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Disability Overhead Expense Insurance - HH789 - Riders


Automatic Increase Option (AIO)

For no additional premium this rider is automatically issued to all standard issues through age 55. It provides an automatic increase in the Maximum Aggregate Benefit without evidence of insurability on the six policy anniversaries following the effective date providing the Insured is not Disabled. The increase is based on the CPI-U with a minimum of 4 percent and maximum of 10 percent.

The rider is renewable every six years with evidence of financial insurability. It is terminated if one of the six increase offers are declined.

This rider is available in conjunction with the BU rider.

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Benefit Update (BU)

This rider is truly a unique feature to Principal Life. For no additional premium, this rider is automatically added to all standard issue policies (for clients 18 to 55) if at least 75% of eligible coverage is purchased at issue. This rider helps keep the Insured's policy benefits up to date every three years without evidence of medical insurability. Principal Life will notify the Insured through correspondence when they are eligible for a BU increase review. To have a review conducted, the Insured must complete and submit a BU application and provide financial information.

Depending on the information submitted, we may offer to increase the coverage up to the maximum issue and participation limits for which they qualify - there is no cap! The no cap feature is a competitive advantage over most companies' future insurability options which usually have benefit caps. Premiums for BU increases are based on the Insured's attained age and the current rates in effect for the original policy at the time of the increase. A client must accept at least 50 percent of the BU offer to keep the rider inforce on the policy.

Principal Life also allows the client to maintain one policy and all definitions, provisions, discounts and current rates (at attained age) of the original policy apply.

It's also important to remember that a Principal Life OE insurance policy is fully adjustable. So, if you client needs to increase their policy's benefits before a BU increase opportunity arises, they can do so with full underwriting.

Please note: First year commissions are paid on any benefit increases.

The BU rider is available in conjunction with the AIO rider.

Refer to the Benefit Update Rider Opportunities section for more information on Benefit Update correspondence.

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Business Loan Protection

This cost rider* reimburses the owner for the covered business-related loan obligation during his or her total disability up to $10,000/month. Types of loan covered include those taken out to cover:

  • The purchase of a practice or existing business
  • The purchase of a large piece of equipment
  • The expansion of the business or practice
  • Facility renovations and improvements
  • An increase in working capital or build up of inventory
  • The purchase of a building or land (must be purchased for the sole use of the business)

The loan obligation should be in the form of a Term, Variable Rate, Commercial Mortgage or Lease Financing Loan.

Rider Specifics include:

  • Benefit Maximum: $1 million
  • Benefit Period: End of the financial obligation or earlier (3-year minimum), but not to exceed the OE policy's age 65 policy anniversary
  • Issue Ages: 18 to 60
  • Elimination Periods: 30, 60, 90, 180 or 365 days
  • Occupation Classes: 3A/3A-M and above
  • Sales Programs Available: Fully Underwritten, Association, Simplified, Multi-Life, GSI
  • Discounts Available: 10% Select Occupation, 20% Multi-Life (based on sex distinct rates), 10% Association
  • Multiple Loans: If the client has more than one business-related loan obligation to cover, multiple OE insurance policies must be purchased with the Business Loan Protection rider selected. The policy can be issued with a zero dollar OE insurance benefit
Underwriting Guidelines

Financial Verification

  • Completed OE statement (including rider information) must be submitted with the application
  • Prior year's business federal income tax return or Profit and Loss Statement for the last 12 months - if inforce and applied OE exceeds $10,000/month
  • Copy of loan documentation
  • Must qualify under the earned income guidelines for OE insurance

Medical Verification

How it pays:

Benefits are payable when you meet the policy's definition of a Total Disability: You are unable to perform the substantial and material duties of your occupation and are not working. Once disabled under the terms of the policy, you must satisfy the rider's elimination period before being reimbursed for the loan obligation. You can also assign your benefits to the financial institution holding your loan and Principal Life will pay the benefits directly to it. Benefits are sent on the first loan payment date after the elimination period is satisfied and continue during Your Continuous Disability but not beyond the Business Loan Protection Date. This rider offers guaranteed premium rates until you reach the Business Loan Protection Termination Date* and it cannot be conditionally renewed beyond the age 65 policy anniversary. Your premiums are waived after you're disabled for 90 days. Principal Life refunds the premiums paid for coverage after the disability begins and continues to waive all premiums during your Continuous Disability.

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Residual Disability Benefit (RDB)

This rider may be added to the policy for an additional premium and is available to 5A, 4A,
4A-M, 3A, 3A-M and 2A occupation classes.

Residual Disability means:

  1. You are not Totally Disabled; and
  2. Solely due to Injury or Sickness:
    • You are able to perform some, but not all, of the substantial and material duties of Your Occupation or You are unable to perform Full-time Work in Your Occupation; and
    • You incur a monthly Loss of Net Income*; and
  3. You satisfy the requirements of the policy’s Claim Information section.

* Loss of net income is the amount by which monthly gross income is less than covered overhead expenses. We will pay an amount equal to the Loss of Net Income the Insured incurs each month up to the Maximum Monthly Benefit, but not to exceed the Maximum Aggregate Benefit.

For the first six months of a Residual Disability following the Elimination Period, the benefit payable will not be less than 50 percent of the Maximum Monthly Benefit.

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