Principal received an honorable mention on the list of Good Financial Cents Best Life Insurance Companies.
They are very solid financially and are a great option if they have the best rates when you run your quotes.
Principal Life Insurance Company
The History of Principal Life Insurance Company
The Principal Financial Group – also known as The Principal – was founded in 1879. This global investment management leader has been offering individuals and companies financial and insurance solutions for more than 135 years.
Since its founding, the company has grown considerably – today having more than 14,800 employees worldwide – of which roughly 10,000 are in the United States alone. The Principal is a stock company, and it trades on the New York Stock Exchange under the ticker symbol PFG.
Principal Life Insurance Company Review
Although it is known worldwide, the Principal is bound by one common purpose, and that is to provide its customers with the financial tools, resources, and information that they require to live the best lives that they can.
The Principal offers insurance, investment products, and retirement plans to both individuals and businesses. This large insurer currently has more than 19 million customers around the globe in 18 countries, and it holds more than $547 billion of assets under management. Its products and services are provided by a diverse network of companies and advisors.
This carrier has been noted as one of the World’s Most Ethical Companies, as well as One of America’s Best Employers, and the #3 Greenest CRE Company. It has also attained some additional accolades, including:
- #1 Provider of Defined Benefit Retirement Plans
- #1 Record Keeper of Employee Stock Ownership Plans
- #1 Provider of Nonqualified Deferred Compensation plans
The Principal provides a great deal of information about its products and services on its website. Customers can also reach a customer service representative if they need help or if they have a question or a concern. A representative can easily be reached via a toll-free phone line, as well as via email.
Financial Strength and Ratings of Principal Life Insurance Company
The Principal has an excellent reputation as far as paying out it claims to its insurance policyholders.
Because of this, it has been provided with very high ratings from the insurer rating agencies.
These include the following:
- A+ (Superior) from A.M. Best
- AA- (Very Strong) from Fitch
- A1 (Good) from Moody’s Investors Service
- A+ (Strong) from Standard & Poor’s
Life Insurance Products Offered by Principal Life Insurance Company
Principal Life Insurance Company offers both term and permanent life insurance solutions. This can help its customers to better plan for their specific coverage needs when planning for the protection that they require – regardless of the stage of life that they are in.
Term Life Insurance Coverage through The Principal
With term life insurance, pure death benefit only coverage is provided, without any cash value or investment build up included in the policy. Because of that, term life insurance can often be more affordable than permanent coverage – primarily if the applicant is young and in good health. This can allow for the purchase of a larger amount of protection at an affordable premium price.
Term life insurance is often thought of as being “temporary” life insurance protection. This is because it is purchased for certain periods of time – or “terms” – of coverage such as for ten years, 15 years, 20 years, 25 years, or even for 30 years. However, when the term of coverage expires, it is necessary for the insured to purchase a new policy, at their then-current age and health condition, if they want to remain insured. However, in some cases, a term life insurance policy may offer a conversion feature whereby the insured may convert his or her policy over to a permanent form of life insurance. The Principal offers this feature on many of its term life insurance policies – and the insured will not need to provide additional evidence of insurability.
Permanent Life Insurance Coverage Through the Principal
Permanent life insurance coverage provides death benefit coverage, and it also has a cash value component as a part of the policy. The death benefit in a permanent policy will last for the remainder of the policy holder’s life. So, unlike a term policy, there is no time limit. As long as the premium is paid, the policy will remain in force.
The cash value in a permanent life insurance policy is allowed to grow on a tax-deferred basis. What this means is that there is no tax that will be due on the growth of the funds within the cash value until the time that the funds are withdrawn.
The Principal offers three key types of permanent life insurance policies. These include the following:
Universal Life Insurance Coverage
With universal life insurance coverage, there is death benefit protection, as well as cash value build up. A universal life insurance policy is flexible regarding the premium payments, as well as its death benefit protection. It can also provide flexibility concerning when the policyholder pays the premium (within certain guidelines).
With this type of life insurance policy, the cash value can accumulate based upon a floating rate of interest – yet it will have a minimum rate guarantee. In some cases, these policies may also include a secondary interest rate guarantee for even more security.
Variable Universal Life Insurance Coverage
Variable universal life insurance coverage also offers a death benefit, along with a cash component. However, the cash component policyholder be more aggressive by choosing from a variety of different market linked investments. This can allow funds to grow a great deal more, based on market performance. It can also, however, mean that there is more risk involved. With that in mind, it is important to be aware of risk tolerance before moving forward with a variable insurance product.
As with other types of permanent life insurance, a variable universal life insurance policy will also allow the policy to obtain the benefit of tax-deferred growth within the cash component. In addition, the policy holder will be allowed to either borrow or to withdraw the funds that are in the cash component for whatever need he or she has if they choose to do so.
Also, with this type of policy, the policyholder is allowed to convert the cash value to an annuity for income that he or she cannot outlive. This can help to alleviate the worry in retirement about running out of income – a fear that is held by many retirees today due in large part to our longer life expectancies.
Survivorship Life Insurance Coverage
A survivorship life insurance policy will cover two lives rather than just one. This can be less costly than purchasing two separate life insurance policies. The survivorship plans that are offered by The Principal will pay at the death of the second insured individual. These policies are frequently used for estate planning purposes to leverage various tax deductions.
Other Coverage Products Offered
In addition to life insurance, the Principal Life Insurance Company also offers other types of insurance coverage products. These include the following:
Disability Income Protection
A disability income insurance policy from The Principal can help an individual to protect their financial health from the loss of his or her income due to an injury or an illness.
While many people may think that their most valuable asset is their home or their retirement plan, it is their ability to earn an income. This is because, without the ability to earn, most other assets would be impossible to obtain or to keep.
It is estimated that one in four people who enter the workforce today will become disabled before the time that they retire. Therefore, protecting their income with a disability income policy can be a way to ensure that living expenses will still be paid over time.
With Principal, you can get a plan with as much as $20,000 in monthly benefits. One unique factor is you don’t have to be totally disabled to receive the benefits.
You can choose elimination periods as short as 30 days and benefit periods as long as 5 years. The plan is guaranteed renewable and non-cancelable, which means you don’t have to worry about losing protection.
Principal has a handful of benefits they include with their disability plan at no cost to the policyholder. One unique advantage of Principal’s plan is the death benefit, which will pay out a lump sum if the policyholder passes away while claiming the plan.
They also include a waiver of premium rider, a benefits update rider, future benefit increase rider, and several more benefits.
They also sell several additional riders you can add. They have four options to choose from:
- Transitional occupation rider
- Residual disability and recover
- Regular occupation
- Rehabilitation benefit
Because of the rates and the benefits of the policy, Principal is one of the most popular options for disability coverage.
Retirement Savings Protection
In addition to just becoming disabled and not being able to earn an income, contributing to a retirement savings plan can also stop if a person is unable to work. Therefore, with retirement savings protection, contributions into retirement savings can continue while a person is not able to work because of a disabling illness or injury. With The Principal’s retirement savings protection, policy holders can insure “what could be” from “what if.”
Annuities from Principal Life
Buying an annuity is an excellent way for you to supplement your retirement income. If you’re shopping for annuities, it’s important that you find the perfect company for you. On top of all of the insurance products, Principal Life also has several types of annuities that they sell. They have four different types that you can invest your money in, depending on what your investment risk is.
The four types are:
- Fixed Annuity
- Income Annuity
- Indexed Annuity
- Variable Annuity
With a fixed annuity, you can choose how your money grows and select from a couple of different benefits. These annuities allow you to choose from a quick death benefit, emergency access, and IRS minimum distribution notification.
There are two separate types of income annuities that are slightly different. Principal has Immediate Income Annuities and Deferred Income Annuities. The Immediate Income Annuities are designed for those that are looking to start getting income in retirement in the next 12 months. As you can probably guess, Deferred Income Annuities are for those that are looking for guaranteed income in the next 13 months or longer.
The next time is the indexed annuity. These annuities are going to give you investment safety, but without sacrificing the potential for more growth. The rates are linked to one or more equity-based indices.
Variable annuities allow you to save for retirement by getting growth that is based on market performance with different kinds of payout options. They have flexibility withdrawal options with tired surrender charges. They also offer some living benefit riders that can protect you from any risk of the market crashing and give you some additional benefits before you start taking withdrawals. A unique benefit that Principal offers with their variable annuities is the Deferred Income Rider, which lets you transfer money from your accumulated value to create more income payments, without having to pay any additional fees.