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Principal Term Insurance

Why Buy Term Insurance? An affordable edge against the unexpected Cost – It provides inexpensive protection. If you continue the policy past the guaranteed premium period, however, the premium will increase and may become less attractive. Short-term Needs – It helps meet short-term needs such as protecting business loans, protection for the first few critical years of a start-up business, and college planning. The Principal Financial Group® offers four term insurance products addressing length of coverage up to 30 years. Convertibility – Occasionally, people find short-term needs ultimately become long-term. You can take out term insurance to cover a mortgage or to provide protection until your children graduate from college. However, there may come a time when insurance becomes more difficult to obtain, either because of cost or ill health. The conversion aspect of term insurance becomes important when this scenario arises. If you own term insurance from The Principal®, your policy may be convertible to a permanent plan without evidence of insurability until the earlier of the level premium period or age 70.

Term insurance vs. permanent insurance What if I buy term insurance and invest the difference rather than pay the higher permanent insurance premium? • Most people have good intentions, but many don’t regularly “invest the difference.” In order to separate your savings and insurance goals, you will have to take steps to plan for the money saved in premium payments. In addition to needing a sound strategy, the return on your saved premium needs to out-perform the accumulation of the cash value of the permanent policy you would have purchased. Permanent life insurance may combine both components for you, and the cash accumulates on a tax-deferred basis. However, some permanent life insurance does not accumulate a lot of cash value due to the guarantees and is more expensive. Term insurance may be a better fit in some scenarios. • Most term policies have guaranteed premiums for a limited time. Beyond that time premiums can go up to stipulated maximums. Using a universal life policy with a guaranteed death benefit feature, a premium can be locked in at a guaranteed rate for a guaranteed duration of both premium and death benefit. However, the premium for a universal life policy is usually higher than the premium for a term policy.

• Term insurance generally does not accumulate cash value. Permanent insurance, when properly funded, may accumulate cash value which can be used in emergencies, for life needs, or as a source of income at retirement. If the permanent policy has a guaranteed death benefit feature, any cash withdrawals or loans may adversely affect the death benefit guarantee duration. Also, this form of permanent insurance is more expensive initially and term may be a better option for those where cash value is not important and where price of premium does matter. Term insurance can in many ways be compared to renting a home, while permanent insurance can be compared to owning a home. See chart below: Term vs. Permanent Insurance FEATURE

TERM (RENT)

PERMANENT (BUY)

Tax-free death benefit (a roof over your head)

Yes

Yes

Possible guaranteed level payment for life

No

Yes

Potential ability to pay off (pay up) early

No

Yes

Potential to build equity (cash value)

No

Yes

Tax-free recovery of cost up to basis

Not usually

Yes

If permanent insurance with a long-term premium looks like the right fit for you, The Principal may have the appropriate product for you. However, term may be a better fit for someone who is looking for a short- or long-term solution — and is looking for the most affordable premium with a chance of conversion. Whenever a major life-changing event occurs, you should contact your financial representative for a life insurance review. Make sure your insurance strategy is keeping pace with your changing life.

FOR MORE INFORMATION Contact your local representative or visit www.principal.com/term.

WE’LL GIVE YOU AN EDGE® Principal National Life Insurance Company (except in New York) and Principal Life Insurance Company, Des Moines, Iowa 50392-0001, www.principal.com

Principal Life Insurance Company reserves the right to charge the maximum premium beginning with any premium redetermination date. The premium at redetermination date, if less than the maximum premium stated in the policy, is not guaranteed beyond the current redetermination period. Also, the premium at redetermination date is subject to the company’s expectations as to one or more future cost factors including persistency, expenses, mortality and interest. Any increase in premium will not result in an increase in your benefits or cash values, if any, or other nonforfeiture values. While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal are rendering legal, accounting or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. Insurance products from the Principal Financial Group® (The Principal®) are issued by Principal National Life Insurance Company (except in New York) and Principal Life Insurance Company, Des Moines, IA 50392.

Not FDIC or NCUA insured May lose

value •

Not a deposit • No bank or credit union guarantee Not insured by any Federal government agency

BB9186-05 | 10/2011 | Policy Form SF806 | Rider Forms SF 684, 686, 687, 807 | t1110110401