistently receives the highest marks
from rating agencies, which means it is
fiscally strong enough to outlast you.”
- Worth magazine, Editors’ Choice Award
July/August 2002
scrupulous responsibility for policyowner
funds—to provide superior value and
pay claims promptly on long-term financial
contracts that often remain in force
for decades.
Throughout our history, this attitude and
approach has kept the company on a strong
and solid course during difficult economic
times that rocked many others in the business
world. Clearly, Northwestern Mutual has
achieved financial strength of major proportions.
Our approach to mutuality, including the
long-term investment strategy and tight focus
on operating fundamentals, helps us maintain
the highest possible financial ratings. 9
6
“Northwestern Mutual is committed
to retaining its mutuality, which Moody’s
believes can be a competitive
advantage in today’s markets.
While stock companies have greater
access to capital, advantages of
remaining a mutual company include
extremely competitive returns to
participating policyowners in the
form of dividends and reduced shortterm
scrutiny from outside parties,
permitting the company to take a
longer-term planning horizon (such as
taking advantage of favorable longterm
equity market returns to
maintain high policy dividends).”
- Moody’s Investors Service, Rating Analysis,
April 2005
9
Moody’s, Aaa; Standard & Poor’s, AAA; A.M. Best,
A++; and FitchRatings, AAA
“If you find a client with an existing
Northwestern Mutual Life policy, simply
insist on retention of that policy.
Northwestern Mutual is, by quite a
margin, the best. So it was in 1955
when I went into the business. So it
will likely be long after I’m dead.”
- James Hunt, Consumer Federation of America
Web site (www.consumerfed.org)
September 28, 2001
“The (insurer financial strength) ratings
reflect Northwestern’s market-leading
individual life insurance business, its
extremely strong capitalization and very
strong operating performance. Other
factors include the company’s very
strong and unique investment strategy
and strong liquidity.”
- Standard & Poor’s Insurance Rating Analysis,
July 2004

BUILDING BLOCKS OF MUTUALITY
Superior life insurance value for the policyowner
rests on our ability to produce
outstanding results in these four areas:
• Mortality
• Expenses
• Persistency
• Investments
These four value-producers are building blocks of
mutuality. Northwestern Mutual excels at all four.
Superior Mortality
A periodic industry study allows Northwestern
Mutual to compare its mortality experience to
the combined mortality of Northwestern and
20 of its major competitors. In simple terms,
Northwestern Mutual policyowners, on average,
tend to live longer.
The comparison below shows the first 15 policy
years, covers all ages, and includes the best
classes of smokers and non-smokers—
the vast majority of Northwestern Mutual’s
insureds. Northwestern Mutual has consistently
experienced lower mortality than its
competitors. In the latest study, its mortality
experience was about 35% better than the
intercompany average. Because the average
company pays proportionately more in death
benefits than Northwestern Mutual does, the
average company has that much less to
return in dividends to surviving policyowners.
We attribute this superiority in mortality to
a field force that seeks out people who live
responsibly, and to a medical and underwriting
staff exceptionally skilled in assessing health
risks. This contributes to superior value for
our policyowners.
Society of Actuaries Comparative Mortality Study
Medical & Paramedical Combined
All Ages, First 15 Policy Years
Intercompany Average
Northwestern Mutual
140%
105%
70%
35%
69-
74
70-
75
71-
76
72-
77
73-
78
74-
79
75-
80
76-
81
77-
82
78-
83
79-
84
80-
85
81-
86
82-
87
83-
88
84-
89
85-
90
86-
91
87-
92
88-
93
89-
94
90-
95
91-
96
92-
97
93-
98
94-
99
95-
00
96-
01
Source: Society of Actuaries Comparative Mortality Studies
Prepared and calculated by The Northwestern Mutual Life Insurance Company, Milwaukee, WI.
8
140

Low Expenses
The company is noted for its frugality and its
ability to keep costs down. This has been a
hallmark of the company’s management,
decade after decade. It remains a key
competitive advantage today—and a key
ingredient of superior value for the customer.
As an example, Northwestern Mutual’s
expenses, as measured on its principal product
line, have consistently been about one-third
less than the industry average. These expense
savings can provide additional value for policyowners
in the form of dividends and surplus.
Ordinary Life Expenses
as Percent of Premium*
Company** 2000 2002 2004
Northwestern Mutual 18.6% 17.7% 18.1%
AEGON 25.6 23.5 21.4
Jefferson-Pilot 19.1 21.9 23.2
Manulife Financial (1) 36.5 23.3 23.2
Pacific Life 24.1 23.1 24.3
New York Life 26.2 25.4 24.4
Guardian 30.9 28.3 25.5
Prudential 41.4 25.0 26.6
American Express 26.7 24.2 27.6
Met Life & Affiliates (2) 30.4 28.7 28.5
State Farm 30.5 31.8 28.7
Principal 22.8 26.6 29.7
Lincoln National 49.9 34.5 29.8
Mass Mutual 21.7 24.7 32.8
AXA Financial (3) 23.8 22.1 37.3
Industry Average 29.5 26.3 26.3
* Direct premiums, excluding dividends to additions
** Family data
(1) Primary Companies – John Hancock, John Hancock USA
(2) Primary Companies – New England, General American,
Metropolitan Life
(3) Primary Companies – Equitable, MONY
Source: A.M. Best Company, prepared and calculated by
The Northwestern Mutual Life Insurance Company, Milwaukee, WI.
“Doing what is best for
the policyowner and
creating policyowner
value (rather than
shareholder value)
remains fundamental to
the shared value system
of the organization.”
- Report of the Policyowners’
Examining Committee, 2001
“Northwestern Mutual …
has become a model of
the life insurance
company that did things
right. Northwestern has
stuck to selling
traditional kinds of
policies … makes its
decisions on
conservative standards,
and controls costs
aggressively.”
- The New York Times,
August 30, 1992
“Our character means
108 years of adherence
to principles and
practices that have
produced outstanding
results. Our record of
quality performance
and integrity gives this
company unique
character.”
- Donald Slichter, President and
CEO, Northwestern Mutual,
1965
9

10
“As it happens,
Northwestern, the master
of loyalty, is also famous
for its careful cost management
… yet all of
Northwestern’s savings
would not sustain superior
production if they weren’t
reinvested in the delivery
of superior value to
customers and agents,
earning their loyalty in
the process.”
- Frederick Reichheld,
“The Loyalty Effect,” 1996
“A commandment that
flows from our credo is
a policy of aggressive
fairness. We treat all of
our policyowners with
the same thorough
respect.”
- Donald J. Schuenke,
President and CEO,
Northwestern Mutual, 1988
“Our company has
embraced mutuality for
143 years. But ironically,
today, as more and more
companies abandon the
mutual form, the advantage
of mutuality is finally
getting its rightful
attention. We like being
a mutual company.”
- James D. Ericson,
President and CEO,
Northwestern Mutual, 2000
Excellent Persistency
The third contributor to policyowner value is
persistency, the degree to which policyowners
keep what they have purchased. A low lapse
rate leads to better mortality results,
better cash flow for investments, and a larger
base over which to spread expenses. The latest
available data shows Northwestern’s annual
life insurance lapse rate to be almost half the
industry average.
The company also regards its leadership
position in persistency as important to the
consumer for two reasons. First, it is perhaps
the truest measure of customer satisfaction—
people voting with their dollars, so to speak.
And secondly, persistency is an indicator that
the products were properly bought—and
properly sold—in the first place. People keep
the policies in force for the simple reason that
the products are filling a real need.
Lapse Ratio by Amount Combining
New Business & Inforce Business
Company* 2000 2002 2004
Northwestern Mutual 4.5% 4.0% 3.9%
American Express 6.4 4.4 4.3
Prudential 6.8 7.8 5.0
Mass Mutual 5.9 5.4 5.1
New York Life 7.0 6.5 5.7
Lincoln National 10.0 8.7 5.7
Principal 6.4 6.8 6.0
Manulife Financial(1) 5.8 6.4 6.3
State Farm 8.1 7.6 6.7
Met Life & Affiliates (2) 8.2 8.2 6.8
Pacific Life 4.8 7.7 7.2
Guardian 6.2 6.4 7.5
Jefferson-Pilot 8.8 9.0 7.7
AXA Financial (3) 7.3 7.9 7.8
AEGON 8.1 7.9 8.9
Industry Average 8.6 8.6 7.1
* Family data
(1) Primary Companies – John Hancock, John Hancock USA
(2) Primary Companies – New England, General American,
Metropolitan Life
(3) Primary Companies – Equitable, MONY
Source: A.M. Best Company, prepared and calculated by
The Northwestern Mutual Life Insurance Company, Milwaukee, WI.

High-Quality Investment Portfolio
The final building block of superior value
and of our unique brand of mutuality is how
we manage our general-account investment
portfolio. Northwestern Mutual invests in all
the major asset classes and market sectors,
maintaining a diversified portfolio that blends
fixed income and equity investments.
The company is opportunistic in investment
activity and value-oriented in its investment
approach. It can take a long-term perspective
and in some cases can be more aggressive
with portions of its investment portfolio.
This strategy allows Northwestern Mutual to
maximize total returns with reduced volatility
in an effort to increase investment income and
create additional value for policyowners. 10
Small wonder that observers refer to this
competitive advantage as “the power of
the portfolio.”
4
96.3
85.0%
15.0%
Public Bonds &
Preferred Stock 45.1%
3.8%
Private Bonds &
Preferred Stock 16.9%
Private Equities
& Subsidiaries 3.1%
7.8%
5.0%
18.3%
Source: Northwestern Mutual
10
For a fuller explanation of the investment portfolio, see Northwestern Mutual’s brochure “The Power of the Portfolio”
11

MEETING CHANGING NEEDS—FOR LIFE
Northwestern Mutual’s world-class insurance
products result from a vision and passion
to be “simply the best” in quality and value.
We have always aimed to—
• Provide superior products
• Avoid fads and gimmicks
• Upgrade our policies in both the scope
of coverage and ability to provide better
benefits at lower costs.
“This insurance and financial firm has zero
new-economy glamour, and that’s just fine.
It’s only gaining market share, boosting
sales, and successfully retaining its topperforming
sales agents.”
- Sales and Marketing Management,
#1 Sales Force: Co-Winner,
July 2001
In recent decades, policyowners have brought
to us a broader range of financial needs.
Northwestern Mutual has answered with
more diverse products and services. While
keeping our focus on world-class insurance,
we’ve also added a careful selection of related
financial products.
The Northwestern Mutual Financial Network
These financial products are presented to
customers in a coordinated way through the
Northwestern Mutual Financial Network.
The Network, the marketing name for the sales
and distribution arm of Northwestern Mutual,
includes both the company’s financial
representatives and the financial specialists
who help them meet each client’s unique needs.
The combination of financial representatives
and specialists provide needs-based analysis,
expert guidance and innovative solutions to help
clients improve financial security through—
• Asset and income protection
• Education funding
• Business needs analysis
• Investment services
• Employee and executive benefits
• Retirement solutions and
• Estate analysis
And our “mutual advantage” thrives. As we
continue to do what’s right for policyowners,
build long-term relationships to meet their
needs, build and preserve financial strength, and
provide expert guidance, we will draw upon the
benefits of the culture and values that have
defined our company over time.
“We have an incredibly high level of integrity and a reputation for doing the right
thing. When I first came here in 1969, we were focused on doing what's right
for the customer, and that remains our priority today.”
- Ed Zore, President and CEO,
Northwestern Mutual, Leaders magazine, 2002
12

7
Dividends for Northwestern Mutual policies are distributions of the company’s surplus. They arise when premiums plus
investment income are more than enough to cover company operating expenses (including taxes), claim costs, guaranteed
increases in policy cash values and additions to surplus. Dividends are paid annually to policyowners in proportion to company
earnings on their policies. However, decisions with respect to the determination and allocation of divisible surplus are at the
discretion and sound business judgment of the company’s Board of Trustees. There is no guaranteed specific method or formula
for the determination and allocation of divisible surplus. Accordingly, the company’s approach is subject to change. Also, there
is no guarantee that any dividend will be paid on an individual policy in any given year.
Securities are offered through Northwestern Mutual Investment Services, LLC, Suite 300, 611 E. Wisconsin Ave., Milwaukee,
Wisconsin, 53202, 1-866-664-7737. NMIS is a member of the NASD and SIPC.

Charts contained in this brochure
were prepared and calculated by
The Northwestern Mutual Life
Insurance Company, Milwaukee, WI.
The Northwestern Mutual
Life Insurance Company Milwaukee, WI
www.northwesternmutual.com
19-0185 (1002) (REV 0805)