Principal Physician Disability Insurance Review (Updated 2024)

Principal defines total disability as you not being able to work your primary job.

What Is Principal Financial Group?

Principal Financial Group is a global financial investment management and insurance company headquartered in Des Moines, Iowa, U.S.A. It was founded in 1879 as an insurance company, but today is on the Fortune 500 under the umbrella of “investment management leader.” The company does indeed have four primary business units: Retirement and Income Solutions, Principal Global Investors, Principal International, and U.S. Insurance Solutions. Principal employs over 15,000 people worldwide.

With over 140 years of experience, Principal has emerged as a global leader in the insurance industry. The company offers a range of insurance products, including life, disability, and retirement savings protection. Their reputation for excellence is reflected in their impressive ratings, such as an A+ rating from the Better Business Bureau and a Superior rating from A.M. Best.

In 2019, Principal purchased Wells Fargo’s institutional retirement business, including 401k, pension, asset advice, etc. for $1.2 billion. Then, in 2021, activist investor firm Elliott Management Group took a stake in Principal, pushing for changes. Luckily for Principal, the two parties agreed on two new directors and business went back to usual. LeverageRx has a close relationship with Principal and find their disability insurance product for physicians to be one of the better policies out there. Read on to learn more.

Principal Physician Disability Insurance Highlights

Principal’s disability insurance policy, HH750, is underwritten and issued by Principal Life Insurance Company. In this section we are going to review the biggest things to look for when purchasing disability insurance.

Principal’s Individual Disability Income Insurance is a comprehensive policy designed to provide financial protection in the event of injury, illness, or disability. With this policy, physicians can rest assured that their income will be protected, even if they are unable to work. The monthly benefits can be used to cover essential living expenses, such as mortgage payments, car payments, utilities, and student loan debt.

Own-Occupation

When buying disability insurance, you need to know how the insurance company defines “disabled.” At Principal, their occupation rider defines total disability as being unable to perform the material and substantial duties of your occupation, even if you can work in another field. Principal also offers a modified own occupation, which defines total disability as being unable to do your job and being able to work in another field but unwilling to do so.

It’s essential to note that Principal’s definition of true own-occupation varies slightly from other providers. Their policy states that there must be no reasonable job or worksite modifications that would enable you to perform your own occupation. While this may introduce some additional considerations, it still aligns with the true own-occupation standard that physicians seek.

Non-Cancellable or Guaranteed Renewable

A non-cancellable disability insurance policy means the insurance company can’t cancel, increase your premiums or reduce your benefits as long as you pay the premiums. The disability insurance policy at Principal is non-cancellable and guaranteed renewable to age 65.

Benefit Period

The benefit period is an option that comes with every policy. It is asking you up until what age do you want to receive payments should you fall ill or have an accident? The duration of the benefit period affects the price of the premium because the longer the benefit period, the greater the insurer’s risk. At Principal, you have a benefit period until the age of 70. You can also choose benefit periods to age 67 or 65, as well as benefit periods of two years or five years.

Elimination Period

The elimination period is the length of time between the start of an injury or illness and the time the insurance company pays you your benefits. You can purchase coverage with 30-day, 60-day, 90-day, 180-day, and 365-day elimination periods.

Mental Disorders

Principal has a 24-month limit for mental and nervous disorders using their own-occupation definition of disability.

Principal Physician Disability Insurance Riders

Anyone who buys physician disability insurance has the option to add riders which are provisions to give you extra benefits depending on your situation. Most riders come with an added cost, but it depends on the insurer.

Cost-of-living Adjustment (COLA) Rider

A COLA rider ensures that your benefits keep up with inflation. Principal’s COLA benefit is increased on a compound basis instead of simple. They offer a 3% or 6% COLA maximum. Upon returning to work full time, you keep any increased disability benefit without having to provide evidence of good health.

Residual Disability Rider

Principal offers a partial disability benefit called “residual disability.” If you become partially disabled, meaning you can perform some functions and not others, you will still receive full benefits. At Principal, in order to qualify as residually disabled:

• A loss of earnings of at least 20%; AND
• The inability to work full time and perform the duties of your occupation
• If you qualify, you will be paid 100% of your policy’s benefit for total disability if your loss of earnings exceeds 75%
• For earnings losses of less than 75%, you will receive a benefit proportional to your loss of pre-disability income

Principal’s residual disability rider will give you a minimum of 50% of your policy’s monthly benefit for total disability for the first 6 months of residual disability. You will receive 50% of the policy’s monthly benefit for total disability if you are retired or are unemployed.

Catastrophic Disability Rider

This rider provides additional benefits in the event you are unable to perform at least two of the six activities for daily living, or you require “substantial supervision due to severe cognitive impairment.”

Insurance language can be confusing. Click here and schedule a call with LeverageRx’s disability insurance specialist. He will answer your questions and explain the differences in policies for FREE.

Principal Physician Disability Insurance Alternatives

Guardian

Guardian has the best definition of total disability. To be considered totally disabled and receive full benefits, you must not be able to work the medical specialty you went to school for. However, even if you can work somewhere else, Guardian will pay you full benefits since the new job is not your specialty.

Learn More: Guardian Disability Insurance Review

MassMutual

MassMutual has a great COLA rider which guarantees an increase to the benefit every year. By the 6th year, the MassMutual COLA rider increases the payout by 16%! That said, their own-occupation is weak. If you can work at all, then MassMutual pay not pay you full benefits.

Learn More: MassMutual Physician Disability Insurance Review

Ameritas

The great thing about Ameritas disability insurance products for physicians is they consider your medical specialty to be your own-occupation, thus it is included by default. So even if you can work in another occupation after your disability, Ameritas will still pay you full benefits.

Learn More: Ameritas Disability Insurance Review

Is Principal Disability Insurance Right for you?

Reading insurance policies is boring and hard to understand. How do you know which one is right for you? LeverageRx’s in-house specialist can hop on a call to answer your questions if you fill out this form. In the meantime, here is what is included in Principal’s disability insurance policy base (meaning no extra charge):

Benefit update rider. Available for no additional premium, this rider allows you to increase policy benefits every three years up to the maximum issue and participation limits, up to age 55, without medical evidence of insurability. Principal offers advanced options on this rider, enabling the insured to take the option early with the loss or reduction of your group long-term disability plan or at least a 50% increase in sustainable earnings.

Future benefit increase rider. Available for no additional premium and renewable every six years. The increases are based on the Consumer Price Index with a minimum of 4% compounded and a maximum of 10% compounded. In addition to the CPI increase, the insured may also be eligible for an additional benefit increase if eligible based on financial information. When combined together, the CPI increase and the additional benefit increase cannot be greater than $500.

Presumptive total disability benefit. The policy will waive your elimination period if you sustain a total loss of at least one of the following: sight, hearing, inability to use hands or feet. The loss is not required to be permanent and the elimination period would be waived even if you are able to work.

Serious illness benefit. For no additional premium, this rider provides a one-time lump sum benefit equal to six times the policy’s ultimate monthly benefit, in addition to the other benefits provided by the policy, if the Insured becomes disabled under the policy and diagnosed with coronary artery bypass graft surgery, cancer or stroke.

Key Takeaways

Principal offers an excellent solution for physicians seeking comprehensive and reliable long-term disability coverage. With its true own-occupation definition of disability, built-in benefits, and a range of optional riders, Principal provides flexibility and peace of mind to physicians. The company’s reputation for financial stability and customer satisfaction further solidifies Principal as a top choice for physicians looking to protect their financial future.

Principal understands the unique needs and challenges faced by physicians and offers tailored coverage to meet those needs. By choosing Principal Physician Disability Insurance, you can rest assured that your financial well-being is protected, allowing you to focus on what matters most: providing exceptional care to your patients. To see your options with Principal, request your quotes today.