Principal Financial Life Insurance Review
Principal Life Insurance sells group and individual life insurance policies online and through advisers. It has standard term life options, but where it truly shines is in its four whole life insurance policies. It understands that life can be unexpected, and it offers flexibility to match.
If you need to, you can borrow against the policy’s value or initiate a partial surrender, both of which are tax-free. Principal deducts outstanding loans from the death benefit when you die or surrender the policy. If you choose a full surrender, you will pay income tax on any portion of the benefit that exceeds premiums.
Your beneficiaries also have choices for receiving their death benefits. They can elect a lump-sum distribution, pick from income options that provide income over their remaining life, or receive the death benefit in an interest-bearing account they can access on demand.
Unfortunately, Principal Financial is missing some of the riders we consider most important, including accidental death benefit and disability waiver of premium. However, customers seem otherwise satisfied with Principal Financial’s offerings, so it’s still possible to build a robust policy.
Convertible option on term life policies
Sells cash-value policies and survivorship insurance
Multiple options for death benefit payment
Better for group life insurance policies than individual
The Life Insurance Factors We Analyzed
Principal Financial receives strong ratings for customer service from J.D. Power for overall satisfaction, product offerings, price, and interaction. It’s encouraging to see that customers consistently rate the company highly. The National Association of Insurance Commissioners (NAIC) also reports that Principal Financial received fewer than the average number of customer complaints in 2018.
You can also get a quote for both term and permanent life insurance online, which is unusual for the industry. You’ll still have to go through an adviser to purchase a policy, but the convenience of an online quote makes shopping around a breeze.
Principal Financial has received strong and stable ratings from all major credit rating companies. Moody’s gave it an A1, AM Best an A+, and S&P Global an A+. These ratings tell investors that the company has a strong balance sheet, with assets large enough to cover all debts, and is extremely unlikely to encounter financial difficulties in the future.
This is an important indicator of whether or not your life insurance company will still be around in thirty years.
Coverage and rider information
Principal sells the two major types of life insurance: term and permanent. Under the umbrella of permanent insurance, it offers universal life insurance, indexed universal life insurance, variable universal life insurance, and survivorship insurance.
If you’re looking for short-term coverage, Principal’s term life options are some of the most flexible on the market. While most providers offer coverage for only a few set terms, like 10 or 20 years, Principal offers terms of one, 10, 15, 20, and 30 years. This allows you to choose the coverage length that best suits your needs. Its term policies can also be converted to permanent policies with the same death benefit without a medical exam, so you have the flexibility to continue coverage at the end of your term without going through an extensive application process.
Principal’s other standout option is its survivorship insurance, not sold by many of its competitors. This type of policy covers two lives and pays the death benefit upon the death of the second individual. It’s useful in estate planning to get the most out of certain tax deductions.
Principal sells more robust policies to those under group and corporate policies, with policies that include the accidental death and disability waiver of premium riders that are not advertised for its individual policies.
Life insurance coverage features
|Insurance types offered||Term, whole, universal, indexed universal, variable universal, survivorship|
|Term lengths offered||1, 10, 15, 20, and 30 years|
|Standout coverage features|| Special one-year policies for gap coverage|
Convertible term life policies
Coverage up to $50 million
Principal Financial Life Insurance Overview: Financial Strength, Availability, and History
Over its many years in business, Principal Financial has built an excellent reputation in the industry. It have a strong balance sheet, with over $700 billion in assets to fund operations and protect policyholders.
The company has an A+ rating with the Better Business Bureau in addition to its excellent ratings with J.D. Power and few complaints with the NAIC. Customers have indicated satisfaction with the company’s products and service.
- In business since: 1879
- S&P Global financial strength rating: A+
- Moody’s financial strength rating: A1
- AM Best financial strength rating: A+
- States served: 50
All information accurate as of January 22, 2020.
The Bottom Line
Group life insurance tends to account for a higher percentage of Principal Financial’s business than individual policies, and it is better known as a corporate insurance provider. However, an individual policy from Principal could still be a good option. Its online quote process makes it easy to shop around, and its coverage is customizable. It’s also one of the highest-rated companies in customer satisfaction surveys, so if it offers you an affordable quote, you’re likely to have a good experience.
Principal Financial Life Insurance FAQ
Principal Financial’s 140-plus years of experience serving group and individual insurance needs and its strong finances makes it a good insurance provider. Customers also rate their interactions with the insurer highly.
Principal Financial sells term and whole life insurance policies. It provides several types of whole life insurance: universal life insurance, indexed universal life insurance, variable universal life insurance, and survivorship insurance. Each of those policies has different features, from returns tied to the stock market to a floating interest rate.
The cost per month of life insurance depends on numerous factors, which makes comparisons between companies difficult. Principal Financial doesn’t disclose any information on average premiums. However, if you want to pay less for your life insurance, quitting smoking and exercising regularly are ways to reduce the cost of premiums. Life insurance companies consider these, along with age, income, amount of requested coverage, and health history, when making underwriting decisions. If you present more risk to the insurer, you will pay a higher premium.
Principal Financial claims that certain whole life policies are eligible for policyholder dividends, though there is no record of how much it has historically paid out.
According to the FAQ on Principal’s website, some applications may require a medical exam. Medical exams are most common for whole life insurance policies, or for policies with high coverage amounts.
You can cancel a policy with Principal Financial only by contacting an agent directly. Note that canceling a whole life insurance policy, or cashing it in it, could lead to tax penalties, and you may surrender all or some of your cash value.