Principal Secure Choice Indexed AnnuitySM
The choice is yours
When you purchase a Principal Secure Choice Indexed
AnnuitySM (Principal Secure Choice), you know that your
premium is safe. But it also gives you the opportunity to
grow your money. With this annuity you get to choose
between two different crediting methods. And which
method you choose will affect what you potentially earn.
So now you’re
asking, “How do I
know which choice is
right for me?” Here’s
some information
that might help.
Annual point-to-point
crediting method
Performance trigger
crediting method
Do you want the opportunity to earn more
if the market is up? You might be right for
point-to-point.
Do you want the assurance of knowing what
you’ll earn during certain market conditions?
Our performance trigger option might be
what you’re looking for.
The cap for this option is generally higher than
the trigger percentage for our performance trigger
method, but it’s not guaranteed you will earn the
cap. When the market shows gains, you earn interest
up to that year’s index gain, or your pre-determined
cap, whichever is lower.
For example, if your cap is 5.0% and the market
shows a yearly gain of 3.2%, you will receive a credit
of 3.2%. If the market shows gains of 6.5%, you will
receive credit up to your cap, or 5.0%. If the market
is flat or negative, you will receive no index credit.
Translation? If the market is up, you can potentially
earn more with this method.
Not FDIC or NCUA Insured
May Lose Value • Not a Deposit • No Bank or Credit Union Guarantee
Not Insured by any Federal Government Agency
The trigger percentage for this option is usually
lower than the cap for our point-to-point method.
But you’ll know exactly what you’re getting for an
index credit when the market is up. And unlike the
point-to-point method, you also receive a credit
when the market is flat.
So, if your trigger percentage is 3.75%, and the market
is flat or has a gain of 2%, you still receive a credit of
3.75%. If the market shows gains of 6.5%, you earn your
trigger percentage of 3.75%. But if the market is
negative, you won’t receive an index credit.
What’s it mean? You’re guaranteed your trigger
percentage any year market earnings aren’t negative.
But if the market has a good year, you potentially earn
less than you would with the point-to-point method.
Let’s explain a few things
So now you know about our two index crediting options. But you
might still be wondering how this all works. Talking about index
credits involves using a lot of financial terms you might not be familiar
with. So let’s start by trying to explain a few.
Index credit
An index credit is the
amount applied to your
existing premium at the
end of each contract year.
Credits are based on how
the market performs in any
given year. Specifically,
Principal Secure Choice
earnings are based in part
on the S&P 500® Index
(excluding dividends). With
Principal Secure Choice you
can choose between two
different index crediting
methods—annual
point-to-point or
performance trigger.
The best part? With either
option, your accumulated
value is never reduced for
negative performance in
the S&P 500® Index. This
eliminates some of the risk
often associated with the
stock market.
Guaranteed floor
This is what it sounds like, the
floor. This is what protects
your premium in years when
the market is down and
earnings fall. You may not earn
anything during those years,
but the floor insures you won’t
lose anything either. The
guaranteed floor feature is
included with both of our
index credit methods.
Accumulated value
Every year that you earn
an index credit, it’s added to
your original premium.
These credits are locked in
annually—meaning you never
lose them. That’s what’s
known as the accumulated
value of your annuity. And
each year going forward, all
earnings are applied to that
accumulated value. So you are
earning interest on a higher
amount of money. Put
simply—every index credit
you earn adds to your
accumulated value and gives
you the ability to earn more.
Pertaining to annual pointto-point option specifically:
Index cap
When you choose the annual
point-to-point option, you’ll
receive a set index credit cap
when you purchase your
annuity. Think of a cap as
a ceiling—it’s the highest
percentage that may be
credited to your annuity
during any given year. Even
if the S&P 500® Index earns
more, your earnings will stop
at the cap. Your cap is reset
annually on your contract
anniversary.
Pertaining to performance
trigger option specifically:
Trigger percentage
This is similar to a cap, and
is set when you choose the
performance trigger option.
It’s the interest credit
applied to your annuity if
the S&P 500® Index is flat or
positive. Your trigger
percentage is reset annually
on your contract anniversary.
A closer look at how this works
Our chart shows how both the annual point-to-point method and the
performance trigger method would perform during similar market conditions.
Also, our chart assumes you purchase a $100,000 annuity with a 7-year surrender charge period. And that
you make no withdrawals from your original premium. This is a hypothetical example of a 7-year period with
the first contract year ending in 2008.* We are not trying to imply actual market performance. We just
want you to understand how each method might perform under similar market conditions, and how market
changes can affect how much interest you earn with Principal Secure Choice. Please remember, this
example is not meant to be predictive of the future. Your results can and will vary.
S&P 500® Index
Point-to-point
Performance trigger
Potential for growth
You may be credited for
gains up to your index cap
or trigger percentage
$140,000
S&P 500 ®
$140, 218
Interest credit
Locked in annually
$120,000
Point-to-point
$127,628
Guaranteed floor
Your index credit
is never negative
Performance
trigger
$120, 210
$100,000
$80,000
$60,000
2008
2009
2010
2011
2012
2013
2014
-38.49
23.45
12.78
-.0003
13.41
29.60
11.39
%
Trigger interest
credited
0.00
3.75
3.75
0.00
3.75
3.75
3.75
%
Point-to-point
interest credited
0.00
5.00
5.00
0.00
5.00
5.00
5.00
%
S&P 500®
index return
What if you regret your choice?
When choosing your index credit, you should consider which makes the most
sense to you. Make a decision based on your financial situation, your life
circumstances and your willingness to take risks with your money.
And here’s the good news—we let you change your mind.
While you can only choose one index crediting method at a time, you can
switch between the two from one contract year to the next. You’ll have a
30-day window before each contract anniversary to make the change.
What’s your
next step?
Talk to your financial
professional. They can
answer your questions
and provide any additional
information you need about
Principal Secure Choice.
principal.com
This brochure should be accompanied by the Principal Secure Choice main product brochure (RF2177).
* Actual cap rates and trigger percentages will vary based on the time period when the contract is sold, premium size
and surrender charge duration selected.
Purchasing an indexed annuity does not provide a direct investment into the stock market and guarantees are based on
the claims-paying ability of Principal Life Insurance Company. They are a long-term non-security (fixed) annuity product
that provide an opportunity to earn an interest rate based partially on a specific index without the risk of loss of
premium due to market downturns. Indexed annuities may not be suitable for all individuals.
“Standard & Poor’s®,” “S&P®,” “S&P 500®,” “Standard & Poor’s 500” and “500” are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed for use by Principal Life Insurance Company. The Product is not sponsored,
endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding the
advisability of purchasing the Product.
Annuity products and services are offered through Principal Life Insurance Company, a member company of the
Principal Financial Group®, Des Moines, IA 50392.
© 2016 Principal Financial Services, Inc.
Contract ICC15 SF 965/SF965
08/2016 | t160526039q
RF2177H-01