We're adding buffer accounts to our variable annuities

First segment launches July 1

We're adding buffer accounts to our variable annuities

Offer clients downside protection with uncapped market participation

The PVC U.S. LargeCap Buffer Series offers four defined outcome investment options available exclusively through Principal variable annuities. These funds track the S&P 500 Price Return Index.

Similar to other defined outcome investments, our buffer accounts help protect against market volatility with a downside buffer. But we also provide full participation up to 10% and partial participation after 10%, meaning your client continues to benefit from investment gains during strong markets.

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These investments are designed to offer:

Downside protection

Downside buffer

TAXES

Tax-deferred growth

Downside buffer helps protect clients from some loss.

Full market participation

Full market participation

Full market participation up to the first 10% of gains.

Partial
participation

No hard cap

Partial participation continues on gains above 10%.

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The benefits of partial market participation

This chart illustrates the concept of a 10% downside buffer, 10% full participation in the market, and partial market participation above 10%.
Hypothetical illustration only to show how the downside buffer and upside participation works. The buffer strategies seek to offer a defined outcome over rolling 12-month periods. The strategies are designed to reset annually and can be held indefinitely by investors. Over the outcome period, which Is defined as a 1-year period beginning at fund inception and each annual anniversary thereafter, the strategies are designed to offer: a downside buffer of 10% (i.e. strategy does not participate in the first 10% of negative S&P 500® index performance); approximately 1:1 participation in the S&P 500® returns between 0 and 10%; partial participation of in any S&P 500® returns in excess of 10% before. Returns reflected are before the deduction of any fees and expenses.
If markets are performing well, your client's account will continue to have upside growth with no hard cap on their potential earnings.

Principal buffer investments

  • Are fully liquid. Clients can move money in and out of the accounts at any time.*
  • Offer a one-year outcome period starting at inception. Investments automatically rollover into new outcome period at year anniversary.
  • Reset buffer and participation rates annually.
*Investing after the start date or moving money out before the end date will affect the expected outcome.

Downside buffers help protect clients from volatile markets

The chart below shows the gains needed to recover from a down market both with and without a buffer. The buffer greatly reduces the amount your clients will need to regain after market losses.

Gains needed to recoup loss

With buffer
Without buffer
-10% loss
0%
11.1%
-20% loss
11.1%
25%
-30% loss
25%
42.86%

-10% loss

0%

11.1%

-20% loss

11.1%

25%

-30% loss

25%

42.86%

Use as part of a retirement savings plan

Principal PVC U.S. LargeCap Buffer Series can work in combination with both equity and fixed income holdings to reinforce your clients’ investment goals and tolerance for risk. They are available with our Principal® Pivot Series and Principal® Lifetime Income Solutions II variable annuities, as well as most previously issued Principal variable annuities.

Resources

PVC U.S. LargeCap Buffer
Series Fact Sheet

Learn more

Contact your local Principal® rep to ask about variable annuity solutions: 

Call today: 800-309-1623

For financial professional use only. Not for distribution to the public.


Variable annuities are long-term investment products designed for retirement purposes and are subject to market fluctuation, investment risk, and possible loss of principal. Variable annuities contain both investment and insurance components and have fees and charges, including mortality and expense, administration, investment option fees. An annuity's value fluctuates with the market value of the underlying investment options, and all assets accumulate tax-deferred. Withdrawals of earnings are taxable as ordinary income and, if taken prior to age 591/2, may be subject to an additional 10% federal tax. Withdrawals will reduce the death benefit and cash surrender value.


Annuity products and services are offered through Principal Life Insurance Company. Securities offered through Principal Securities, Inc,. member SIPC, and/or independent broker/dealers. Principal Life and Principal Securities are members of the Principal Financial Group®, Des Moines, IA 50392, principal.com.


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The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.
 

Insurance products and plan administrative services provided through Principal Life Insurance Co., a member of the Principal Financial Group®, Des Moines, IA 50392.
 

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