Principal Financial recently announced Agent/Broker DI compensation changes starting in 2023.

These changes are part of a strategic review within the entire company to focus on profitable growth, reduce capital intensity, sharpen its strategic effort, and generate long-term value for shareholders. In the middle of 2021, the company announced that it was selling its retail life insurance and annuity business as part of the review initiated by their active investor, Elliott Management Corp.

After their months long review of Principal’s individual disability product line and operations, it was determined that the company must increase its profitability. In order to make this happen swiftly, expenses needed to be reduced immediately. About the only place where one can do that immediately, is to cut distribution expenses - agent commissions, along with agency commissions, from the sale of individual disability products.

The new 2023 compensation for individual disability product sales is summarized in this flyer from Principal Financial.

While it is not possible to summarize all of the changes in an email without this email becoming an essay, here are some highlights of the key changes.

• No changes to first year commissions (FYC)
• Renewal commission changes for sales to MDs and Dentists under age 40
• Top renewal tier production requirement increased from $30,000 of annualized premium to $400,000
• Base renewals decreased by 50% and top tier renewals decreased 13% reduction for renewal years 2-5
• No change for renewal years 6-10
• 33% reduction for service fees in years 11+
• First Year Bonus changes
• Top bonus tier production requirement increased from $90,000 annualized premium to $400,000, with a bonus increase of 5% or 50% increase
• First bonus tier requirement increased from $30,000 to $500,000 of annualized premium, with a bonus reduction of 33%
• Inforce Bonus changes
• A 20% to 29% reduction in inforce bonus, based on new production tiers for eligibility

Please note that all policy adjustments after 2023 on policies originally issued prior to 1/1/2023 will be paid at current commission rates. This mean both Benefit Update increases as well as underwritten adjustments.