Life insurance has existed for centuries. Customers value stability and reliability. So naturally, the industry does not change quickly.
In recent decades, however, many life insurance companies have started working harder to attract younger applicants by streamlining the process of getting coverage.
Principal Financial Life Insurance has been one of the leaders in this process. Let’s take a closer look at the company’s policies in this review.
Guide to Principal Life Insurance:
Overview of Principal Financial Life Insurance Coverage
Life insurance should be an easy sell to younger applicants such as millennials.
Younger people have had less time to save money and become financially independent.
And life insurance exists to provide more financial freedom for your family if you died and could no longer continue your journey to financial freedom.
Plus, life insurance rates tend to be lowest when you’re young and healthy. So why doesn’t every millennial have life insurance coverage in place right now?
I think it has a lot to do with the hassle and red tape you have to cut through to get covered.
Principal Financial’s Life Insurance Niche
Part of the red tape traditionally involves needles, a body-mass index calculation, and a blood pressure cuff — that’s right, the medical exam.
In most cases, you’ll need a medical exam to prove you’re healthy enough for affordable life insurance.
Sure, you could skip the exam, but then you’d automatically be categorized with applicants who have weight problems, a chronic illness, or high cholesterol which means you’d pay more.
Principal Financial has created a sweet spot for people ages 35 to 55 who want a large term policy to go through the entire underwriting process without taking a medical exam.
Instead of relying on the exam, Principal’s underwriters can check a battery of online databases which would let them know if you’d been diagnosed with a serious illness or had relied on medication to control a chronic condition.
Unless the databases flag your application, you can have quality, medically underwritten coverage in place within 48 hours. This was unheard of just a decade ago.
Haven Life has a similar program for qualified applicants, but overall, insurance companies do not usually let you access low rates without a medical exam. Principal Financial is at the forefront of the changes in the life insurance industry.
Of course, many applicants won’t make the cut for this innovative program. They can still get coverage through the traditional underwriting process which includes the medical exam.
This route will usually require 30 days before you get a decision about your coverage.
Principal Financial Ratings
Ease of access won’t help if the insurance company doesn’t have the quality coverage you need. Fortunately, it’s safe to report Principal Financial, which has existed since 1879, has the stability to pair with its innovation.
The company consistently gets high marks from A.M. Best and other agencies that analyze life insurance companies and issue financial ratings. Principal also gets the highest rating from the Better Business Bureau.
This doesn’t mean you can’t possibly have a customer service problem — it just means Principal has consistently worked to resolve customer service complaints.
Deciding where to buy life insurance is an important decision, and it could impact your family’s financial freedom for years to come, so I always encourage people to do their own research along with reading reviews like this one.
Principal Life Insurance Policy Options
The first big decision most life insurance shoppers face will be determining the best policy type. Ultimately, policies fit into one of these two types:
Principal Term Life
These temporary policies last for a specified period of time. Principal offers 1-, 10-, 20-, and 30-year terms. When your term expires, you’ll have to make other plans for your life insurance needs.
Term policies offer the most efficiency — you can get a lot of coverage for a low rate, depending on your health and other personal factors.
Principal Whole Life
Whole life policies can last the rest of your life, assuming you keep the premiums up to date. These policies also feature a separate cash component which gradually gains value over time.
You can decide how to use this value: as a savings tool, for investing, or to interact with the mechanics of your coverage to lower your premiums or increase your policy’s death benefit.
Choosing The Right Life Insurance Policy
I usually steer young people with young and growing families toward term life, but you could also make a case for whole life, which insurers sometimes call permanent coverage.
Term life makes the most sense because it costs less and because younger people usually haven’t had enough time to save a large sum of money. They need more life insurance in case the worst happens.
Once you’re older and less dependent on your income, you’ll probably need less — or maybe even no — life insurance coverage. In that case, a whole life policy with its flexibility and added cash value will make more sense.
Again, you get to decide based on your individual needs. Principal Financial Life has great options across the board — from simple term to more complex universal whole life policies.
Customizations For Your Principal Policy
Deciding on whole or term life insurance won’t be your final decision. You’ll also have to decide:
Term policies unlock the highest coverage amounts, but you’ll pay more for more coverage and for longer terms.
- To decide on a term length: Think about how long you’ll need the coverage in place. If your kids will be financially independent in 15 or so years, a 20-year term may be enough. Principal has 10-, 20-, and 30-year terms. The company’s 1-year term is more of a stopgap — a way to insure yourself while starting a new business that depends on your personal finances to survive, for example.
- To decide on a coverage amount: Most advisors suggest having enough life insurance coverage to replace your salary for seven to 10 years. You may want to add even more coverage if you have a new, jumbo mortgage or if you expect one or more of your children to attend a private grade school or university.
Principal Life Insurance Riders
In insurance-speak, “riders” refer to extras you can attach to your policy to make it more flexible. In essence, riders provide insurance for your insurance.
Principal Financial Life, for example, offers a standard assortment of riders, including:
Disability Waiver of Premium Rider
With this rider, you could keep the coverage even without paying your premiums if you become disabled. Restrictions apply, so be sure you read the rider’s language before adding this extra expense.
Child Coverage Rider
You could direct up to $50,000 of your coverage to your children without putting them through the underwriting process as separate applicants. This rider also costs extra, so consider whether you need your children covered before signing up.
In most cases, you really don’t need life insurance on your children since they don’t earn income.
Converting Your Coverage
Like many insurers, Principal lets term policyholders convert their insurance to whole life without requiring another trip through the underwriting process.
To convert your policy, check with the company’s customer service staff before your term expires or before you reach 70-½ years of age, whichever comes first.
Pros and Cons of Principal Financial
- Up to $1 million with no medical exam for qualified applicants
- A stable company offering innovative approaches to coverage
- Solid customer service and financial stability ratings
- Must work with agent or call office to start coverage process
- Applicants with health complications can’t fast-track process
Reasons to Go With Principal Life Insurance
Principal Life provides great options for life insurance, especially if you’re young and healthy and would like to get a full-size term policy of up to $1 million without a medical exam.
Principal stands out because of its ability to combine stability and innovation. But in other ways, the company still has progress to make.
For example, you’d need to work with an agent or make a phone call to Principal’s customer service staff during business hours (U.S. Central Time Zone) to start the process of getting covered.
Once you get the process going, though, you could have really good coverage really quickly. That’s a winning combination when you’re young and busy.