Principal to Focus on Business Insurance Market; Exiting Routine Consumer Sales

Today, Principal announced significant changes to its product portfolio. In US life insurance, they will focus exclusively on the business market (particularly small to medium-sized businesses) with emphasis on non-qualified deferred compensation. Principal will discontinue new sales of its life insurance products to non-business related retail customers by the end of third quarter 2021. Additionally, Principal will pursue “strategic transactions” for the in-force universal life with secondary guarantee block, as well as other related in-force blocks.

 

On the annuity side of the business, Principal will continue to distribute variable annuities through their corporate suite of retirements solutions. Principal will exit U.S. retail fixed annuities also by the end of third quarter.

 

This is obviously very disappointing news, as Principal has been a long-term, trusted relationship of Underwriters Brokerage Service for many years. While this data is still fresh and there are many questions yet to be answered, we would like everyone to remind everyone of the following:

 

• The term insurance plans currently pending will continue to be underwritten with the same level of professionalism as before.

 

• Existing, in-force term insurance policies have a guaranteed, level premium and death benefit for the duration of the term period. 

 

• If you have clients who have had a health change, conversion should be considered immediately while the conversion product options remain favorable.

 

• While the long-term custodian of the No-Lapse Guarantee products is not known at this time, this announcement is a tremendous reminder of the value of contractual guarantees. Product blocks relying heavily on non-guaranteed elements tend to fare worse during these types of transitions.

 

• We expect policies underwritten using the Early Cash Value rider to remain unchanged, given that they fit within the business owner market and appear to be included as a part of the carrier’s long term strategy.