Billing change for renewing 10-Year Term policies
10/03/2023
When Principal® 10-Year Term policies complete their Initial Level Premium Period, they renew for successive one-year terms, at increased premium amounts. In some cases, premium increases can be significant. So, our practice for any policy on Pre-Authorized Check (PAC) withdrawal has been to automatically remove it from PAC and switch to direct (paper) bill prior to the beginning of the 11th year renewal to avoid drafting an amount from the policy owner’s bank account that’s larger than what they’re expecting and that they may not be prepared for.
A new process is coming.
We’re pleased to let you know of an upcoming change that will provide your clients more notice and control over their premium billing in this situation. A letter (see sample below) will be sent to policy owners 60 days prior to the end of the 10th policy year, notifying them of their new premium amount and giving them the option of remaining on PAC or changing to direct bill. This change will be effective beginning with policies renewing in January 2024*.
Here's an overview:
- If they want to continue with PAC, no further action will be required. Their PAC withdrawal will be adjusted to the higher amount and will continue to draft as before.
- If they want to discontinue PAC and switch to paper billing, they’ll need to contact the home office directly or change their option at www.principal.com.
- For those that don’t respond, we’ll continue to draft by PAC at the higher premium amount.
- If they’re already on direct bill, nothing changes.
With the new 60-day letter, we’re providing clients with the lead time they need to make the decision that’s right for their situation—maintain their preferred payment method, move to direct bill, change the premium mode, or seek other options.
Questions?
Contact policy holder service at 800-247-9988.
Sample policy owner letter
Dear Policy Owner,
In accordance with the terms specified in the policy, the premium for the Term life insurance policy shown above will be increasing from $USD to $USD on the upcoming policy anniversary date of Month/Day/Year.
Because you’re reaching the end of your initial level premium period, you may notice a substantial increase in your premium amount. This is because your level premiums are ending (see your data pages for details). Your policy will continue to renew for successive one-year periods each year; however, your premium will most likely increase each year as well. If you’d like to discuss your options, please contact your financial representative, or call our Home Office at the number below.
What does this mean to me?
- If you’re set up to receive a paper bill, there’s no action needed at this time.
- If you’re set up for automatic premium withdrawals, and you’d like to continue with the withdrawals at the higher amount, no action is needed.
- However, if you’d like to discontinue the automatic withdrawals and switch to a paper bill, you need to contact us or go online to make that change as soon as possible.
We’re here to help. If you have any questions, please call us at the number listed below. Thanks for choosing Principal® for your insurance needs.
*Principal Term 2014 was introduced in January 2014. Note, a small number of policies in this product series have issue dates prior to January 2014, meaning they’ll start year 11 prior to January 2024.
Insurance products issued by Principal National Life Insurance Company (except in NY) and Principal Life Insurance Company®, and the companies available through the Preferred Product Network, Inc. Plan administrative services provided by Principal Life. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392.
For financial professional use only. Not for distribution to the public.