Principal Financial Group was founded in 1879 and today is a Fortune 500 company that offers an array of financial products around the world.
The company offers individual and group disability insurance through Principal Life Insurance Company. Principal Life is highly rated for its financial strength by the leading rating agencies, including:
- A+, Superior, the second-highest of 13 rating levels by A.M. Best
- AA-, Very Strong, the fourth highest of 19 rating levels by Fitch Ratings
- A-, Good, the fifth-highest of 21 rating levels by Moody’s Investors Service
- A+, Strong, the fifth-highest of 20 rating levels by S&P Global
Below are provisions of Principal’s Series 700 individual disability insurance policy:
Basic policy provisions
The Principal Series 700 policy is non-cancelable (except for non-payment of premiums) and guaranteed renewable to age 65 and conditionally renewable for life.
You can buy a policy if are age 18 to 60 (or 18-64 for multi-life cases). The policy offers elimination periods of 30, 60, 90, 180, or 365 days.
You can opt for benefit periods of 2 years, 5 years, to age 65, to age 67, or to age 70. The maximum benefit offered by this policy is $20,000 per month.
Simplified underwriting is available for applicants ages 18 to 50 applying for up to $6,000 a month in benefits. With simplified underwriting, there are no lab tests or financial verification.
Principal’s Business Owner Program evaluates business owner applicants based not only on their trade but on additional factors. These include your income, the number of employees, the number of years in business, and your job duties. By looking at a business as a whole, Principal says business owners can save money on coverage.
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Built-in policy features
The following features are built into Principal’s disability policy:
- Rehabilitation Benefit. You may receive additional benefits to help pay for a rehabilitation program that supports your return to the workforce.
- Death Benefit. The policy offers a lump-sum benefit if you die while receiving disability benefits.
- Waiver of Premium Benefit. If you become disabled and qualify for benefits, you are not required to pay for your policy after its elimination period (90 days or less). You may be reimbursed for premium payments made during that time if you qualify for disability.
No-cost benefits provided
Principal’s policy provides several no-cost benefits that enhance your monthly benefit or provide additional benefit payments, including:
Benefit Update
Your coverage can be reviewed every three years to ensure your monthly benefits are keeping up with changes in your income. There are no medical questions – just an application and in some cases financial information.
You can also request an increase before your three years are up if you lose or have your employer-provided disability coverage reduced; or experience at least a 20 percent increase in your earnings.
Future Benefit Increase
Principal automatically adjusts your monthly benefit amount every year for six years to keep up with inflation. The policy guarantees a 4 percent compounded increase, up to 10 percent compounded. You may also request an additional increase annually, up to $500 maximum, based on your income.
Capital Sum Benefit
You receive a one-time, lump-sum benefit that is 12 times your maximum monthly benefit if you lose sight in one eye or lose the use of a hand or foot without the possibility of recovery.
Supplemental Health Benefit
You receive an additional one-time, lump-sum benefit payment that is six times your maximum monthly benefit if you are disabled with coronary by-pass, cancer, or stroke as defined in the policy for at least 90 days:
Presumptive Disability Benefit
Regardless of your ability to work or earn an income, you receive monthly benefit payments if you have a total loss of use (without the possibility of recovery) of your speech, hearing in both ears, sight in both eyes, or the use of both hands, both feet or one hand and one foot.
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Principal disability insurance cost
Principal says its disability insurance typically costs between 1 percent to 3 percent of the insured’s annual income.
Premium rates depend on a variety of factors, including age, gender, occupation class, smoking status, benefit factor, elimination period, selected riders, and applicable discounts.
Principal lists the following sample rates for a $1,000 monthly benefit. The samples are for a non-smoker who selects a benefit period up to age 65 with a 180-day elimination period. A residual disability and recovery benefit rider are also selected.
- Age 30 Male: $16/month
- Age 30 Female: $30/month
- Age 40 Male: $24/month
- Age 40 Female: $39/month
- Age 50 Male: $37/month
- Age 50 Female: $46/month
Learn More: How Much Does Disability Insurance Cost?
Optional features for an additional cost
Principal’s disability insurance policy offers the following optional benefits available for additional cost:
Cost of Living Adjustment (COLA)
Benefits payments increase by 3 percent or 6 percent annually.
Catastrophic Disability Benefit
An additional monthly benefit will be paid if you become catastrophically disabled, defined as losing the ability to perform two or more activities of daily living without assistance.
Extended Total Disability Benefit
You can lengthen the amount of time you receive benefit payments beyond the policy’s maximum benefit period if you have a continuous total disability that begins before age 55.
Residual Disability and Recovery Benefit.
If you are residually disabled and have a reduction of earnings (by at least 20% of your prior earnings), but are not totally disabled, you receive a disability benefit payment proportionate to your loss of earnings.
Regular Occupation
If you are totally disabled in your current occupation and choose to return to work in another occupation, you receive full benefit payments, regardless of the income you earn.
Short-Term Residual Disability Benefit
If you are residually disabled and have a reduction of earnings (by at least 20% of your prior earnings), but are not totally disabled, you receive a disability benefit payment proportionate to your loss of earnings for 6 or 12 months.
Transitional Occupation Rider
If you are totally disabled in your current occupation and begin working in a new occupation, you can still receive disability benefits. You receive up to 100 percent of your pre-disability earnings, up to your maximum monthly benefit.
Learn More: Disability Insurance Riders, Explained
Joel Palmer is a freelance writer and personal finance expert who focuses on the mortgage, insurance, financial services, and technology industries. He spent the first 10 years of his career as a business and financial reporter.
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