Principal IUL Review (2026)

Principal at a glance: who stands behind the policy

Principal traces its start to July 1, 1879, when banker Edward Temple founded The Bankers Life Association in Des Moines, Iowa, to sell low-cost life insurance to bankers and their employees. In 1911 it became Bankers Life Company, a mutual insurer owned by its policyholders. It took the name Principal Financial Group in 1985 and became a public company in October 2001. Its stock moved from the New York Stock Exchange to Nasdaq on December 15, 2017, where it trades as PFG. Principal says it is a member of the Fortune 500.

Two Principal companies matter to an IUL buyer:

• Principal National Life Insurance Company issues both of Principal's current IULs everywhere except New York. Its policy form numbers appear on each brochure.
• Principal Life Insurance Company is the group's main insurer. Principal's brochures say riders issued by Principal Life are available in New York only.

Both are domiciled in Iowa and regulated by the Iowa Insurance Division, according to Principal's 2025 annual report.

Today Principal is mostly a retirement, asset management and workplace benefits company. It reported $1,814.6 billion in assets under administration, including $781.0 billion in assets under management, at the end of 2025. Its U.S. operations administered about 710,000 individual life policies with more than $570 billion of coverage in force.

The most important fact about Principal's life business is who it now sells to. In its own words, "In 2021, we narrowed our focus to the business market and ceased sales to the retail consumer market." Its individual life products are now aimed at owners, executives and key employees of small and medium-sized businesses, with an emphasis on nonqualified executive benefits. Those business sales made up 100% of its individual life sales in 2025. It sells through its own affiliated financial representatives and through independent brokers, in all 50 states and D.C.

How strong is Principal?

Principal's quarterly report for the period ended June 30, 2026 lists these insurer financial strength ratings for both Principal Life and Principal National Life:

Every outlook is stable. A+ is the second-highest grade on AM Best's scale, and AA- from Fitch sits in its "very strong" band. For the rating scales, see how we rate life insurance companies.

A rating measures the company, not the policy. It tells you how likely Principal is to pay claims decades from now. It says nothing about whether an IUL's caps and charges suit you.

One structural point is worth knowing. Principal has handed some older risks to reinsurers. In 2022 it reinsured its in-force block of universal life policies with secondary guarantees, and its block of retail fixed annuities, with Talcott Life & Annuity Re, a Cayman Islands affiliate of Talcott Resolution, under what its filings call coinsurance with funds withheld. More on what that means for owners below.

Principal's IUL lineup

Principal's introduction to IUL says it offers two indexed universal life products, and that the right one depends on your objective. Both are issued by Principal National Life outside New York, and both consumer brochures were revised in late 2025.

Principal Indexed Universal Life Accumulation II is the accumulation policy. Principal describes it as the choice when you want "more of an emphasis on growing cash value than in maximizing the amount of death benefit coverage." It offers three S&P 500 index accounts, including a High Cap account that deducts a charge in exchange for a higher cap. It adds a 0.25% Accumulated Value Enhancement from year 11 when the fixed account is crediting above its 1% minimum. It offers two loan types and business riders such as higher early surrender values for business-owned policies.

Principal Indexed Universal Life Flex II is the balanced policy. Principal pitches it as "cost-effective life insurance coverage offering a balance of death benefit protection and cash value growth." It has two S&P 500 index accounts and a fixed account. Its main extra is an optional Extended No-Lapse Guarantee Rider. That rider has no separate charge, but Principal says electing it raises the policy charges to pay for the longer guarantee.

The main job of each is different. Accumulation II is for funding heavily and drawing income later. Flex II is for coverage at a manageable cost with some cash value on the side.

Index options and how interest is credited

An index account does not buy stocks. It credits interest based on how an index moved over a 12-month period, limited by a cap. Every index account on both Principal IULs is tied to the S&P 500:

• S&P 500 Price Return: compares the index at the start and end of 12 months and credits the change, up to a cap. Dividends are not included. Both policies offer it.
• S&P 500 Price Return High Cap: the same method with a higher cap, but a stated percentage is taken from the account at the start of each 12-month period. Accumulation II only.
• S&P 500 Total Return: compares the starting value with the average of the next 12 monthly values, and includes reinvested dividends. Both policies offer it. Averaging smooths out swings, but in a steadily rising year it usually credits less than a point-to-point method.

Principal's introduction to IUL says the participation rate is set by Principal and is guaranteed to be at least 100%. Both product brochures guarantee a 0% floor on index credits. The brochures also say the guaranteed minimum cap is set when you buy and written into your contract.

That 0% floor protects the credit, not your cash value. Principal's own brochure says it plainly: "Policy charges are still assessed so your policy value can decrease." On the High Cap account, the up-front charge comes out even in a year the index falls, so that account can lose value in a down year before any other charges.

Principal does not publish current caps in its consumer materials. Ask for them, in writing, on the date of your illustration. Our guide to IUL cap rates explains how to weigh caps against charges.

How Principal treats existing policyholders

This is the section that matters most, because you will own an IUL for decades after the sale. We looked at caps on existing policies, cost of insurance charges, reinsurance of older blocks, and lawsuits and regulatory actions.

Cap history: not published

Principal does not publish a history of the caps it has declared on its IULs, for new or existing policies. We could not find one in its public materials or filings. That does not mean it has treated owners badly. It means you cannot check. Its brochures warn that indexed life contracts commonly let the insurer change caps and participation rates periodically, such as once a year, and that such changes could hurt your return. Before you buy, ask for the guaranteed minimum cap in the contract and for the cap history on the account you plan to use.

Cost of insurance charges

The cost of insurance is the monthly charge for the death benefit. A carrier raising it on existing policies is one of the biggest risks in universal life. We found no public record of Principal raising cost of insurance rates on its IULs, and its 2025 annual report does not describe one. In-force rate actions are not always made public, so treat this as unconfirmed rather than a clean record.

Reinsured blocks

Two decisions affect older Principal customers:

• Guaranteed universal life (ULSG). Principal stopped retail sales in 2021 and in 2022 reinsured its block of universal life with secondary guarantees with Talcott Life & Annuity Re. Its annual report lists "managing our reinsurance relationships" as an ongoing risk.
• Individual fixed annuities. Principal ceased sales of individual fixed annuities in 2021 and in 2022 reinsured the block existing on January 1, 2022, with the same Talcott affiliate.

Under reinsurance, the original insurer normally stays responsible to the policyholder, and Principal's filings describe these as reinsurance agreements rather than sales of the policies. If you own one of these older contracts, your policy terms do not change. IUL policies are not part of either block as the filings describe them.

Principal Life also keeps a closed block, set up when it converted to a stock company in 1998, for participating life policies that had a dividend scale in force on July 1, 1998. Assets were set aside so those policies could keep paying dividends on the 1997 scale if experience held up. If you own one, your guaranteed benefits are unchanged; dividends are never guaranteed.

Lawsuits and regulatory actions

Principal's 2025 annual report says it is "regularly involved in litigation," including possible class actions, and that regulators regularly examine it. It names no specific life insurance case and says management does not expect any pending matter to have a material adverse effect. We did not find a public class action over Principal IUL sales practices or cost of insurance increases, but we have not completed a court-by-court or state-by-state review, so we make no claim either way beyond this. Our guide to IUL lawsuits covers the wider industry picture.

Riders and living benefits

Both IULs include a package of base riders, subject to state availability and qualification, at no added charge unless used:

• Chronic Illness Death Benefit Advance Rider: lets you take part of the death benefit early if you cannot perform two of six daily activities for at least 90 days and the condition is permanent, or if you need substantial supervision because of a permanent severe cognitive impairment. The lifetime maximum is the lesser of 75% of the eligible amount or $2 million. Because there is no up-front charge, each payment is discounted for early access, and the Flex II brochure notes an administrative fee.
• Terminal Illness Death Benefit Advance Rider: an early payout if you are diagnosed with a terminal illness. The advance is a lien that accrues interest, which reduces the death benefit.
• Life Paid-Up Rider: helps keep a policy with a large loan from lapsing, when the policy's conditions are met.
• Cost of Living Increase Rider: lets you raise coverage to keep pace with inflation without new underwriting.

Principal's Accumulation II brochure says the chronic and terminal illness riders are not available in Massachusetts, and the chronic illness rider is not long-term care insurance. Optional riders, at a cost, include waiver of monthly policy charges on disability and a Salary Increase Rider for business cases. Accumulation II adds an Alternate Surrender Value Rider for business-owned policies, and Flex II adds the Extended No-Lapse Guarantee Rider. See IUL living benefits and overloan protection.

Underwriting and service

Underwriting sets your risk class from your age, sex, health, medical history, finances, habits, occupation and hobbies such as flying or scuba diving. Principal says some applicants qualify for Principal Accelerated Underwriting, which gathers less information and is usually quicker. Everyone else goes through full underwriting. For what to expect, see IUL underwriting.

Principal sends each owner an annual statement at the end of each policy year.

Who Principal fits, and who should look elsewhere

Principal is a strong candidate if you:

• Own a business or are an executive, and want life insurance as part of a key person, buy-sell or executive benefit plan. That is the market Principal serves.
• Want an A+ rated carrier with strong ratings from all four agencies.
• Prefer a simple index menu tied only to the S&P 500.
• Want chronic and terminal illness riders at no up-front cost.

Look elsewhere if you:

• Want to check a carrier's cap record before you buy. Principal does not publish one.
• Want volatility-controlled or multi-index accounts. Principal offers neither.
• Are a family buyer with no business connection. Principal ceased retail consumer sales in 2021, so ask whether the agent can place the policy at all.
• Live in New York. Principal National Life, which issues these IULs, does not issue policies there, and we have not confirmed a New York version.
• Mainly want the cheapest permanent death benefit. Term insurance or guaranteed universal life may cost less. See who should not buy IUL.

A word on taxes, since IUL is often sold on them. Income from an IUL usually comes from policy loans and from partial surrenders up to your premiums paid. Both are tax-free only while the policy stays in force and is not a modified endowment contract. If the policy lapses or is surrendered with a loan outstanding, the gain can become taxable in a single year. Our IUL taxes guide walks through the rules, and IUL for business owners covers company-paid plans.

To compare Principal with other carriers, start with our list of the best IUL companies.