Principal Life Insurance Company Review 2018

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We, at Effortless Insurance, love writing life insurance company reviews. It gives our readers an opportunity to learn about products and rates, but it also allows us to identify the best companies to be contracted with so that we can offer their products to our clients.

Today, I will review Principal Life Insurance Company, which we proudly represent as one of the 50+ carriers. You will learn more about their products, underwriting process, and sample rates. Let’s dive in!

Principal Life Insurance History

Bankers Life Association was founded in 1879 by Edward Temple and five other co-workers. Back then, they only sold life insurance policies to men between the ages of 22 and 55, who didn’t have a high-risk profession. By 1889, Bankers Life had $29 million in-force policies and had to relocate to Des Moines, Iowa.

By 1985, they became The Principal Financial Group and, in 2001, became a publicly traded company. Today, Principal offers a wide range of products, including life insurance and financial products for individuals and institutions, and they have offices in over 19 countries and more than $670 billion in assets under management.

Principal Life Insurance Ratings

  • A.M. Best Company: A+ (Superior)
  • Fitch: AA- (Very strong)
  • Moody’s: A1 (Good)
  • S&P Global: A+ (Strong)

Products Offered by Principal Life Insurance

Principal offers many financial, disability, and life insurance products for individuals and institutions. Their offering includes annuities, mutual funds, and exchange-traded funds among many others. This review will solely touch on their life insurance products and services which consist of term life and universal life insurance.

Term Life Insurance

Term life insurance offers the highest death benefit for the lowest cost. It’s the most straightforward life product to understand because there is no cash savings or investment component as part of your coverage. Instead, you only pay for the cost of insurance (COI) for a predetermined length of 10, 15, 20 or 30 years. At the end of the initial term, you can convert the policy to whole life, renew it annually, or drop it.

  • Issue ages: 20–80
  • Term periods: 10-, 15-, 20- and a 30-year term
  • Minimum face amount: $200,000
  • Renewable to age 95
  • Policy conversion period:
    • 10-year term: first seven years
    • 15-year term: first 12 years
    • 20-year term: first 15 years
    • 30-year term: first 20 years
    • Or until the insured’s age 70, whichever is earlier

Universal Life Insurance

Universal life insurance is a type of permanent coverage that offers guaranteed death benefit and cash growth accumulation on a tax-deferred basis. The most prominent advantage universal life has over whole life (which is also permanent policy) is the flexibility to skip or adjust your premium payments over time and even increase or decrease your death benefit. Universal life’s premise is that, since life continuously evolving, your coverage should do the same. Principal offers five types:

  1. UL Accumulation II is a flexible solution for those who are looking for robust cash accumulation, choices in death benefit options, and the option to increase or decrease the coverage (subject to underwriting). It offers a 10-year, no-lapse guarantee, which means if you pay the minimum premium, the coverage will stay in force. It also provides an automated income feature that simplifies the withdrawal process from the cash account.
  2. UL Flex II provides affordable premium and flexibility to adjust the death benefit throughout the years. The choices for the no-lapse guarantee can be to the lesser of age 95 or 35 years or 10-year Ul Accumulation has. Principal Accelerated Underwriting (no-exam option) is also an added feature.
  3. Survivorship Ul Protector II is a second-to-die coverage which protects two lives and pays only after the second one dies. It’s an ideal solution for clients who are seeking estate planning needs. It comes with lapse protection rider which provides guaranteed death benefit throughout the second insured’s lifetime.
  4. UL Protector IV provides guaranteed lifetime protection at an affordable price. The lapse protection rider can range from a few years up to a lifetime.
  5. UL Provider Edge is another low-cost, versatile universal life policy. It offers optional death benefit guarantees, cash value accumulation, chronic illness rider and targets affordable premium rates.

UL Highlights

  • Issue ages: 0–85
  • Minimum face amount: $25,000
  • 10-year no-lapse guarantee (UL Accumulation only)
  • Three available death benefit options
  • Automated income feature which simplifies the process of client’s withdrawals
  • Over-loan protection

Indexed Universal Life Insurance

Indexed universal life has the same features as the traditional UL. When paying your premium, a portion goes to pay for the cost of insurance and the remainder is going to earn interest in a crediting account. The cash-value growth in IUL is linked to a stock market index, which gives you the potential to yield higher interest rates than the fixed rate provided by a traditional UL.

You get the best of both worlds. If the market goes in your favor, you will capitalize on earning a higher interest rate, and if it goes south, you will receive 0% for that year. It will never be negative earnings as it always has a floor at 0%.

  1. IUL Accumulation helps clients to achieve diversity on the other investment account by implementing an interest rate growth opportunity from three options: Fixed account, S&P total return, or S&P price return.
  2. IUL Flex II is geared to the budget-conscious individuals who are looking for growth but dislike the volatility in variable universal life. It presents affordable coverage with the opportunity for cash growth accumulation.

IUL Highlights

  • Issue ages:20–85
  • 10-year no-lapse guarantee
  • Minimum face amount: $100,000
  • Three available death benefit options
  • Automated income feature, which simplifies the process of client’s withdrawals
  • Living benefit rider included
  • Three account options:
    • S&P price return index-linked
    • S&P total return index-linked
    • Fixed account – 2%

Optional Riders

  • Children’s insurance: Allows adding term coverage on a child with benefits ranging from $5,000 to $25,000.
  • Conversion extension: Allows the insured to convert the policy at the end of the initial term period or the age of 70 instead of the first seven years on the 10-year plan or first 12 years on the 15-year plan. (See above policy conversion periods.)
  • Waiver of premium: If the insured is disabled, Principal will waive your premium and keep the policy active.
  • Accelerated benefit: Allows the insured to tap into 75% (up to $1,000,000) of the death benefit if diagnosed with a terminal illness. There is no cost for this rider.
  • Extended no-lapse: Guarantees the policy will not lapse before the lesser of 35 years or age 95
  • Life paid-up: Provides no-lapse protection in the event of large outstanding loans. Added on all policies where approved by the states in which it is sold
  • Cost of living increase: Allows the insured to increase the death benefit without proving insurability based on fluctuations in the Consumer Price Index (CPI)

*Note: Riders are not available on all plans*.

Related: What are life insurance riders?

Principal’s Underwriting Strengths

life insurance underwriting strengths

This is the part where a broker can be an asset for a client who wishes to find the best life insurance for him/herself. Every carrier on the market has its unique way of underwriting a client for a coverage. For instance, one company will rate you Standard for using a high blood pressure medication even if the hypertension is under control, while others rate you Preferred for the same condition.

A broker will ask you a few questions about your health, driving record, and family history among a few others and only then recommend a carrier which has the highest chance to approve your coverage at the best possible rate. Principal Life has a few strengths that make it an excellent choice for many.

Automatic Standard Approval Program

The Automatic Standard Approval Program (ASAP) is designed to boost a low substandard rating to a standard when possible. It’s only available on their permanent products, and the applicant can’t be rated lower than table 3. For instance, an applicant with diabetes, hypertension, and cholesterol has a table 3 risk. With this program, he may qualify for a standard rate which translates into 75% in savings.

Healthy Lifestyle Credits

Principal’s Healthy Lifestyle Credits (HLC) is a way of rewarding individuals who are not in perfect health but are doing the right thing to improve their health by controlling or limiting lifestyle choices. They use a scoring system for a few underwriting factors to determine the overall score by positive points for favorable health results and negative points for less desirable.

The combined score is called Healthy Lifestyle credit score. For example, an applicant falls outside of the weight guideline and should be rated table 2. However, he has no family history risk and is not on any high blood pressure or cholesterol drugs. Therefore, he gets a standard rate instead of table 2.

Accelerated Underwriting

The Accelerated Underwriting process eliminates the lab testing and paramedic exams, and most cases are issued within 48 hours. However, this process is reserved for the healthiest applicants and only about 50–60 percent may qualify. If they don’t qualify, a traditional underwriting process, which includes an exam, will take over.

Banner and North American both offer a similar process, however, with Banner, you must be between the ages of 20 and 40 to qualify for a one-million-dollar policy, and with North American, you must be between the ages of 18 to 50. Principal Life is a superior option if you are over the age of 50 and need that much in coverage.

  • Issue Ages: 18–60
  • Face amount: $50,000–$1,000,000

Principal vs. Other Carriers’ Sample Monthly Rates

sample rates

Male 20-year Term $250,000

 CompanyAge 30Age 40Age 50Age 60
 Protective $13.12 $17.85 $41.50 $111.59
 Banner $13.33 $19.26 $40.85 $111.13
 AIG $13.54 $19.38 $42.73 $114.74
 Foresters $13.56 $18.81 $42.66 $114.84
 Lincoln$13.56 $18.38 $46.55 $190.53
 Mutual of Omaha $13.56 $20.08 $46.55 $134.05
 Principal $14.66 $19.03 $42.61 $110.03
 SBLI $14.79 $21.67 $51.68 $147.70
 Transamerica $20.34 $26.45 $51.17 $135.88
 Prudential $20.34 $24.50 $45.50 $128.84

Female 20-year Term $250,000

 CompanyAge 30Age 40Age 50Age 60
 Protective $11.83 $15.27 $31.18 $77.61
 Banner $11.74 $15.67 $31.17 $78.83
 AIG $11.81 $18.51 $35.59 $89.66
 Foresters $12.47 $16.63 $31.94 $85.97
 Lincoln$12.08 $16.14 $32.77 $160.13
 Mutual of Omaha $12.64 $19.21 $36.05 $94.02
 Principal $13.13 $16.63 $32.90 $77.92
 SBLI $13.31 $18.99 $36.46 $90.37
 Transamerica $13.98 $21.72 $40.64 $110.51
 Prudential $17.28 $22.53 $40.03 $89.25

Male 20-year Term $500,000

 CompanyAge 30Age 40Age 50Age 60
 Protective $20.21 $28.38 $75.68 $205.97
 Banner $20.12 $32.68 $74.39 $205.97
 AIG $20.24 $30.62 $77.76 $213.57
 Foresters $21.00 $31.50 $79.19 $223.56
 Lincoln$21.00 $30.28 $78.71 $214.33
 Mutual of Omaha $21.61 $33.42 $85.05 $249.55
 Principal $22.75 $31.50 $78.66 $213.50
 SBLI $21.32 $36.92 $96.06 $286.85
 Transamerica $23.65 $43.00 $95.46 $253.70
 Prudential $33.25 $41.56 $83.56 $250.25

Female 20-year Term $500,000

 CompanyAge 30Age 40Age 50Age 60
 Protective $17.63 $24.94 $55.47 $139.32
 Banner $17.11 $25.49 $55.47 $145.00
 AIG $17.21 $27.16 $63.06 $163.40
 Foresters $18.81 $27.13 $57.75 $165.81
 Lincoln$18.16 $26.16 $58.41 $148.05
 Mutual of Omaha $18.99 $28.61 $64.05 $169.93
 Principal $19.69 $26.69 $59.24 $149.27
 SBLI $19.14 $29.67 $65.87 $173.03
 Transamerica $19.78 $34.83 $73.10 $204.68
 Prudential $27.13 $37.63 $72.63 $171.06

Male 20-year Term $1,000,000

 CompanyAge 30Age 40Age 50Age 60
 Protective $33.97 $51.17 $142.33 $396.03
 Banner $37.84 $58.48 $140.61 $406.63
 AIG $34.95 $53.98 $144.80 $418.14
 Foresters $34.13 $56.00 $150.50 $438.38
 Lincoln$49.00 $70.00 $147.70 $418.78
 Mutual of Omaha $37.80 $59.68 $161.18 $481.43
 Principal $38.50 $55.56 $147.88 $418.78
 SBLI $35.24 $56.03 $147.73 $457.62
 Transamerica $39.56 $80.84 $178.02 $483.32
 Prudential $48.56 $70.44 $157.94 $467.69

Female 20-year Term $1,000,000

 CompanyAge 30Age 40Age 50Age 60
 Protective $28.81 $43.43 $101.91 $267.03
 Banner $28.72 $50.09 $110.51 $294.55
 AIG $28.89 $47.92 $117.12 $309.15
 Foresters $29.75 $47.25 $107.63 $322.88
 Lincoln$38.50 $53.38 $108.50 $283.33
 Mutual of Omaha $31.68 $50.93 $119.18 $324.80
 Principal $32.16 $46.81 $108.94 $283.50
 SBLI $29.67 $44.28 $104.57 $272.92
 Transamerica $32.68 $65.36 $139.32 $388.72
 Prudential $37.19 $59.94 $124.69 $319.81

*All rates quoted on this page are for a super-preferred healthy individual who does not use tobacco. Monthly rates are updated as of Aug 2018 and are subject to underwriting approval.*

Bottom Line

Principal is a superb company with amazing financial ratings and one of the best universal life policies on the market. If you are in the market for universal life, Principal is a good choice.

Their term rates are competitive price-wise for over 55 years old, but the minimum amount for coverage starts at $200,000, so if you need less than that, you may need to look somewhere else. For individuals under the age of 55, you will find other companies with better rates. Keep in mind that you should not apply to one company because they have the lowest quotes.

You may not qualify for the prices once the underwriter reviews your application. You could be rated higher or get declined. Choosing the best life insurance for your situation by yourself can be a daunting process. Let us do this for you. You can give us a call at 866-326-3053 for an unbiased quote or go ahead and run the quotes on this page to see if Principal might be the right company for you.

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2018-09-03T06:26:59+00:00August 22nd, 2018|Categories: Company Reviews|0 Comments

About the Author:

Ron is a licensed life & health insurance broker. He has two amazing rescued Pitbulls. He also enjoys real food, heavy squats, critical thinking, and reading.

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