No one likes to think about their death, but failing to do so can mean placing a financial burden on your loved ones when you pass away. Life insurance mitigates this financial risk by providing a death benefit that can cover funeral expenses and debts after you pass away.
Originally founded 140 years ago, Principal Financial is a very old insurance company with $735 billion in managed assets. This venerable insurer enjoys a long-standing reputation for reliable life insurance and they offer a few different types of policies.
We’ll walk through Principal Financial’s life insurance options and how they differ, as well as what top professional organizations have to say about buying life insurance policies with the company.
Principal Financial life insurance
Life insurance describes a range of insurance products designed to protect the loved ones of the policyholder. The two main kinds of life insurance policies are term and permanent.
As the name suggests, term life insurance is only good for the term stated in the policy. These policy terms usually last anywhere from 10 to 30 years, but some companies let you buy a policy year-by-year. A term life insurance policy is only valuable if the policyholder dies within the policy’s term.
A permanent life insurance policy doesn’t have an expiration date—it lasts throughout the life of the policyholder, so long as the premiums are paid. This kind of life insurance can also have a cash value that gains interest as premiums are paid. Some permanent life insurance policies even allow policyholders to take out loans against the policy’s value.
Principal Financial offers both term and permanent life insurance policy options. We’ll go through each option to see how they stack up.
Types of life insurance policies offered
Term life insurance policy – Principal Financial offers one main term life insurance policy. This insurer’s term policy comes with term options of 10, 15, 20 or 30 years. Principal Financial also gives policyholders the option to sign up for a 1-year term if they only need life insurance for a short timespan. A term life insurance has no cash value aside from the benefit paid upon death within the term limit. Policyholders have the option to convert their term policy to a permanent policy, which includes a cash value.
Universal life insurance policy – This is the first of 4 different permanent life insurance policies offered by Principal Financial. A universal policy allows you to adjust the benefits and premiums while the policy is active. These adjustments can be very helpful as life situations change. With a universal policy, you’ll accumulate a cash value, but the interest rate can change quite a bit over the policy’s lifetime.
Indexed universal life insurance policy – This is a form of universal life insurance for investment-savvy policyholders. Like a regular universal policy, an indexed universal policy accumulates a cash value based on interest. But the difference is the cash value’s interest is partly linked to the gains and losses of a stock market index. The cash value included in the policy has tax benefits, as well.
Variable universal life insurance policy – This is another variation on a universal life insurance policy. Similar to an indexed universal policy, a variable universal policy focuses on investments. With a variable universal policy, you can use the policy’s cash value to directly invest in stocks and mutual funds using sub-accounts within the policy. These policies can be fairly complicated and require significant research.
Survivorship insurance – This is a restricted form of life insurance that covers two lives. The benefits associated with the policy are only paid out to beneficiaries “upon the death of the second life”. Some people chose survivorship insurance for estate planning.
Principal Financial ratings, reviews, customer satisfaction and complaints
Principal Financial is a Fortune 500® company with a good reputation. The 2019 J.D. Power Life Insurance Study gave Principal Financial a score of 4 out of 5 (“better than most”) and ranked the insurance provider fourth in the industry overall.
Principal Financial has been selling insurance policies for well over a century, and the company enjoys positive financial ratings from top professional organizations, including AM Best (A+ rating), Moody’s (A1 rating) and S&P Global (A+ rating).
Reasons why Principal Financial is a great option
The first thing people need to know about their life insurer is if the company is solvent and has the ability to pay out claims. With top financial ratings and 140 years in the business, Principal Financial is a safe bet when it comes to paying claims.
The other advantage of Principal Financial is the policy options that are geared toward people in different stages of life. Term life insurance, for example, is great for young people who can get lower premiums based on good health, because the term policy can be converted to a permanent policy later on. And survivorship insurance, for example, can be very helpful for older folks who did not get around to purchasing life insurance earlier in their lives.
Additional policies offered by Principal Financial
Aside from life insurance, Principal Financial mostly deals in global financial investment management, so they don’t offer much in terms of individual insurance policies for things like auto and home. However, the company does offer quite a few products focused on retirement planning and long-term investing.
Frequently asked questions
How do I get a quote for Principal Financial Life Insurance?
Principal Financial makes getting a quote on the cost of life insurance easy. Check out the provider’s online quote tool to get a fast estimate of how much a policy might cost. Keep in mind that the actual policy’s cost may be different than the quote.
What is a life insurance policy’s death benefit?
When a life insurance policyholder dies, the policy may issue benefits to the beneficiaries listed in the policy. This is known as the policy’s death benefit. It’s usually a lump-sum amount that’s listed in the policy, and the amount is usually taxed differently than lump-sums paid in other situations.
What’s the best life insurance company?
The best life insurance company will depend on what you’re looking for from your life insurance policy. Some people may want a cheap term life policy, while others may want a high-premium variable universal policy for investing purposes. After you know what you need out of your policy, it’s a good idea to shop around for a few quotes from different providers to find the one that works best for you.