Principal Life Insurance Review
Build a policy to protect your family the right way
Principal Life Insurance offers five different types of insurance in eight different plans. In this review, we’ll explore the types of life insurance that Principal offers as well as the riders that can be added to build a custom policy. We’ll also review company ratings for financial strength and customer satisfaction, plus pricing information for prospective policyholders.
Read on to see if Principal Life has the perfect policy that fits all of your life insurance needs.
What We Like
Multiple policies for each type of permanent insurance
Nearly a dozen available riders to help customize service
Outlined policy details online so you know exactly what you’re getting
Investment advice and other financial services through your Principal representative
Excellent ratings for financial stability
What We Don't Like
Surrender charges apply for permanent policies
Customer service keeps “bankers’ hours”
Each rider is only available with a couple of policies
Company Overview: An Established Giant
Principal Life Insurance is a division of Principal Financial Group, a large financial services company headquartered in Des Moines, Iowa. Principal was founded in 1879 and is part of Fortune’s list of the 500 largest companies in the U.S.
Available Plans: Lots of Options
Principal Life offers five different types of life insurance coverage with multiple ways to set up or build a custom policy. The company offers term life, which provides policyholders with a preset death benefit for a defined period of time in exchange for level premiums that don't change over the years. Customers can also choose from several types of permanent coverage that, unlike term, lasts as long as your premiums are paid.
The types of insurance offered by Principal Life include:
Term Life Insurance
Term life through Principal can be issued for customers age 20 to 80 and can be renewed up to age 95. The minimum policy size is $200,000. Principal also allows term life policies to be converted to permanent coverage up to age 70 or the end of the predetermined conversion period stated in the policy.
The conversion period for Principal term policies varies by term length:
- 10-Year Term: First seven years of the policy
- 15-Year Term: First 12 years of the policy
- 20-Year Term: First 15 years of the policy
- 30-Year Term: First 20 years of the policy
Universal Life Insurance
Universal life coverage from Principal is a permanent policy that offers flexible death benefits and flexible premiums. Policies accumulate cash value based on a variable interest rate but have a minimum interest rate guarantee. Policies can be issued from age zero to 85.
Principal Life offers two universal life policies:
- Universal Life Flex III: Have a minimum policy size of $25,000 for ages zero to 19 and $50,000 for ages 20 to 85. Flex III policies also include extended, no-lapse guarantees for either the first 35 years of the policy or age 95, whichever comes first.
- Universal Life Protector V: Can be issued with minimums of $25,000 or $50,000 depending on the insured’s age and tobacco use. Large death benefit policies over $15 million for estates are available but require extra approvals.
Indexed Universal Life Insurance
Indexed universal life policies from Principal can be issued from age 20 to 85. These policies provide death benefit protection as well as the ability to grow cash value with built-in interest rate protection. Policies earn interest based on an underlying stock market index with built-in protection to prevent losses.
The indexed universal life policies available from Principal include:
- Indexed Universal Life Accumulation II: Offers long-term growth and income plus a death benefit. Policyholders can tie their cash accounts to either a fixed account or one of three S&P indices. The minimum policy size is $50,000.
- Indexed Universal Life Flex II: Policies have a minimum size of $100,000. They offer flexible coverage and moderate cash value growth that can be tied to either a fixed account or one of two S&P indices.
Variable Universal Life Insurance
Variable universal life is a permanent insurance policy that provides the opportunity for more aggressive cash value growth. These policies allow customers to set their own investment strategy and grow the value of their cash account based on market performance.
Principal Life offers the following variable universal life policies:
- Executive Variable Universal Life III: Offers death benefits for business-owned/sponsored solutions, making it ideal for employers seeking to attract and retain key employees. Policies have a $100,000 minimum and provide long-term cash value growth.
- Variable Universal Life Income IV: Offers long-term cash value growth that is based on variable market interest rates. Policies have a $100,000 minimum and have numerous optional riders for customers to add features and benefits to their coverage.
Survivorship Universal Life Insurance
Survivorship life insurance from Principal insures two people and pays a death benefit upon the death of the second insured. This makes survivorship policies ideal in estate planning and also helpful in leveraging some tax deductions.
Principal offers one survivorship universal life policy:
- Survivorship Universal Life Protector III: Designed for clients who want cost-efficient, guaranteed protection on two people. It is ideal for clients with estate planning needs. Policies can be issued from ages 20 to 85 and have a minimum face value of $250,000.
Survivorship Universal Life Insurance provides estate planning protection for older, more conservative clients. It can also be used to fund buy-sell and split-dollar plans for businesses.
Available Riders: A Great Line-up of Add-ons
Principal Life policyholders who want to get even more out of their policies can add riders for additional benefits and features. Not all riders are available for all policies. In fact, most policies only have a couple of optional riders available.
The riders available for Principal Life policies include:
A children’s insurance rider allows policyholders to add term coverage for a child to an existing policy. Children’s term coverage is available from $5,000 to $25,000.
Term policies from Principal come with a conversion extension rider that allows the insured to convert the policy (within certain timeframes) to permanent coverage. Conversion periods vary by policy term.
Waiver of Premium
Waiver of premium riders cover a policyholder’s premiums if they become disabled. This rider is available with term policies and some universal life policies.
Waiver of Monthly Policy Charge
A waiver of monthly charge rider pays the monthly policy charges if the insured becomes disabled. This rider is available with Variable Universal Life Income IV policies.
An accelerated benefit rider, also called a terminal illness death benefit advance rider, allows policyholders to tap 75% of their death benefit (up to $1,000,000) if they’re diagnosed with a terminal illness. There is no cost for this rider—it’s included with Principal’s term life policies as well as VUL Income IV.
Maturity Date Extension
Maturity date extension riders automatically extend the maturity date of a policy after the first insured dies and are included in survivorship policies at no cost.
Extended no-lapse riders guarantee that policies will not lapse before either age 95 or the end of the 35th year of the policy, whichever comes first. This rider is only available with certain Principal universal life policies.
Cost of Living Increase
Cost of living increase riders allow policyholders to increase their death benefits based on changes to the Consumer Price Index (CPI) without having to prove their insurability. This rider is available with certain universal life policies including Flex III and Indexed Accumulation II.
Life paid-up riders offer no-lapse protection if policyholders take out large loans against their policy. This rider is available with certain universal life policies including Flex III and Accumulation II, but is only available in states where it’s approved.
Enhanced Cash Surrender Value
Enhanced cash surrender value riders reduce a policy’s surrender charges to boost the overall surrender value in the early years. This rider is available with Principal’s Executive VUL III policies.
Change of Insured
A change of insured rider lets a policyholder change who the policy insures. This type of rider is ideal for use in business situations (for example with key man insurance). The rider can be added to Principal Executive VUL III and VUL Income IV policies.
Death Benefit Guarantee
A death benefit guarantee rider guarantees that the policy won’t lapse before age 85, so long as the policyholder meets certain premium requirements outlined in policy documents. The rider can be added to Executive VUL III policies.
Policy Split Option
Policy split option riders are automatically included in Principal’s survivorship policies at no cost. These riders allow policyholders to split their policy if they get divorced or meet certain other criteria.
A salary increase rider enables policyholders to increase the face amount of their policy based on salary adjustments without requiring evidence of insurability. This rider is available for VUL Income IV policies but costs extra if the value of the benefit exceeds $30,000.
A chronic illness rider provides a policyholder with access to money while they’re still alive if they’re diagnosed with a chronic illness. This rider can be added to Principal’s UL Flex III, Indexed UL Accumulation II, and Variable Universal Life Income IV policies.
A lapse protection rider provides policyholders with guaranteed death benefit protection for a preset period of time ranging from a few years up to the insured’s lifetime. This means that if your policy lapses because you can’t pay premiums, you can still collect a death benefit. This rider is available with universal policies.
Customer Service: Limited Hours & Local Reps
Policyholders who need help from Principal Life can call 800-986-3343 between 7 a.m. and 7 p.m. Central Time, Monday through Friday. Customers can also send an email to Principal’s service center directly through their website, visit Principal’s insurance help page, or get help from one of Principal’s local representatives directly.
Customer Satisfaction: Fourth Overall Among Life Insurers
Principal Life has an above-average rating from J.D. Power and actually ranked #4 overall among two dozen of the top national life insurance companies in its most recent study. Principal also has an A+ rating from the BBB. While the company does have numerous complaints, very few of them are related to life insurance. What complaints we could find are related to policies unexpectedly canceled for late payment and other administrative issues.
Financial Strength: Great Ratings All-Around
Principal Life receives very strong financial ratings from multiple rating agencies. They have an A+ rating from AM Best, AA- from Fitch, A+ from S&P, and an A1 rating from Moody’s. These ratings should reassure policyholders that their insurance is backed up by a company with a strong balance sheet and excellent risk management practices.
Cancellation Policy: Not Easy & Fees Apply
Customers who decide that they want to cancel term life policies with Principal Life just have to stop paying the premiums. For those looking to cancel permanent policies, there are forms that they’ll need to sign; these forms aren’t readily available online—you may need to work with a Principal rep to obtain them. Principal also charges fees for partial and full surrenders of permanent insurance that vary by individual policy.
Price: Fairly Competitive
Principal offers a lot of different policies that can be customized and their prices are fairly competitive with other national providers. The company has an easy-to-use quoting tool to get an idea of your monthly premiums. Principal's prices may not be as low as you could find with other insurers.
Below are sample monthly premiums for $250,000 in term life coverage on a 20-year term for non-smoking customers in standard health.
Competition: Principal Life vs. Mutual of Omaha
Both Principal Life and Mutual of Omaha have excellent financial ratings. While both rank in the top four of all life insurance companies in J.D. Power’s study of national life insurance companies, Mutual of Omaha ranks #3 and Principal is #4. Principal offers more policy types than Mutual of Omaha with term life coverage costs roughly the same each month for both providers. Cost-conscious clients should be sure to get a quote from Mutual of Omaha, but those who value more customized coverage should use Principal.
Final Verdict: A Great Option for Custom Coverage
Principal Life is a very well-established financial firm that has very strong financial ratings and ranks #4 overall among all national insurers for customer satisfaction. The company has a wide range of policies available and offers numerous riders so customers can get even more out of their policies. If you need custom coverage with a policy that meets your particular needs, Principal Life insurance is right for you.
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