Principal announced on June 28, 2021 that it was discontinuing new sales of U.S. retail fixed annuities and consumer life insurance products, fully exiting the retail consumer market by ending new sales of term life and universal life to retail customers. That single corporate decision is the most important fact for anyone holding a Principal term policy and wondering whether it can be sold, because nearly every term conversion clause in the industry permits conversion only to a permanent product the company makes available at the time of conversion.
When a carrier stops selling retail permanent life insurance, that sentence stops being boilerplate and starts being the whole question. It does not automatically mean conversion is unavailable — carriers commonly designate a specific product to receive conversions from an in-force term block, and Principal continued serving business and estate planning markets after the retail exit. But it does mean you must get the answer in writing rather than assuming, and you must get it before you spend a single hour on anything else.
The reason conversion matters at all: a buyer purchases a death benefit that must eventually be paid. Term coverage that expires while the insured is living pays nothing, so an unconvertible term policy has essentially no secondary market value no matter how large the face amount or how serious the diagnosis. This page walks the exact requests to make and what to do with each possible answer.
In This Article
What the 2021 exit did and did not cover
Precision matters here, so here is what is on the record.
In its June 2021 strategic review, Principal said it would fully exit U.S. retail fixed annuities — discontinuing new sales of deferred annuities, payout annuities and indexed annuities, with related in-force blocks holding roughly $18 billion in policy reserves — while continuing to sell its variable annuity. In U.S. individual life, it said it would fully exit the retail consumer market by discontinuing new sales of term life and universal life products to retail consumers, and would pursue strategic alternatives for in-force blocks.
In May 2022, Principal closed a reinsurance transaction with Talcott Resolution, an affiliate of Sixth Street, reinsuring approximately $25 billion of in-force statutory reserves covering its U.S. retail fixed annuity and universal life with secondary guarantee blocks. Talcott separately engaged Principal to manage roughly $4 billion of commercial mortgage loans and private credit assets.
Two implications for a term policyholder. First, the retail term block was not described as part of that reinsurance transaction, so your term contract’s servicing relationship likely remains where it has been. Second, the question of what permanent product a conversion would land in is genuinely open and must be answered by the carrier, not inferred from a press release. Ask; do not assume in either direction.
The five things to request, in one written letter
Write to the carrier as the owner of record. Ask for:
- Confirmation that the policy is convertible, and the exact calendar date the privilege expires. Conversion rights are limited by age, by duration, or by both, and the earliest limit governs. Age cutoffs at the anniversary nearest 65 or 70 are common, as are duration cutoffs covering only the first ten or fifteen years of a longer level term.
- The specific permanent product a conversion would produce today, named on the page, in your state.
- An illustration of that product’s premium at the insured’s current attained age, on a guaranteed basis rather than a current-assumption basis.
- The maximum face amount that product will accept on conversion. If the designated conversion product caps below your term face amount, only the convertible portion is relevant to any transaction.
- Written confirmation that the original underwriting class carries forward with no new evidence of insurability. This is the entire source of value in a conversion right.
Keep the reply. If a transaction proceeds, a provider’s underwriting team will want to see it, and a written carrier statement is worth far more than a note from a phone call. Background on the clause is in our term conversion rider explainer.
Why conversion is the entire basis of value
Put yourself in the buyer’s position. They pay cash today, take over the premiums, and collect the death benefit whenever it arrives. Their return depends completely on the benefit arriving.
On a term policy with eight years remaining, either the insured dies inside the window and the buyer is paid, or the insured outlives it and the investment is a total loss. Some contracts continue past the level period at annually renewable rates, but those escalate so sharply at advanced ages that paying them becomes irrational within a few years. Institutional portfolios are not built on that bet, and buyers who will consider it price the possibility of total loss into the number.
Conversion removes the timing risk entirely. The converted contract — typically universal life or guaranteed universal life — pays whenever the insured dies, and its premium can be modeled for decades. That is why nearly every term settlement completed in the market is a converted-term settlement, and why the conversion executes at closing rather than beforehand.
The sequence protects you: submit the term policy for review; providers underwrite and issue offers contingent on conversion; conversion and change of ownership execute together at closing with the buyer assuming premiums. You should never be asked to fund a large permanent premium out of pocket in advance against a promised sale. Both routes are compared in settlement versus term conversion.
| Carrier answer on conversion | What it means | Next step |
|---|---|---|
| Convertible, product named, no face cap issue | A settlement is genuinely possible | Apply the age, health and size screens |
| Convertible, but the product caps below your face amount | Only the convertible portion is marketable | Confirm the cap in writing before proceeding |
| Convertible, deadline already passed | No meaningful market value | Look at riders inside the contract |
| Not convertible under the contract | No meaningful market value | Look at riders inside the contract |
| No written answer given | Nothing can be assessed | Re-request in writing as owner of record |
The carrier, the regulator, and the Iowa framework
Principal Life Insurance Company is domiciled in Iowa and headquartered in Des Moines, tracing its origins to 1879 as Bankers Life Association. The organization converted from mutual form and went public in 2001, so the parent is a publicly traded company rather than a mutual, and policyholders are customers rather than members.
Solvency oversight sits with the Iowa Insurance Division. Iowa regulates life settlements under chapter 508E of the Iowa Code, which sets licensing requirements for providers and brokers, mandates disclosures to the owner, and establishes a rescission period after funding.
Important distinction: your settlement transaction is governed by the state where the policy was issued and delivered, or in some frameworks where you reside — not by Iowa merely because the carrier is Iowa-domiciled. A Principal policy delivered in Texas is a Texas transaction under Texas law. Verify that any provider or broker approaching you holds a current license in your own state, and confirm it with that state’s insurance department rather than accepting a certificate by email. Our page on how life settlement companies are regulated covers what licensing does and does not guarantee.
One Iowa planning note for residents: Iowa’s inheritance tax was phased out and fully repealed for deaths occurring on or after January 1, 2025, which removes a consideration that used to enter this analysis for Iowa families.
Screens that follow, and what the numbers look like
Face amount. Most providers work from a floor near $100,000, and a large share will not review below $250,000. A converted policy carries a permanent premium the buyer funds for years, so small face amounts cannot absorb underwriting, escrow and closing costs. See minimum policy size for a life settlement.
Age and health. The market targets insureds roughly sixty-five and older, or younger insureds with a significant diagnosis. A healthy sixty-two-year-old with a fully convertible policy will typically receive no offer. That is an ordinary market outcome rather than a failure of representation, and anyone telling you otherwise is selling optimism.
Ownership and consent. Only the owner of record can transfer the policy. Principal wrote a great deal of employer-sponsored and business-owned coverage over the decades, so verify ownership carefully: if a corporation, partnership or trust owns the contract, that entity signs, and the person with authority to bind it must be established. An irrevocable beneficiary must consent in writing, and any collateral assignment to a lender must be released. Both take time; start them at the beginning rather than at closing.
Conversion premium. Expect a steep number. A $500,000 term policy costing $2,800 a year at sixty-five can convert into a guaranteed universal life premium in the range of $25,000 to $40,000 annually depending on the product and guarantee period. In a settlement the buyer funds it from closing forward.
If the answer comes back no
If the carrier confirms the policy is not convertible, or that the conversion window has closed, or that the designated conversion product caps at a face amount too small to matter, the honest conclusion is that the policy has no meaningful secondary market value. Do not spend weeks assembling medical records to prove that twice.
Turn to what the contract already contains. Many term forms include an accelerated death benefit provision paying a portion of the face amount on certification of terminal illness, and some include chronic illness triggers. That is a claim against your own policy — no buyer, no escrow, no third-party underwriting — and it typically pays faster than any market transaction. Check as well for a waiver of premium benefit that may have gone unclaimed during a past period of disability.
If the insured has a terminal prognosis, a viatical settlement runs under different regulatory and tax rules than a life settlement and deserves separate evaluation with your own tax advisor.
And if coverage is still genuinely needed but the premium has become unaffordable, a smaller replacement policy may be the answer rather than any transaction on this one. Our guide to what to do when premiums stop being affordable ranks the alternatives in order.
Pine Lake Life Solutions provides education and a free policy review. Pine Lake does not purchase policies and we are not licensed in every state. Send the policy cover page and the carrier’s written answer on conversion and you will get a straight read on whether anything is available.
Frequently Asked Questions
Did Principal stop selling life insurance?
In June 2021 Principal announced it would fully exit the U.S. retail consumer market by discontinuing new sales of term life and universal life products to retail consumers, alongside exiting U.S. retail fixed annuities. It continued serving business and estate planning markets. For a term policyholder the practical question is what permanent product a conversion would produce today, which only the carrier can answer in writing.
Was my term policy reinsured to another company?
The May 2022 Talcott Resolution transaction reinsured approximately $25 billion of in-force statutory reserves covering Principal’s U.S. retail fixed annuity and universal life with secondary guarantee blocks. The retail term block was not described as part of that deal. Confirm your own servicing arrangement with the carrier rather than inferring it, since blocks can move after the fact.
Why does the retail exit complicate conversion?
Because nearly every conversion clause permits conversion only to a permanent product the company makes available at the time of conversion. When a carrier stops selling retail permanent life insurance, that clause becomes the central question rather than boilerplate. Carriers commonly designate a specific product for in-force conversions, so ask for it by name, in your state, in writing.
What exactly should I ask the carrier?
Five things in one letter: confirmation the policy is convertible and the exact expiration date; the specific permanent product a conversion would produce in your state; a guaranteed-basis illustration of that product at the insured’s attained age; the maximum face amount that product will accept on conversion; and confirmation the original risk class carries forward with no new evidence of insurability.
Which state’s law governs the settlement?
Generally the state where the policy was issued and delivered, or where the owner resides — not Iowa merely because Principal is Iowa-domiciled. Iowa regulates settlements under chapter 508E of the Iowa Code, but a Principal policy delivered in Texas is a Texas transaction. Verify any provider’s and broker’s licenses with your own state’s insurance department directly.
My policy is business-owned. Does that change anything?
It changes who signs and how long it takes. Principal wrote substantial employer-sponsored and business-owned coverage, so ownership must be verified carefully. If a corporation, partnership or trust owns the contract, that entity signs and the person with authority to bind it must be documented. Any collateral assignment to a lender must also be released before closing.
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Related Reading
- Can I Sell A Term Life Insurance Policy
- What Is A Term Conversion Rider
- Life Settlement Vs Term Conversion
- Are Life Settlement Companies Regulated
- Minimum Policy Size For A Life Settlement
- Cant Afford Life Insurance Premiums
- Can I Sell A Policy Owned By A Business
- What Is Guaranteed Universal Life
- Sell Term Life Policy
Pine Lake Life Solutions does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.