UPDATED: Nov 30, 2018
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About Principal Life Insurance Company
The history of Principal goes back to the founding of Bankers Life Association in 1879 in Iowa. The company initially offered life insurance policies on a membership basis to men between the ages of 22 and 55 who were low risk – in good health and not in a high-risk occupation. This approach served them well, as growth in the first decade hit $29 million in life insurance policies and necessitated a move to a larger building in Des Moines, Iowa.
In 1909 the company reorganized to form a mutual insurance company, another successful move that brought the company safely through the Depression. Growth again led to the need for a new headquarters, and the current headquarters was built in Des Moines in 1939.
In 1941 Bankers began writing group health insurance, which became a large portion of their sales in the following years. In 1985 the company started using the name Principal Financial Group; this was followed by global expansion into new markets. An underlying company and the biggest part of the new financial group, Bankers Life become Principal Mutual Life Insurance Company around the same time. In 2001 Principal left behind its mutual association roots and became a publicly traded corporation.
Today Principal employs around 9,000 people in Des Moines alone, owns several buildings in the downtown area and has naming rights to several city landmarks. They also sponsor a PGA golf tournament, the Principal Charity Classic. Principal ranked at number 210 on the Fortune 500 in 2018.
Principal products are offered to individuals as well as to groups through employer benefit plans. The list of employee benefits is much longer than what’s offered to individuals directly, and its likely Principal brings in much more business that way. Individual products are heavily weighted towards retirement planning.
While the company headquarters remain in Des Moines, Principal offers its products across the U.S. and in a total of 18 countries around the world.
Principal’s products are divided into individual and group categories. Group benefits are designed to be offered as voluntary employee benefits and are only available through employers that choose to provide those benefits. Individual products are available to the general public, but they are more limited in selection. First, we will take a look at the individual product options, then take a look at what you might be offered as group benefits.
There are a handful of insurance products in the individual category and many investment and retirement planning options.
Term life is offered in 10, 15, 20, or 30-year term lengths, and all of the policies are convertible to a permanent policy. There is also a one-year term renewable policy available.
The website does not give minimum or maximum death benefit amounts, and in fact, there is little detail at all on the term life products. It was not until we went into the quoting section that we were able to glean a little more information. The death benefit field allows entries of amounts between $200,000 and $50,000,000 for term life. That is an extremely high maximum amount of insurance. We will take a closer look at the quoting system in our section on rates.
Principal has three options for permanent life: Universal, Variable Universal, and Survivorship.
Again, details on these policies are limited to a brief description of each. There are not any issue age limits, death benefit amounts, or other details found on the site. As before, we went into the quoting system where the same upper and lower limits for death benefits were presented as those we saw on the term policy.
Visitors to the site are, instead of being provided with easy to access details, referred to a financial advisor for a complimentary consultation.
Principal Life’s annuity options are more diverse than their life insurance selections, with a choice to meet the needs of every investor from immediate needs to long-term planning.
While there are more options, there is not much more detail offered on the annuities than there is for the life insurance plans. Basic overviews of the functions of each and the needs they serve are provided.
Principal’s annuities are:
Fixed Annuities, which offer a guaranteed return of premium and guaranteed interest rates. These also offer tax advantages, flexible access, and emergency access to funds.
Single Premium Deferred Annuities, with a lump sum contribution that will provide income later in life. These are available with a variety of options including different guarantee periods and other features.
Income Annuities, including Immediate to provide income within 12 months while continuing to grow the original investment, and Deferred to provide income later in life. These annuities also have a variety of options to choose from, including:
- Fixed period or fixed amount payouts
- Refund terms for remaining balance
- Joint and Survivorship options
- Monthly, quarterly, or annual payment choices
- Inflation protection
- Liquidity Rider
Indexed annuities, which link your investment to a particular index offering a competitive interest rate for a low-risk investment that still offers growth. These have a guaranteed lifetime income and a guaranteed death benefit as well.
Variable Annuities, which offer more opportunity for growth by using varying investments and rates of return based on market performance. These also have a guaranteed lifetime income and have the option of both a living benefit rider and a deferred income rider.
Principal offers retirement savings plans both for individuals and through employers. They manage both 401(k) and 403(b) plans and can also assist with rollovers into an IRA or a new 401(k) plan.
Principal offers both traditional and Roth IRA options, and retirement funds can be rolled over into either one.
Additionally, Principal assists with investments in mutual funds and setting up of personal trusts for a comprehensive approach to savings and investment.
Disability Income Protection
Principal’s disability insurance program is offered to individuals to provide income when a disability renders the insured unable to work. Customized coverage options are available to adjust the plan to meet your needs.
There is a Retirement Savings Protection rider also available. This rider can be added to the disability plan to continue contributions to retirement savings even when you are unable to work.
Employee benefits programs through Principal include retirement savings and insurance benefits. These are voluntary benefits that allow the employee to take advantage of the benefits of a group plan, such as lower rates while obtaining the coverage they want.
Principal has a list of group insurance options that employers can select to offer to their employees.
Group Disability is available with long-term and short-term options. Benefit options are flexible, with short-term ranging from 40 – 66 2/3% and long-term ranging from 40 – 60%. The long-term disability plan can be integrated with individual coverage for additional benefits. These plans also allow part-time work while receiving benefits and cover for both partial and full disability.
Group Life plans are also flexible, with the option of both employer-paid and employee-paid policies. Either plan offers a range of options including:
- Guaranteed issue
- Spouse/dependent coverage
- Terminal illness rider
- Waiver of premium options
- Accidental Death and Dismemberment (AD&D)
- Express claims processing for amounts under $50,000
Employer-paid plans can be a flat amount or multiples of salary, with a maximum of $1 million. Employee-paid plans offer coverage up to $500,000. There are options for both plans to be portable in the event of a job change, and the two can be combined.
Dental & Vision Insurance can be offered either separately or together. Benefits include both in and out of network coverage and fully covered preventative care. The dental plan allows a selection of deductibles and co-payment amounts for flexibility.
When combined, the dental and vision plans offered integrated administration and service.
Critical Illness and Accident Insurance are both offered to provide financial protection in the event of a serious illness or an accident. These pay out benefits that can be used for any purpose and combined with disability benefits.
Group Retirement Plans
Principal works with employers to administer a variety of investment and retirement plan options for employees. These include:
- 401(k) and 403(b)
- Employee stock ownership plans
- Nonqualified deferred compensation plans
- Pension plans
Principal offers a quick quote option for individual life insurance on their website, including both term and permanent coverage.
The quoting system asks the usual questions about age and tobacco use, but also requests height and weight; this is unusual. While height and weight are often used as indicators for rating, it is rare to see them in a quoting system online. It is likely that a BMI is determined and used as part of the rate quote.
Since we do not normally enter those values in our quotes, it may affect how the rates we returned compare to other companies. We quoted a 30-year-old male in California, non-tobacco, 6’ tall and 200 lbs.
The term rates returned for a base policy amount of $200,000 (the lowest offered) were $10/month for a 10-year term, $13 for a 20-year, and $18 for a 30-year.
We then boosted the coverage to $1 million. The ten-year term returned a rate of $22. A 20-year term had a rate of $36 a month, and a 30-year term came in at $63.
Finally, we quoted permanent life insurance at both $200,000 and at $1 million. The rate for $200,000 in coverage came to $94 a month, while the $1 million in coverage came to $425 a month.
Overall, most of these rates are well within the bounds of what we have seen at other companies for similar policies. The term rates, in particular, are very reasonable – we usually quote a $100,000 policy (not offered here) and see similar rates, which makes these plans a good value.
We found the claims information on the Principal site to be difficult to locate. The website does not offer a dedicated claims page nor does it provide a link off the main page to find this information quickly.
Claims information is buried in the help section of the website, where there is a brief Q&A. This section provides a claims phone number for life insurance at 800-331-2213. There is not another option offered for assistance with a life insurance claim.
A different phone number, 800-422-3788 is provided for disability claims. This line is only available during business hours and an email option is also provided for disability claim assistance.
Another perusal through the help section led us to the forms download area, where both life and disability insurance claim forms can be downloaded, along with several other forms.
While all of the basic information for getting a claim submitted is present, it is not easy to locate and very minimal.
The Principal Website
Overall, we found the Principal website easy to navigate. It offers a lot of basic information, including overviews of different products and advice articles on investments and insurance. The site has a clean look and is less bloated with unnecessary information than some other financial websites we have seen. We would like to see more detail on the products themselves and less general information, however, a problem that is not uncommon.
The online quoting system is easy to use, and the height and weight entries may help return more accurate quotes and avoid surprises later. The system allows you to either enter the amount of coverage you want or do a calculation of your life insurance needs. It works smoothly and provides helpful results.
As we have already noted, the main issue we would like to see improved with this company’s online service is the access to claims information. A main claims tab that takes visitors directly to the information they need is something we want to see from every insurance company.
Ratings and Consumer Reviews
Principal Financial Group has an A+ rating with the Better Business Bureau (BBB), where they have been accredited since 1948. There are 83 complaints on file in the past three years, with 28 of those closed in the past 12 months. This is a small number for a company as large as Principal.
Yelp has 27 reviews of Principal with an overall one-star rating. The complaints all cite a poor customer service experience, with difficulty obtaining clear answers. There are also several complaints about difficulty with dental insurance claims being denied.
While it is always a little concerning to see the same complaints repeated for one company, the overall number of complaints is again very low. We found very few customer complaints about this company in general with none listed on the more common insurance review sites. This may be in part due to their heavy involvement in group policies, where many policyholders may have turned to the HR department to resolve an issue rather than posting a review or complaint online.
The Bottom Line
Principal Financial Group is a large company that relies on group insurance policies for a lot of their business. They have reasonable rates for their life insurance policies, particularly term life and even at high benefit amounts, which is likely to appeal to those who need a large amount of coverage.
We found nothing of major concern in the reviews of this company, although it does appear that some policyholders struggle with getting assistance from customer service, particularly for group benefits. Overall, though, Principal has a solid reputation and a solid financial footing.
For a list of companies that we recommend, visit our Best Insurance Companies page.