Who Is Principal Financial
Principal Financial has been around since 1879 and currently has $667.8 Billion in assets under management.
They are currently a Fortune 500 company and was named The World’s Most Ethical Company in 2015.
They hold financial ratings of:
- A1 (Good) with Moody’s 5th highest of 21 rating levels
- A+ (Strong) with S&P Global 5th highest of 20 rating levels
- A+ (Superior) with A.M. Best 2nd highest of 13 rating levels
- AA- (Very Strong) with Fitch Ratings 4th highest of 19 rating levels
These ratings give Principal Financial a stable outlook and also shows their financial ability to pay claims.
Completing a term conversion with Principal is a great option especially if you want to be sure the company will be around in the near future.
What Is Term Life Conversion
A term life conversion is just taking your term policy and converting it into either a universal life product or a whole life product.
When you buy a term life insurance policy, you are mostly looking at the monthly premium and the term length.
These periods usually go from 5 years up to 30 years depending on the company.
However, these policies will eventually end, and you will have to either renew them, let them lapse, or convert them.
Of the 3 options, in my opinion, conversion is always the best option if you have a medical condition that may prevent you from getting coverage at a later time.
You can do this conversion without having to take any exams or prove insurability as long as you convert the policy before the conversion expiration period.
Principal Financial Products & Conversion Options
The Principal Term product is great for people who want to leave money to their loved ones or business partners for income replacement and offers the highest death benefit protection at some of the most affordable rates.
It is also a solid product if you need coverage for a specific amount of time for things like proof of credit, business startup or buy-sell agreement funding.
When it comes to conversions, this product doesn’t offer any term conversion credits; however, it can be converted into a survivor product which we discuss below.
Unlike most products, the Principal Term plan comes with two different conversion period options, and we list them below:
Standard Policy Conversion Privilege:
The Standard Policy Conversion Privilege allows you to convert to a permanent policy based on the earlier of the set conversion period or the policy anniversary nearest your age of 70.
Below are the set conversion periods:
- 10 Year Term: first 7 policy years
- 15 Year Term: first 12 policy years
- 20 Year Term: first 15 policy years
- 30 Year Term: first 20 policy years
Conversion Extension Rider:
The Conversion Extension Rider is only available when you purchase the policy, so if you don’t add it at that time, you can’t add it later.
This rider does come at an additional cost; however, it extends the conversion period to the earliest of the full level term period and the policy anniversary nearest your age of 70.
Below are the extended conversion periods:
- 10 Year Term: Ages 20 – 62; You Can Convert The Policy For 10 Years or To Age 70.
- 15 Year Term: Ages 20 – 57; You Can Convert The Policy For 15 Years or To Age 70.
- 20 Year Term: Ages 20 – 54; You Can Convert The Policy For 20 Years or To Age 70.
- 30 Year Term: Ages 20 – 49. You Can Convert The Policy For 30 Years or To Age 70.
If you have a 15 year term policy with the Standard Conversion Privilege and you are currently 55, you will have to convert the policy within the first 12 policy years (three years before the term is up) at the age of 67.
If you have a 15 year term policy with the Conversion Extension Rider and you are currently 56, you will have to convert the policy by the age of 70 since 15 years would take you past being 70 years old.
Principal Term Conversion Options
Once you have decided to convert your policy, you have a few different product options available that you can choose from:
Survivorship Conversion Options
A neat feature of the Principal Term product is that Two Term policies can be converted to one Survivorship Universal Life (SUL) policy.
Conversion is allowed up to twice the face amount of the smaller of the two, term policies.
You can also convert your policy to a Survivorship UL policy.
If you convert your policy, then the person you are adding to the SUL policy still must go through underwriting.
The conversion option to a SUL is only valid provided that Principal offers the Survivorship UL at the time of conversion.
Child Rider Conversion Options
The Principal Term product is one of the few that offers a conversion provision for the child insurance rider.
Coverage on each of your currently insured kids may be converted as follows:
- Coverage on each insured child can be converted to any type of life policy (except Term) available under our underwriting guidelines then in effect.
- The new policy will be issued at the Standard risk class published at the time of the conversion.
- No evidence of insurability is required, as long as:
- The face amount is not less than $1,000 per unit and is not more than $3,000 per unit of this rider.
- The conversion is applied for no earlier than 60 days before, and no later than 31 days after, the date the conversion can be made as described below.
- The rider can be converted on the first of:
- Policy anniversary following the insured child’s 25th birthday.
- The policy anniversary nearest insured’s age 65.
- The death of the insured.
Waiver Of Premium Conversion Options
At an extra cost, Principal Financial has a rider available that provides you with a waiver of your required premiums if you become totally disabled.
The disability must happen before your 65th birthday while the policy is in force.
This rider will terminate during conversion; however, similar riders may be issued with the new policy without evidence of insurability, subject to provisions in the new riders and the rules in effect at the time of conversion.
If your policy is currently being paid by the waiver of premium rider, you can still convert your policy to a permanent plan.
However, if you can’t purchase the rider on the new permanent policy, it is best to keep your term policy and waive the premiums up to the age of 95 if you qualify per the rider.
Additional Conversion Features
You have no limit on the number of conversions you can do, and you are also able to do partial conversions as long as you don’t fall below the product’s minimum face amount guidelines.
Principal One-Year Term
The Principal One-Year Term product is a fully underwritten term life insurance product with coverage for 1 year.
It is great for people who need short-term life insurance coverage.
The Principal One-Year Term product is neither renewable nor convertible.
How To Get Started
If you have been waiting to convert your policy because the process was confusing, we’ve got you covered.
We have a Simple 3 Step Process:
- We get to know your situation, and budget then send you rates
- If it makes sense for you, we’ll collect all the documents needed.
- Finally, we process the paperwork for you and become the agent on your new policy.
And guess what:
We convert policies through Principal Financial all the time, and there’s no charge for our service.
So don’t wait to convert your term policy, just fill out the form on this page to get started or give us a call at 1-888-554-3432.