Principal Group Insurance Review

Principal Financial Group, commonly referred to as Principal, is a global financial investment management and insurance company. Established in 1879, Principal has grown to become a leading provider of retirement, insurance, and asset management services. This article aims to provide a comprehensive review of Principal’s background, insurance products, pricing structure, claims process, customer service experience, market reputation, financial stability, and customer reviews.

1. Background of Principal Financial Group

Principal Financial Group was founded in Des Moines, Iowa, as Bankers Life Association in 1879. Over the years, it has evolved into a multinational corporation providing a wide range of financial services, including insurance, retirement, and investment products. The company operates in over 80 countries, serving millions of customers globally.

Principal's mission is to help individuals, businesses, and institutions achieve financial security and long-term success. It has a diversified portfolio, making it a prominent player in the financial services industry. Principal has consistently been listed on the Fortune 500 and is recognized as a leader in retirement plans and insurance products.

2. Insurance Products Offered by Principal

Principal Financial Group offers a broad spectrum of insurance products, primarily focused on life insurance and disability insurance. Here’s an overview of the main insurance products:

A. Life Insurance

Principal offers different types of life insurance policies that cater to a variety of needs:

1. Term Life Insurance: A straightforward life insurance policy that offers coverage for a specified period, usually 10, 20, or 30 years. It is ideal for individuals looking for affordable coverage for a set period, such as during their working years.

2. Universal Life Insurance: This policy combines life insurance with an investment component. It offers flexibility in premium payments and death benefits. Universal life insurance provides permanent coverage as long as premiums are paid.

3. Indexed Universal Life Insurance: This is a variation of universal life insurance where the policy’s cash value is tied to a stock market index (e.g., the S&P 500). It offers potential growth based on market performance, although it typically has limits on both gains and losses.

4. Variable Universal Life Insurance: This policy allows policyholders to invest the cash value in various market options, giving them the potential for higher returns but also subject to greater risk.

B. Disability Insurance

Principal’s disability insurance policies provide income protection in case a policyholder is unable to work due to illness or injury:

1. Individual Disability Insurance: This policy replaces a portion of the policyholder’s income if they become unable to work due to a disability. It provides financial protection for daily expenses during recovery.

2. Business Overhead Expense Insurance: This insurance is tailored for business owners. It covers the operating expenses of a business, such as rent and utilities, if the owner is unable to work due to a disability.

3. Disability Buy-Out Insurance: In case a business owner becomes disabled, this policy allows other partners or stakeholders to buy out their interest in the business.

3. Pricing Structure

Principal’s insurance policies are priced competitively, though individual premiums depend on several factors, including age, health, coverage amount, and the specific type of insurance chosen. Here’s a closer look at how the pricing structure is determined:

A. Term Life Insurance Pricing

Term life insurance policies are generally the most affordable option. Premiums for term life insurance vary based on the policyholder’s age and the length of the term. For example, a 30-year-old non-smoker in good health might pay around $20 to $40 per month for a $500,000, 20-year term policy.

B. Universal Life Insurance Pricing

Universal life insurance policies are more expensive than term policies because they provide lifetime coverage and include an investment component. Pricing for these policies can range widely depending on how much premium flexibility is desired and the level of cash value growth expected.

C. Disability Insurance Pricing

Disability insurance is priced based on the policyholder’s occupation, income, age, and health. Occupations that involve more physical risk (e.g., construction workers) will have higher premiums than desk jobs. For an average individual, disability insurance premiums might range from 1% to 3% of the insured income.

4. Claims Process

Principal has a straightforward and transparent claims process, which is a significant advantage for policyholders. Here’s an overview of the steps involved:

1. Notification: Policyholders or beneficiaries must notify Principal about the event (death, disability, etc.) that triggers the claim.
2. Documentation: The required documentation, such as medical reports or a death certificate, must be submitted. Principal provides detailed guidance on what is needed for different claims.
3. Review and Processing: Once all the necessary documentation is received, Principal reviews the claim. The processing time varies depending on the complexity of the claim. Most life insurance claims are processed within 10 to 14 business days.
4. Payout: Once approved, the payout is made to the beneficiaries or the insured individual.

Policyholders generally report a smooth claims process, though some customers have expressed concerns about the processing time for more complex claims, such as disability insurance.

5. Customer Service Experience

Principal Financial Group is widely regarded for its customer service. The company offers multiple channels of communication, including phone support, online chat, and an extensive FAQ section on their website. Principal has a dedicated customer service team that helps customers with policy inquiries, claims, and billing questions.

Pros of Principal’s Customer Service:

• Responsive: Most customers report quick response times from Principal’s customer service team.
• Helpful Representatives: The representatives are knowledgeable and guide customers through complex insurance and financial matters.
• Digital Tools: Principal offers an intuitive online portal where customers can manage their policies, make payments, and track claims.

Cons:

• Some customers have mentioned wait times when calling during peak hours.
• A few reviews have pointed to difficulty in resolving more intricate issues that require specialized attention.

6. Market Reputation

Principal Financial Group has earned a solid reputation in the insurance and financial services market. It consistently ranks as a top provider of retirement plans, life insurance, and disability insurance. Principal’s commitment to corporate responsibility, diversity, and sustainability has also enhanced its image in the market.

Key Accolades:

• Fortune 500 Company: Principal has been a regular on the Fortune 500 list, highlighting its financial strength and market presence.
• Top Retirement Plan Provider: Principal is consistently recognized as a leader in offering retirement plans, particularly for small and mid-sized businesses.
• Strong Financial Ratings: Principal holds high financial strength ratings from major rating agencies, which underscores its ability to meet its obligations to policyholders.

7. Financial Stability and Regulatory Compliance

Principal’s financial stability is one of its core strengths. The company has consistently received high ratings from major credit rating agencies:

• A.M. Best: A+ (Superior)
• Moody’s: A1 (High Quality)
• Standard & Poor’s: A+ (Strong)

These ratings reflect Principal’s robust financial foundation and its ability to pay out claims, even in times of economic uncertainty.

Additionally, Principal complies with all regulatory requirements and maintains transparency in its operations. The company is overseen by various regulatory bodies, including state insurance departments and the Securities and Exchange Commission (SEC). Principal adheres to industry regulations to protect policyholders and ensure ethical practices.

8. Customer Reviews and Ratings

Customer reviews of Principal Financial Group are generally positive, particularly in areas such as policy offerings and financial strength. However, there are mixed reviews regarding the claims process and customer service experience.

Positive Reviews:

• Comprehensive Coverage: Customers appreciate the variety of life and disability insurance products offered by Principal, which allows them to choose policies tailored to their specific needs.
• Financial Security: Many customers feel reassured by Principal’s strong financial ratings, knowing that the company can meet its long-term obligations.
• User-Friendly Online Tools: Principal’s digital platforms for managing policies and filing claims receive high praise.

Negative Reviews:

• Claims Delays: Some customers have reported delays in the claims process, particularly for disability insurance.
• Complex Products: Certain policyholders have mentioned that the complexity of universal and variable life insurance policies can make them difficult to understand without expert guidance.

Overall Ratings:

• Better Business Bureau (BBB): A+
• Trustpilot: 3.9/5 (based on limited reviews)
• ConsumerAffairs: 4.1/5

Principal Financial Group is a well-established and financially stable company offering a wide range of insurance products, including life and disability insurance. Its competitive pricing, user-friendly online tools, and strong customer service make it a good option for individuals and businesses seeking financial security.

While there are some concerns about the claims process and the complexity of certain insurance products, the company’s overall reputation, financial stability, and market presence outweigh these minor drawbacks. Customers looking for comprehensive coverage and a trusted name in the industry will find Principal to be a reliable choice.

FAQs

1. What is the history and background of Principal Financial Group?

Principal Financial Group, originally founded as Bankers Life Association in 1879, has a long and rich history. Based in Des Moines, Iowa, it started as an insurance provider and evolved into a global financial services company. Today, Principal offers a variety of services, including retirement planning, life and disability insurance, and investment management. Operating in more than 80 countries, Principal has grown to serve millions of customers worldwide. The company has a strong presence in the U.S. and is listed on the Fortune 500, which attests to its success and market leadership over the years.

2. What types of life insurance products does Principal offer?

Principal Financial Group offers a diverse range of life insurance products to meet different needs. These include:

• Term Life Insurance: Provides affordable coverage for a fixed term, such as 10, 20, or 30 years. It's designed for people looking for basic coverage during specific life stages like raising a family.
• Universal Life Insurance: A permanent life insurance option with an investment component. It offers flexible premiums and adjustable death benefits.
• Indexed Universal Life Insurance: Similar to universal life but with the potential for cash value growth based on stock market index performance. It offers both security and growth potential, although gains are capped.
• Variable Universal Life Insurance: This policy allows for investment in multiple funds, offering greater control over cash value growth but also exposing policyholders to market risks.

Each product serves unique financial goals, whether it's short-term protection or long-term wealth-building.

3. How does Principal's term life insurance compare to permanent life insurance?

Principal’s term life insurance is a simple and affordable option that provides coverage for a specific period, typically 10, 20, or 30 years. It’s an excellent choice for individuals who need protection during specific stages of life, such as raising children or paying off a mortgage. Term life insurance is generally much cheaper than permanent life insurance because it doesn’t build cash value.

Permanent life insurance, like universal or indexed universal life insurance, provides lifelong coverage. These policies also accumulate cash value that can grow over time. However, permanent life insurance is more expensive due to its extended benefits and investment features. It is ideal for people who want to ensure lifetime protection and are interested in wealth accumulation.

4. What are the benefits of disability insurance with Principal?

Principal’s disability insurance products offer significant protection by replacing a portion of your income if you’re unable to work due to illness or injury. Principal provides:

• Individual Disability Insurance: Offers financial security by providing a percentage of your income during a disability period. It’s particularly important for individuals whose income is crucial to their household.
• Business Overhead Expense Insurance: Helps cover a business’s operating expenses (like rent, payroll, or utilities) if the owner becomes disabled.
• Disability Buy-Out Insurance: Provides a lump sum for business partners to buy out the shares of an owner who becomes disabled.

These products offer peace of mind and financial stability when you face health-related setbacks.

5. How are Principal’s insurance premiums determined?

Principal’s insurance premiums are influenced by several factors:

• Age: Younger individuals tend to pay lower premiums because they are less risky to insure.
• Health: Healthier individuals often get better rates. Smokers or people with pre-existing conditions may see higher premiums.
• Coverage Amount: Higher coverage amounts mean higher premiums.
• Policy Type: Term life insurance tends to be cheaper than permanent policies like universal or variable life insurance.
• Occupation: Riskier occupations (e.g., construction workers) usually lead to higher premiums, especially for disability insurance.

Principal provides flexible premium payment options, especially with their universal life policies, allowing you to adjust payments according to your financial situation.

6. What is the claims process like with Principal Financial Group?

Principal’s claims process is designed to be user-friendly and transparent. Here’s a breakdown:

1. Notification: The policyholder or beneficiary must notify Principal about the claim event (e.g., death, disability).
2. Documentation: Principal requires supporting documents, such as a death certificate for life insurance claims or medical reports for disability claims.
3. Review Process: Once the necessary documentation is submitted, Principal begins the claim review process. This usually takes about 10 to 14 business days for standard life insurance claims, but disability claims may take longer depending on complexity.
4. Payout: If the claim is approved, the payout is processed and sent to the appropriate party.

Principal aims to process claims as efficiently as possible, though more complex claims can take additional time.

7. How does Principal’s universal life insurance work?

Universal life insurance from Principal offers both life insurance coverage and a savings or investment component. The policyholder can adjust the premium payments and death benefits, giving them greater flexibility over time. A portion of the premium goes into a cash value account, which grows based on a fixed interest rate or a market index (for indexed universal life).

Universal life policies allow the policyholder to borrow against or withdraw from the cash value. This makes them ideal for people looking for permanent coverage and long-term financial planning options, such as using the policy as part of an estate planning strategy.

8. How does Principal determine eligibility for disability insurance?

Eligibility for Principal’s disability insurance depends on several factors:

• Occupation: Principal assesses the risk associated with the policyholder’s occupation. High-risk jobs typically lead to higher premiums or additional coverage restrictions.
• Health: The company evaluates the policyholder’s medical history, as pre-existing conditions may affect eligibility or premium costs.
• Income: Disability insurance payouts are based on the individual’s income. Principal typically covers up to 60% of a policyholder’s income, depending on the policy chosen.
• Age: Younger, healthier applicants generally receive better rates and higher chances of approval.

Principal’s underwriting process ensures that individuals who receive disability insurance are financially secure in the event they are unable to work.

9. What are the strengths of Principal’s customer service?

Principal Financial Group is known for its responsive and knowledgeable customer service team. The company offers multiple ways to connect with customer service, including phone support, live chat, and an online portal.

Strengths:

• Quick response times: Customers generally report prompt service, especially for routine questions.
• Helpful representatives: Principal’s customer service agents are trained to assist with everything from policy questions to claims guidance.
• Digital tools: The company offers a robust online portal where customers can manage their policies, make payments, and even initiate claims.

However, during peak hours, wait times may be longer, and complex issues may require escalations to specialized departments.

10. How does Principal’s online portal benefit policyholders?

Principal provides a highly functional online portal where policyholders can manage virtually all aspects of their insurance and financial accounts.

Key benefits include:

• Policy management: Customers can view their coverage details, update personal information, and make payments online.
• Claims submission: Policyholders can submit claims and track the progress of their claims directly through the portal.
• Investment tracking: For individuals with investment-linked policies (such as universal life insurance), the portal offers tools to monitor the performance of the cash value or investments.

The portal is user-friendly and helps streamline many administrative tasks for policyholders.

11. How does Principal’s Indexed Universal Life Insurance grow in value?

Principal’s Indexed Universal Life Insurance links the cash value portion of the policy to a specific stock market index, such as the S&P 500. As the index rises, the cash value grows, subject to a cap on maximum returns. Even in years when the index performs poorly, the policyholder’s cash value will not drop below a guaranteed minimum level, offering some downside protection.

This policy is appealing for individuals who want the potential for higher returns compared to traditional universal life insurance, with the added benefit of secure, lifelong coverage.

12. How does Principal handle customer complaints or claims disputes?

Principal Financial Group takes customer complaints seriously and has a formal dispute resolution process. Customers can submit complaints via phone, email, or written correspondence. Once a complaint is received, Principal investigates the issue and works to resolve it, usually within a specific timeframe.

For claim disputes, Principal may require additional documentation or conduct further investigation. If a policyholder is not satisfied with the outcome, they can appeal the decision, request mediation, or pursue legal action if necessary. Overall, Principal aims to resolve issues amicably and efficiently, though some customers have expressed concerns about delays in more complex cases.

13. How does Principal compare to competitors in the insurance industry?

Principal is a leader in the financial services industry, particularly in life and disability insurance. Here are some key points of comparison:

• Product Range: Principal offers a wider range of insurance products than many competitors, particularly in the realm of retirement planning and investment-linked life insurance.
• Financial Strength: Principal consistently receives high financial ratings, indicating stability and reliability. This is a major advantage over smaller, less financially secure insurers.
• Customer Service: While Principal’s customer service is generally rated positively, some competitors may offer more personalized service due to a smaller customer base.

Principal stands out for its broad offerings and strong market presence, but other companies might offer lower premiums or a more tailored service approach.