Principal Life Insurance Review

Our take on Principal Life

Founded in 1879, Principal now provides a variety of products to help customers plan for the future. This includes retirement products for individuals, as well as some plans for employers and business owners. This worldwide company currently boasts of 19 million customers around the world.

Principal offers a good selection of life insurance products, including term, universal, and one-year temporary policies. We especially like their survivorship policy, which is a helpful, though rare, strategy for estate planning.

However, customers seeking whole life insurance products will have to look elsewhere. They offer several options for universal life insurance, but some customers may prefer to stick with tried-and-true investment strategies such as a 401K or a traditional savings account.
We recommend Principal for those looking for term life insurance policies that fit their budget, or for those looking for the relative uniqueness of Principal’s survivorship benefit.

Principal Life Insurance Company Details

What we like

Competitive Rates

Principal’s rates are among the most competitive in the industry, and remain competitive across multiple age brackets.

Survivorship Benefit

Not all insurance providers offer a survivorship benefit, but Principal allows you to insure both you and your spouse for maximum coverage and estate-planning.

Online Quotes Available

Principal offers an easy-to-use online tool to provide online quotes for many of its policies.

What we don’t like

No Whole Life Policies

Principal currently does not offer whole life insurance products.

Few Rider Options

While Principal offers some standard rider options, some customers may find limited options for customizing their term life policy.

Limited Rapid-Issue Options

Applicants may receive coverage without a medical exam, but they may find fewer no-exam options than other companies.

Principle Life Insurance Products

Term Life

Custom Advantage

Principal offers term life insurance coverage to applicants from age 20 to 80. These policies are available in 10, 15, 20, and 30-year increments. Coverage ranges from $200,000 to $1 million.

• No Medical Exam Option

  Healthier applicants can skip the medical exam, though eligibility requirements are fairly narrow.

• Conversion option

  You can convert the term life insurance policy into a permanent policy.

• Accelerated Death Benefit Rider Included

This policy includes the accelerated death benefit rider at no additional cost. This rider will advance up to 75% of the death benefit (up to a max of $1 million) if you are diagnosed with a terminal illness. This benefit can be used for unpaid medical bills, but also things like groceries, over-the-counter drugs, and any other end-of-life expenses.

Universal Life

Universal life insurance policies are permanent life insurance policies that offer flexible premiums and death benefits. A universal policy will also accrue cash value, which can be used to pay for premiums as well as medical expenses.

Policies are available to applicants up to age 85. Coverage ranges from $25,000 to $15 million.

Universal Life Flex III (UL Flex III)

This policy provides flexible coverage to applicants up to age 85, with a policy that lasts through age 121. Coverage ranges from $25,000 to $1 million, with some applicants being eligible for more.

This universal life insurance product accumulates cash value at a guaranteed interest rate, and offers three different death benefit options:

• Option 1: Death benefit amount.
• Option 2: Death benefit plus any accrued cash value
• Option 3: Death benefit plus premiums paid

Additionally, policyholders can increase their death benefit during the first year, and decrease it during from year five onward.

Indexed Universal Life Accumulation II (IUL Accumulation II)

An indexed universal life insurance plan operates the same way as a traditional universal product, though this plan allows you to invest your cash value in an indexed market such as the S&P 500 or Nasdaq. This means that you can earn interest based on that index, but it can also come with the usual risks of investing in the market.

Principal’s indexed policies start with a death benefit of $50,000, and, like the traditional universal life plan, is available to applicants age 20 to 85.

Like the other universal life plans, this policy also provides three ways of paying the death benefit.

Indexed Universal Life Flex II (IUL Flex II)

Principal offers this plan to those between 20 and 85, with coverage starting at $100,000. Like other indexed policies, policyholders can invest their cash value in the market. But this plan offers the security of a “floor,” meaning your interest-based returns never drop below 0%, even when the market performs poorly.

Like the other options, this policy offers three options for receiving the death benefit.

This policy also provides a 10-year no-lapse guarantee.

Variable Universal Life Income (VUL Income IV)

Variable universal life insurance offers policyholders the option of investing their cash value through target-risk or target-date investments.

Principal’s policy starts at $100,000, and is available to applicants between the ages of 20 and 85.

One-Year Term

This unusual offering provides a one-year term to applicants between the ages of 20 and 99. Coverage ranges from $200,000 and $5 million. The policy is non-renewable and offers no additional rider options.

Survivorship Universal Life (SUL)

This type of policy is relatively rare in the industry, but can be a great way to protect both your house and estate. A survivorship policy is issued to an applicant between the ages of 20 and 85, and can cover a second person up to age 90. The policy matures at age 121, ensuring lifelong protection.

This policy has two death benefit options:

• Option 1: Death Benefit
• Option 2: Death Benefit plus accrued cash value

Policyholders will need to pay a monthly surcharge of $20-30, and if you cancel prior to year 20 there is a surrender charge.

Policy benefits

Riders

Principal doesn’t have the widest selection of riders, which makes their policies less customizable than their competitors. But customers can still choose from the following:

Common Mutual of Omaha riders:

• Child Protection Rider - Policyholders can add eligible children to their policy, provided these children are between the ages of 14 days and 18 years. Coverage is available in the amounts of $5,000 and $25,000.
• Accelerated Death Benefit Rider - This rider pays up to 75% of your death benefit if you are diagnosed with a qualifying disease. This rider is included in the standard term policy at no additional cost.
• Conversion Extension Rider - While Principal allows its customers to convert their term policies into a permanent one, this rider offers more time in which to make this decision. This rider is activated at the end of the full level term, or when the policyholder turns 70, whichever comes first.

Conversion Options

Principal’s policyholders are permitted to convert their term life policy up to age 70. However, they can only convert to a guaranteed universal life product after the second anniversary of their term.

Rate Reconsideration

Policyholders may also have their premiums adjusted. Principal will use the policyholder’s age at the time of issue, but will reconsider rates for those who quit smoking or improve their health. However, tobacco users will have to wait at least one year before having their rate reconsidered.

Cost

Principal’s rates for term policies are quite affordable. The following provides a sample of monthly premiums for a healthy, non-smoking male with a 20-year, $500,000 policy:

As we can see, Principal’s premiums consistently stayed below industry averages, making this a great option for affordable life insurance.

Good for all ages

Some companies can increase their rates for older applicants. Principal consistently maintains competitive rates for every age bracket.

Good for Pre-Existing Conditions

Some insurance providers will increase their rates for even mild health conditions such as asthma or diabetes. But Principal has the reputation for maintaining competitive rates for a mild medical history, though this may vary by the severity of the condition and the applicant’s age.

Performance

Financial ratings

Principal has the following financial ratings:

• S&P Rating: A+
• A.M. Best Rating: A+
• BBB: A+

These consistent ratings indicate a high level of reliability, making Principal a company you can trust.